Running a restaurant in Florida is one of the most challenging businesses a person can choose. The margins are razor thin, the labor challenges never seem to end, and the cost of food and supplies can shift without warning. And then, on top of everything else, there is Florida sales and use tax. Florida's sales tax rules for restaurants are layered, the exemptions are narrow, and the Florida Department of Revenue (DOR) knows this industry extremely well. Restaurant owners are audited regularly, and the DOR comes in armed with data — including credit card receipts — that often reveals problems before the owner even sees the audit notice.
My name is James Sutton. I am a CPA and Attorney that practices almost exclusively in the area of Florida sales and use tax controversy. After years of representing restaurant owners in Florida sales tax audits, protests, and litigation, I've found that most issues come down to the same handful of questions. This article answers those questions directly, in plain language, so you can understand what the rules are and where the landmines tend to be.
Q: Is everything I sell at my restaurant subject to Florida sales tax?
A: Almost. The general rule under Rule 12A-1.0115, Florida Administrative Code, is that all food and beverages sold by a restaurant are subject to Florida sales tax — whether the customer eats in or takes the food to go. It does not matter whether the meal is consumed on the premises or packed up in a bag. If it comes out of your kitchen or bar and a customer paid for it, Florida sales tax is almost certainly owed.
The narrow exceptions are items like bottled water sold in a sealed original container, or certain grocery-style items sold in sealed containers that are NOT warm. Another odd exemption is selling more than 5 of an item can be considered a non-taxable grocery item. So 5 donuts are taxable, but 6 donuts are not. For practical purposes, the vast majority of what a restaurant sells is taxable, and you should start from that assumption.
Q: What about complimentary food and drinks we give away — do we owe tax on those?
A: Yes, but in a different form and with distinctions. When a restaurant gives away complimentary food or drinks with a paid meal, such as bread or a desert, then the “complimentary” item is considered part of the sale of the meal and the tax collected on that meal from the customer is all that is owed. However, when a restaurant gives away free items not with a paid meal, whether that is a free appetizer, a birthday dessert, or bread at the table — you generally do not collect sales tax from the customer. However, Florida imposes a use tax on the restaurant itself on the cost of those items. The DOR's position is that the restaurant is the end consumer of those goods for tax purposes.
Employee meals follow a similar but slightly different rule. If a meal is truly free to the employee, no sales tax is due from the customer, but use tax is owed on the taxpayer’s cost of that meal. But if the meal is discounted — even slightly — sales tax is should be paid by the employee based on what was actually paid by the employee.
Q: Are gratuities and service charges subject to sales tax?
A: This is one of the most commonly mishandled issues in the industry. The answer depends entirely on how the charge is structured.
A voluntary tip left by the customer — whether cash or added by the customer on the credit card slip — is not subject to sales tax. It is the customer's own decision (optional) and not part of the "sales price" charged by the restaurant. The tip must also go to the employees, not the business to avoid being taxed.
However, when a restaurant automatically adds a tip to the bill — as many do for large parties or banquets — that mandatory charge can be subject to sales tax IF the amounts do not go to the employees. As any restaurant owner knows, a “mandatory charge” can become “optional” fi the customer complains. However, for other types of fees like corkage fees, setup fees, cover charges, credit card fees, and minimum charges – these are going to be taxable. This is a recurring audit issue that catches restaurant owners off guard, particularly those who operate event spaces or host large group dining.
Q: What about delivery? We use DoorDash and Uber Eats — how does that work?
A: Third-party delivery has become one of the biggest compliance problems in the restaurant industry right now, and the DOR has been actively auditing this area statewide.
Since 2024, most of the food delivery companies are now not only collecting Florida sales tax from customers, but they are also remitting that tax to the Department of Revenue. So, this means that while the delivered meal is subject to sales tax, the delivery companies are handling the sales tax. That means that sales through a food delivery company are exempt sales under the sale for resale exemption, as far as the restaurant is concerned. That is good news.
However, prior to mid - 2024, the food delivery companies were collecting the sales tax on delivery sales, but they were giving the sales tax to the restaurants. That means the restaurants were supposed to be reporting and remitting that tax on their sales tax returns. Far too many restaurant owners did not realize this and the tax was unremitted. We’ve represented a few hundred restaurants on audits that had this issue.
There is also a separate question about delivery fees. If the customer has no option to pick up the food and avoid the delivery fee, the delivery fee is part of the taxable sales price. If the customer could pick up the order without paying a delivery fee, and the fee is separately stated on the invoice, the fee may not be taxable. In the platform delivery context, the customer typically has no pick-up option through the delivery app — making the delivery charge taxable.
Many restaurants have discovered significant audit exposure from years of underreporting on third-party delivery sales. If you have been in this situation and want to clean it up before the DOR finds it first, a voluntary disclosure may be the best path forward.
Q: We buy food and supplies for the restaurant. Do we pay sales tax on those purchases?
A: It depends on the item and how it is used. Purchases of food products that will be resold to customers can generally be made tax-exempt using your Florida Annual Resale Certificate (Form DR-13). That exemption covers food ingredients, beverages, and other items that go directly into what you sell.
However, supplies that are consumed in the operation of the business — cleaning products, paper goods, silverware, chairs, tables, cooking equipment — are taxable purchases, and you owe either sales tax to the vendor or Florida use tax if you purchased them from an out-of-state vendor who did not charge Florida sales tax.
One area where restaurants routinely get hit in audits is on equipment purchases and repairs. If you purchase a piece of equipment for the restaurant, sales tax is generally owed. If you have equipment repaired, sales tax is owed on both the parts and the labor for the repair. Many restaurant owners do not realize they owe tax on repair labor — and a multi-year audit can generate a significant assessment on that alone.
Q: How does the DOR audit restaurants? What do they look for?
A: The DOR audits restaurants using a combination of your reported sales and third-party data. In particular, auditors routinely obtain credit card processing records directly from payment processors (called 1099K). Those records show gross sales by month, and auditors compare them against reported taxable sales on your DR-15 returns. If there is a gap — which there almost always is once complimentary items, non-taxed charges, and delivery platform issues are factored in — auditors assume the gap represents unreported taxable sales and assess accordingly.
Common issues auditors target in restaurant audits include: unreported or under-reported sales from third-party delivery platforms; mandatory gratuities and service charges not included in taxable sales; use tax on complimentary items; missing or expired resale certificates for food purchases; and use tax on out-of-state supply purchases.
The DOR also has the ability to use industry norms to estimate your sales if your records are inadequate. If your sales tax rate appears unusually low compared to similarly situated restaurants, expect scrutiny.
Q: I received a DR-840 audit notice. What should I do?
A: Do not go into a sales tax audit alone, and do not start pulling together records without first understanding what you are dealing with. The DR-840 is the official notice that the DOR intends to audit your business, and from the moment you receive it, the clock starts running and every communication you have with the auditor matters.
A Florida sales tax attorney can review the audit notice, help you understand your rights, advise you on what records to produce (and what not to produce unnecessarily), and represent you throughout the audit process. In many cases, a well-managed audit produces a significantly smaller assessment than what an unrepresented taxpayer ends up with.
If the audit has already resulted in a Notice of Proposed Assessment and you believe it is wrong, you have the right to protest. There are strict deadlines for filing a protest, and missing them can waive your appeal rights entirely. Acting quickly matters.
Q: What if I have been doing things wrong and want to fix it before I get audited?
A: Florida's Voluntary Disclosure Program allows businesses to come forward proactively, report unreported taxes, and generally receive a waiver of most penalties. It is one of the most underutilized tools available to business owners who know they have a problem but have not yet been contacted by the DOR.
The key requirements are that you must not already be under audit or investigation, and the disclosure must be truly voluntary. A sales tax attorney can help you navigate the program, quantify your exposure, and negotiate the terms of your disclosure in a way that limits your total liability as much as possible. In most cases, coming forward under voluntary disclosure is far less painful than being found in an audit.
Q: What other things might a restaurant be subject to sales tax on?
A: Several things come to mind here. Commercial cleaning services, pest control services, security services all come to mind as services a restaurant might typically spend money on that are subject to Florida sales tax. If you charge for parking, then parking is subject to Florida sales tax. Prior to 10/1/25, commercial rent was subject to sales tax. If you have events are your restaurant and charge and admission fee, then you need to be charging sales tax on that admission fee. Catering is also subject to sales tax just as if the food was sold at your restaurant.
About the Author
James Sutton is a Florida licensed CPA and attorney as well as a shareholder in Moffa, Sutton, & Donnini, PA. Mr. Sutton is in charge of the Tampa office of the firm and practices almost exclusively in the area of Florida Sales & Use Tax Controversy. Mr. Sutton handles audits, protests, litigation, criminal cases, revocations, collections, and consulting engagements all in the area of sales tax. Mr. Sutton is an active member of the FICPA, AICPA, AAA-CPA, and FIADA. Mr. Sutton is also the State and Local Tax Chairman for the AAA-CPA and president of the Florida AA-CPA. You can contact James at 813-775-2131 or JamesSutton@FloridaSalesTax.com.
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Additional Resources
For more information on Florida sales tax issues affecting restaurants, please see the following articles published on our website:
FL Sales Tax – Restaurants: What Every Owner Needs to Know Before the DOR Knocks, published April 2026, by James Sutton, CPA, Esq.
Florida – Restaurant Sales and Use Tax Audits, published November 2020, by James Sutton, CPA, Esq.
Restaurants Florida Sales and Use Tax Handbook, published January 2018, by James Sutton, CPA, Esq. and David Brennan, Esq.
FL DOR Targets Restaurants for Sales Tax Audits, published December 2019, by James Sutton, CPA, Esq.
Florida Sales Tax – Is Labor Taxable?, published October 2025, by James Sutton, CPA, Esq.
HELP! – Florida Sales Tax Audit, published January 2026, by James Sutton, CPA, Esq.
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