Dancing with the Oklahoma Tax Commission

Before we get started, please watch this short video clip. Remember, "silence is golden" in the theater.. Get it? Good. Ok, now back to business. For the past few days, Cafe Evoke Coffee Catering has been doing a bit of a tango with the Oklahoma Tax Commission. They are all great over at that place - I should say now - and they did their best to help us out. But.... When we first moved to Oklahoma, I was a good entrepreneur and called state and federal offices to be sure we were up to code and ready for business in Oklahoma. Things have been pretty smooth but the sales tax thing has been a challenge. See, in the state of Montana, we did not have to worry about this which was nice. Now we do. I called and talked with Jason at the Commission and was told that, if we were charging our customers for a service and paying full retail + tax for our milk and other supplies, we did not have to apply for a permit or pass along tax to our customer. Great! I was excited. Well, I decided I should get back on the phone again just to be sure and found out that we do in fact need to charge sales tax, maybe. Here is what our conversation looked liked: Services are not taxable in this state which is what we provide but our services are. So, services are taxable? No, but yours are. Ok, so why do I not pay for the service of a mechanic fixing my car? Services are not taxable. What is the difference? The big difference is that your service involves food. So services are taxable?...... See my tango? Here is what the "book of rules" says about Caterers in Oklahoma: Part 5. "C" 710:65-19-40. Caterers (a) The term "caterer" means a person engaged in the business of preparing or serving meals, food, and drinks without regard to whether the service is at the caterer's place of business, the customer's location, or some other location, usually for a specified price for a specific menu or offering, but not off a menu to the public. The term does not include wait persons hired directly by a caterer's customer, whether hired by the hour, by the day, or for the event (b) Sales tax must be collected, reported and remitted on all charges made by caterers for serving meals, food, and drinks, inclusive of charges for food, the use of dishes, silverware, glasses, chairs, tables, etc.,used in connection with serving meals, and for the labor of serving meals. Sales tax must be collected, reported and remitted on charges made by caterers for the rental of dishes, silverware, glasses, etc., even though no food is provided or served by the caterers in connection with such rental. [Source: Amended at 15 Ok Reg 2827, eff 6-25-98] The part that requires caterers in Oklahoma to charge sales tax on the service aspect of the business is this: "...for the labor of serving meals." (I know I know, coffee is not a meal) So, I'm glad we got through all of that. It took about a week for the Commission to even figure it all out so I do not feel to bad about not totally understanding things. That being said, there is now quite a bit of work ahead for me as I figure out sales tax per city that we cater in - Luther, Oklahoma City, Edmond, Norman, More, El Reno, etc. This does put us now as an exempt company and we do not have to pay sales tax on our material which is nice because it will allow us a chance to lower our prices and also include tax without making our services much more for our customers. So, we will need to begin rethinking our prices and making sure all things are covered and our customers are not out to much in the end. Thanks to Amy at the Commission for taking care of this for me. She did a great job and communicated well - a trait I wish all in government and business did better. My feet hurt... ...be bold Our friends at Ideal Bite have free, fun eco-living tips! Delivered daily via email!