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Florida – Restaurant Sales and Use Tax Audits


Businesses across the board have taken a huge hit as a result of COVID. This pandemic was and still continues to be something no one could have planned for that’s for sure. As restaurants reopen or new restaurants take the place of ones that unfortunately didn’t make it through COVID, it is important to follow the tax laws that apply. As a result, we wanted to provide a refresh of the state and local tax laws that apply to restaurants based in Florida.

Florida sales and use tax laws that apply to restaurants are very convoluted and restaurant owners need to pay close attention to compliance with these laws on a daily basis. The best thing for restaurants to do, like any business, is to have a strong understanding of the tax laws that apply to them and how to stay in compliance. In addition, we will point out several pitfalls for restaurants to avoid that we’ve seen others get caught up in that can make you a target for an audit.

General Rule

The majority of the sales of a restaurant are subject to sales tax. There are a few exceptions to this, however these are very specific situations (which we discuss in more detail below). Most business owners are aware they need to collect and remit sales tax on their sales of food. It is the exceptions that business owners get stuck on – so this article will focus on the exceptions.

Free Food

Free Food to Customers: In this situation, restaurants do not need to collect and remit sales tax.

Free Food to Employees: In this situation, if the meal is free to the employee, Florida sales tax is not due on the meal. However, if the meal is discounted, then the restaurant should charge sales tax based on the price charged to the employee.

Use Tax: Every time a restaurant gives away a complementary item, whether its food or something else that comes with the meal, then it is important to determine whether the restaurant owes use tax on the item. Use tax is a complimentary tax to sales tax and it becomes due if an item is used or consumed in Florida without originally paying Florida sales tax to acquire the item. The use tax is primarily in place to cover items purchased outside of Florida, but the use tax also covers situations when a business uses the sale for resale exemption to purchase inventory, but then takes that items out of inventory for something other than resale. In this case, use tax is due when an item is pulled out of inventory to be given away for free. If the complimentary item is included with a meal, then Florida should consider the item as sold with the meal and no use tax is due. Common types of these items are free chips and salsa, bread, salads, etc., that are posted as being free with the meal.

Gratuity and Other Service Fees

The general rule is that mandatory gratuities are subject to sales tax, but separately stated, optional gratuities that are given to the employees are not subject to sales tax. If any of the funds from customer tips goes to the restaurant instead of the employees, then the tips are taxable to the customer. Other charges that are subject to sales tax are service charges, minimum charges, corkage fees, setup fees, cover charges or other similar charges, as these all go to the restaurant.

Catering and Take Out

Generally, catering and takeout is taxable. There are a few exceptions as laid out below.

Sales and Delivery by Restaurant employees: The only caveat is whether a delivery fee is charged. If the customer could pick up the item without the delivery fee, i.e. the delivery fee is optional, then the delivery fee is not subject to sales tax.

Third party delivery service, but sale by restaurant: the restaurant charges the sales tax to the end customer based on the price paid by the end customer and the fee paid to the delivery service is not subject to sales tax. The complicated factor here is that the delivery service might be the one collecting the tax if the customer pays by check or cash upon deliver. Most business models require credit card payments to the restaurant to avoid this problem. If not, then you need to make sure the restaurant is collecting and remitted the tax from the delivery service to avoid problems. Also, then receipt given to the end customer needs to be in the name of the restaurant, not the delivery service.

Third party delivery service buys the food from the restaurant: the restaurant because the restaurant only needs to collect a resale certificate from the delivery company to avoid sales tax collection/remittance responsibilities.


Pursuant to Section 212.08(1)(a), F.S., “food products for human consumption are exempt from the tax imposed by this chapter.” This Section lists exemptions of “general groceries”. It is important to keep in mind that these laws and rules apply to groceries or restaurants that operate as a grocery store, usually those with a deli side, etc. The term “food products,” is defined in Section 212.08(l)(b), F.S., as: “[E]dible commodities, whether processed, cooked, raw, canned, or in any other form, which are generally regarded as food.” Food products include meat and meat products, poultry products, baked goods, fish and seafood products, vegetables and vegetable products, and fruit and fruit products.

Rule 12A-1.011(2)(a)24, 29, Florida Administrative Code, (“F.A.C.”), interprets the food products exemption statute and specifically excludes from tax meat and poultry products. Additionally, 12A-1.011(4)(b)1, F.A.C., establishes,

Food prepared, whether on or off the seller’s premises, and sold for immediate consumption is subject to tax. This does not apply to food prepared off the seller’s premises and sold in the original sealed container, or to the slicing of products into smaller portions.

  1. Food prepared for immediate consumption is food prepared to a point generally accepted as ready to be eaten without further preparation and that is sold in a manner that suggests readiness for immediate consumption. In determining whether an item of food is sold for immediate consumption, the customary consumption practices prevailing at the selling facility shall be considered.

As a result, if a grocery store is selling food that is not generally accepted to be for immediate consumption, then that grocery item is not taxable. 


Pursuant to Section 212.08(1), F.S., the term “food products,” as defined in Section 212.08(l)(b), F.S.:

[M]eans edible commodities, whether processed, cooked, raw, canned, or in any other form, which are generally regarded as food. 1. Food products include meat and meat products, baked goods, fish and seafood products, vegetables and vegetable products, and fruit and fruit products.

In furtherance of this, Rule 12A-1.011(3)(c)(1), Florida Administrative Code, (“F.A.C.”) specifically excludes from tax bakery products sold for consumption off the premises.

Additionally, 12A-1.011(3)(c)(2), F.A.C., establishes a rebuttable presumption that the sale of bakery products by bakeries with eating facilities are taxable when: a. Such bakery products are sold in quantities of five (5) or fewer items; or b. The bakery products sold, regardless of the quantity, are not packaged in a manner consistent with an intention by the customer to consume the products off the seller's premises.

However, pursuant to 12A-1.011(3) F.A.C., bakery products sold by bakeries, pastry shops, or like establishments as hot prepared food products are taxable. However, bakery products that are still warm from the initial baking are not hot prepared food products.

Tax Exempt Customers:

Almost every business sells to tax exempt customers, including 501(c)(3)’s, governmental entities, etc., all have the ability to purchase food tax exempt, if the rules are followed. If the rules are not followed, then the restaurant will be on the hook for the sales tax not collected. The restaurant needs to collect a Department of Revenue issued exemption certificate (current year) from the customer and keep the exemption certificate on file for at least three years. If the customer does not have a Department of Revenue issued exemption certificate, then the restaurant will need to collect sales tax. The only exemption is that the US government does not have to have an exemption certificate, but you must document that the customer is a branch of the US government to exempt the sale.

Bracket System:

If the sales price comes out to an even dollar, then the tax would be an even 7 cents in a 7% county. But if the sale price is anywhere between $1.10 and $1.16, then the tax is 8 cents according to a statutory bracket chart. You can download the whole bracket system chart HERE. The result is that the average tax is usually a little higher than the local sales tax rate. If you are applying a flat rate tax across the board, then you are making yourself a target to the Florida Department of Revenue.


Alcohol is generally subject to sales tax. Many bars include sales tax in the cost of the drink. In order to do so, without being hit with an audit and being required to pay tax on the amount, the bar must post public notice that tax is included in the total charge. You can read more about how to treat alcohol sales here: Sales and Use Tax on Alcoholic Beverages. We have seen many restaurants and bars get hit with audits for not following these requirements.


It is so important to follow these laws, as although the restaurant is allowed to pass the tax on to the customer, the tax is really on the restaurant. So, if the restaurant fails to pass on the tax to the customer, then the restaurant still owes the tax. If after reading this article you realize that you have not been following the complex tax laws then going down the path of amended sales tax returns or voluntary disclosure is an option for you. Amended sales tax returns result in a 10% penalty, plus interest. We usually recommend correcting sales tax mistakes by entering the voluntary disclosure program. This program allows you to come clean on your taxes, as well as other benefits. The program can really be the perfect solution to ensuring you have the peace of mind you need. Best of all, can usually request a payment plan if you owe taxes. You can read more about the Voluntary Disclosure Program here: FL TAX – VOLUNTARY DISCLOSURE CAN BE THE PERFECT SOLUTION. If you did not collect the tax then, unfortunately, you will be on the hook for the sales tax due. However, a much bigger issue is if you collected and did not remit the sales tax as this can create criminal liability. Sales tax criminal laws have very low thresholds in Florida with as little as $301 of collected but not remitted sales tax becoming a third-degree felony with up to five years in jail. So, if you have collected sales tax but not remitted all of the tax, then you may want to strongly consider entering the voluntary disclosure program, which happens to create a presumption you had no criminal intent.

Florida sales tax audit; Florida sales tax audit help; Florida sales tax audit defense; Florida restaurant sales tax; Miami sales tax audit; Florida sales tax attorneyAbout the author: Paula Savchenko is an attorney at the Law Offices of Moffa, Sutton, & Donnini, P.A, based in Fort Lauderdale, Florida. Ms. Savchenko practices primarily in the areas Administrative Law and Taxation, as she counsels and represents businesses and individuals in their dealings with government agencies. More specifically, most of her work involves state and local tax and regulatory matters, with a focus on the marijuana and hemp industries. She also speaks and writes regularly on the legal aspects of the marijuana and hemp industries. In addition to serving on the board of the Florida Bar – Administrative Law Section – South Florida Chapter, she also serves on the board of the Greater Fort Lauderdale Tax Council, as well as Cannabis Law Accounting and Business. You can learn more about Paula in her bio HERE.

About our Firm: If your business would like to consult with a Florida CPA / Attorney to determine how to comply with Florida's complicated sales and use tax laws or how to cost effectively start complying if your company has been incorrectly paying or charging sales tax, then we offer a FREE INITIAL CONSULTATION to discuss you Florida tax concerns. Contact our law offices today by phone or email via either of the links on the top of this web page. Is an auditor already knocking and you need an expert to defend you? You should have the right experts on your side. Contact the Law Offices of the Law Offices of Moffa, Sutton, & Donnini, P.A. for a free initial consultation on your Florida tax audit concerns.


Florida sales Tax Audit Help, published August 24, 2020, by James Sutton, CPA, Esq.

Florida Sales Tax Informal Written Protest, published November 17, 2018, by James Sutton, CPA, Esq.

Go to Jail for not Paying Florida Sales Tax, published November 3, 2013, by James Sutton, CPA, Esq.

Are Services Taxable in Florida, published September 2, 2020, by Paula Savchenko, Esq.

Restaurants Florida Sales and Use Tax Handbook, published January 4, 2018, by James Sutton, CPA, Esq.