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Prepared Food and Beverage (Meals) Tax

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Prepared Food and Beverage (Meals) Tax

Effective July 1, 2012, the City of Roanoke's Prepared Food and Beverage Tax Rate is five percent (5%).




There is also a State Sales Tax imposed on Prepared Food and Beverages at the rate of five point three percent (5.3%). Contact the Virginia Department of Taxation for additional information.


The following is an on-line version of the Guidelines for the Tax on Prepared Food and Beverages. This document may also be downloaded as a .pdf.

GUIDELINES FOR THE TAX ON PREPARED FOOD AND BEVERAGES
The Prepared Food and Beverage Tax (Meals Tax) was established by Ordinance No. 28631 and was adopted by the City Council on May 18, 1987. In the case of any conflict between these guidelines and the provisions of the City Code (1979), as amended, or other ordinances, the Code or ordinance will prevail. You may also access the Prepared Food and Beverage Tax Guidelines which requires the free .

WHAT IS THE PREPARED FOOD AND BEVERAGE TAX?
    Effective August 1, 1987, a tax was levied on the purchase of all prepared food and beverages served in and from these places of business:

    • Restaurants
    • Eating Houses
    • Dining Rooms
    • Eateries
    • Grills
    • Bowling Alleys
    • Coffee Shops
    • Drug Stores
    • Cafeterias
    • Lunch Wagons/Lunch Trucks
    • Cafes
    • Pushcarts
    • Snack Bars
    • Carry-Out
    • Lunch Counters
    • Caterers
    • Delicatessens
    • Gas Stations
    • Confectioneries
    • Food Concessions
    • Bakeries
    • Motels
    • Hotels
    • Doughnut Shops
    • Grocery Store Delicatessens
    • Carnivals
    • Ice Cream Stores
    • Dinner Theaters
    • Movie Theaters
    • Festivals
    • Bed & Breakfast Inns
    • Private Clubs
    • Convenience Stores
    • Recreation Clubs
    • Non-Profit Organizations
    • Concession Stands
    All prepared food and beverages are taxable whether intended to be consumed on the seller's premises or not.

    The rate of tax is five percent (5%) of the gross amount paid for the food and beverages.

    For the purpose of this tax, FOOD is defined as: Any and all edible refreshments or nourishment, liquid or otherwise including alcoholic beverages, except for snack foods, purchased in or from the places of business as listed above.

    All sellers must register by completing a Registration for Tax Collection Form.

    Please refer to the Exemptions section of these guidelines for details on the purchases of foods that are exempt from this tax.

WHO COLLECTS THE PREPARED FOOD AND BEVERAGE TAX?
    All businesses that come under the definition of restaurant or caterer and that are listed above must collect this tax from their customers when the charge for the food and beverages is paid. The tax is to be paid whether the customer pays by cash or by credit card. The seller adds the tax to the gross amount and collects the total from the customer.
    SELLERS MUST NOT in any way suggest or indicate that they will relieve the customer of payment of part or all of this tax. The customer alone must pay the total tax amount due.
ARE TIPS TAXABLE?
    In the past, tips were taxable when added to the price of food or automatically added onto the bill. An amendment to the Code of Virginia effective July 1, 2006 states that gratuity, service charges or tips that are mandatory or automatically added to the price of a meal by the seller are not subject to the Meals Tax unless the service charges or tips are in excess of 20%. This exemption only applies if the service charge added to the price of the meal does not exceed 20%. Those service charges or tips that are 20% or more and added to the price of the meal remain subject to the Meals Tax.
MONTHLY REMITTANCE:
    The seller must complete and sign a monthly report indicating the amount of the food and beverage charges collected and the tax required to be reported. All forms will be provided at NO CHARGE with a return envelope. If the forms are delivered in person, they must be received by the City Treasurer's Office on or before the 20th of the month. If the forms are mailed, they must be postmarked on or before the 20th of the month.

    In either case, if the 20th of the month falls on a weekend or holiday, the next business day becomes the due date.
RECORDS RETENTION:
    The seller must retain for three years auditable records of:
      1. Gross Receipts for all food and beverages, records of food and beverage purchases, records of spoilage, waste or any other purchases to support the food and beverage operation.
2. Amount charged the buyer for each purchase.
3. Date of each sale, deposit records, cash register tapes, voids, daily worksheets, etc.
4. The amount of tax collected from each sale.
5. Exempt sales.
    CLOSING OF A BUSINESS:
      If you should close your business or that part of your business that is applicable to this tax, you must IMMEDIATELY complete your tax remittance and pay all taxes due. You must also complete the reverse side of the remittance form and list the New Owner's Name and Address, if known and applicable.
    CATERING BUSINESSES LOCATED OUTSIDE OF THE CITY OF ROANOKE:
      On February 4, 1991, Ordinance 30394-20491 amended the Code of the City of Roanoke to provide that the situs for meals taxation is the locality in which the sale is made. Section 32-284 states that "the tax is levied and imposed on the purchaser of all food sold in the city . . . or by a caterer regardless of place of delivery or consumption." Therefore, catering businesses located inside the City of Roanoke must collect the tax and remit it to the City even if the food is delivered to a destination outside of the City of Roanoke. However, when mobile trucks, booths or caterers with businesses located outside the City of Roanoke set up to sell or prepare food in the City of Roanoke, they are liable to the City for the tax.

      Catering businesses located outside of the City of Roanoke are not required to collect and to remit the tax to the City unless they establish a point of sale within the City such as a mobile truck, booth, pushcart, etc.. or they prepare and cook food within the City.

      The Prepared Food and Beverage Tax does not apply to catering services such as rental of tablecloths, napkins, flower arrangements, candles, etc....
    EXEMPTIONS:
      Snack Foods are not taxable by this Ordinance.
      The term "snack" includes items such as:
      • Unopened bottled or canned drinks (not served with meals in a restaurant)
      • Chewing Gum
      • Candy
      • Popcorn (packaged for home consumption)
      • Peanuts and other nuts
      • Unopened bags of prepackaged chips, cookies, doughnuts, crackers, nabs, popcorn etc. . .
      • And other items of a similar nature consumed as a snack.
      The following purchases of food are not subject to this tax:
      • Foods furnished by restaurants to employees as part of their compensation when no charge is made to the employee.
      • Foods sold by non-profit day care centers, public or private elementary or secondary schools or foods sold by any college or university to its students or employees.
      • Foods for use or consumption by the Commonwealth, any political subdivision of the Commonwealth, or the United States.
      • Foods furnished by a hospital, medical clinic, convalescent home, nursing home, home for the aged, infirm or handicapped or other extended care facility to residents thereof.
      • Foods furnished by non-profit charitable organizations to the elderly, infirm, handicapped, or needy persons in their homes or at central locations.
      • Foods sold by non-profit, educational, charitable or benevolent organizations on an occasional basis.
      • Any other sale of food ordered exempt by the Virginia Retail Sales and Use Tax Act.
    PENALTIES:
      If the tax remittance and report is not received in the City Treasurer's Office a 10% penalty will be assessed if the failure is not for more than 30 days and a 20% penalty will be assessed if the failure is not for more than 60 days. The penalty will be not exceed 25% and the minimum penalty is $2. The penalty for filing a false or fraudulent report is fifty percent (50%) of the amount of tax due.

      Failure to comply with any provision of the Tax on Prepared Food and Beverages Ordinance constitutes a Class 1 misdemeanor. Agreements to pay delinquent taxes in installments does not relieve you of criminal liability until the taxes and penalties are paid in full.
    GROCERY AND CONVENIENCE STORES:
      There are possible administrative difficulties with items sold in grocery and convenience stores in determining the applicability of this tax to their sales. Fairness dictates that the Prepared Food and Beverage Tax is to be applied to those sales in businesses (other than restaurants) that are substantially similar to and in direct competition with sales of restaurants. It is important to note that the tax is collected from the purchaser of all food served, sold or delivered in the City in or from a restaurant, whether prepared in such restaurant or not, or by a caterer regardless of place of delivery or consumption.

      The Prepared Food and Beverage Tax does not apply to groceries, but it does apply to grocery stores and convenience stores that sell prepared food and beverages which directly compete with restaurants. Lists of taxable and non-taxable items are provided to aid in the determination of taxability of various foods. Billings & Collections will be pleased to work with the owners of grocery and convenience stores to answer any questions and to facilitate the collection of this tax. Please call (540) 853-6826 or (540) 853-6828 if you have any questions.
    DEFINITIONS:
      CATERER: Any person who furnishes food on the premises of another for compensation.

      FOOD: Any and all edible refreshments or nourishment, liquid or otherwise, including alcoholic beverages, purchased in or from a restaurant or from a caterer, except snack food.

      PURCHASER: Any person who purchases food in or from a restaurant or from a caterer.

      RESTAURANT: Any place in or from which food is sold in the City, including, but not limited to, any restaurant, dining room, grill, coffee shop, cafeteria, cafe, snack bar, lunch counter, delicatessen, confectionery, bakery, eating house, eatery, drugstore, lunch wagon or truck, pushcart or other mobile facility from which food is sold, public or private club, resort, bar or lounge. The word "restaurant" shall not mean a grocery store or supermarket except for any space or section therein designated as a delicatessen or for the sale of prepared sandwiches, delicatessen food or food prepared in a delicatessen.

      SELLER: Any person who sells food in or from a restaurant or as a caterer. (See Section 32-283 for an expanded definition)

      SNACK FOOD: Unopened bottles or cans of carbonated soft drinks, chewing gum, candy, popcorn, peanuts and other nuts; unopened, pre-packaged cookies, doughnuts, crackers and potato chips, and other items of essentially the same nature and consumed for essentially the same purpose.

      OCCASIONAL SALE: A sale by a person (seller) who is engaged in sales on three or fewer separate occasions within one calendar year.

      PERSON: Any individual, corporation, company, association, firm, partnership or any group of individuals acting as a unit.
    EXAMPLES OF ITEMS NOT TAXABLE:
    • Unopened bottle, can or six-pack of beer or bottled wine purchased for off premises consumption.
    • Chewing gum purchased at a restaurant.
    • Church supper prepared by a church on an occasional basis.
    • Cold unopened drink from a case at a convenience store.
    • Food provided to a patient in a hospital or nursing home
    • Food purchased as part of a rescue squad or church fund-raising effort on an occasional basis.
    • Frozen TV dinner or grocery item purchased in a grocery store.
    • Pre-sealed, pre-packaged sweet roll purchased from a snack bar or a cafeteria. For example, "Tasty Kake" cinnamon bun, "Little Debbie" brownies or "Rainbow" honey buns.
    • Peanuts or other nuts from a peanut or candy shop.
    • Candy from a movie theater.
    • Vending machine sales.
    • Popcorn packaged for home consumption
    • Luncheon Meats and Cheese sold from a delicatessen. Salads (potato salad, macaroni salad) sold by the pound from a delicatessen
    • Uncooked pizzas from a delicatessen.
    • Whole/half cakes, pies, breads, brownies, cookies, doughnuts, pastries and any similar bakery items that are pre-sealed and pre-packaged.
    • Freezer cakes from a grocery store delicatessen or bakery
    • Doughnuts that are in unopened, pre-sealed packages
    • Potato salad or cole slaw from a delicatessen or grocery store delicatessen
    EXAMPLES OF TAXABLE ITEMS:
    • Baked, fried, or barbecued turkey, chicken, seafood or ribs from a restaurant, delicatessen or grocery store delicatessen for on or off premises consumption.
    • Beer, wine or mixed drinks at any bar, tavern, or restaurant.
    • Beer, wine or mixed drinks delivered to hotel or motel rooms or any "room service" food.
    • A church supper provided by a caterer.
    • Cup of coffee.
    • Doughnuts served and eaten on premise (non packaged).
    • Food and beverages at a country club or private club.
    • Food and beverage at a company or hospital cafeteria.
    • Fountain drink from a fast food chain or movie theater.
    • Hot dog from a convenience store or pushcart.
    • Ice cream cone, ice cream cakes, ice cream sundaes or cotton candy.
    • A salad from a delicatessen or grocery store delicatessen.
    • Handpacked ice cream or yogurt sold by the pint, quart, 1/2 gallon, etc.
    • Sandwich from a case at a service station, truck, pushcart, delicatessen, grocery store delicatessen, or convenience store.
    • Nachos with cheese served from a service station, truck, pushcart, delicatessen, grocery store delicatessen, convenience store, or snack bar.
    • Slice of cake or pie, loose cookies, bagels that are not prepackaged.
    • Cheese balls from a delicatessen or grocery store delicatessen.
    FOR MORE INFORMATION CONTACT:
      Department of Finance
      Noel C. Taylor Municipal Building
      215 Church Avenue, SW, Room 252
      Roanoke, VA 24011-1529
      (540) 853-6826 or (540) 853-6828

      (540) 853-2458 FAX
      roanokeva.gov/localtax