Listed below are several other types of income that can be received by restaurants and other similar businesses. The tax consequences of these types of income are discussed under each item.
Banquet room rentals
Restaurants and similar businesses often rent out part of their facilities to others for banquets, parties, meetings, etc. In most cases, if you make a separate charge for the use of a banquet or meeting room, retail sales tax does not apply. Instead, this income is subject to B&O tax under the service and other activities classification. However, banquet/meeting facilities provided by a lodging business (hotel, motel, etc.) are subject to sales tax.
If a single charge is made for both a banquet room and meals/drinks (the banquet facility charge is not separately stated), then the total charge is subject to retailing B&O tax and retail sales tax must be collected.
Cash overages and shortages
Shortages may not be deducted from the gross business income unless the business can demonstrate that the shortage was a result of an error in recording sales. Overages are assumed to be a part of the gross business income and must be reported as such.
The Department has published an Excise Tax Advisory on this subject: ETA 3012.2009. Please refer to that document for more information.
Corkage fees
Charges for customers to bring their own bottle of wine instead of purchasing the wine from the restaurant are typically called "corkage fees." These fees are not subject to retail sales tax. However, the fees are subject to B&O tax under the service and other activities classification.
Juke box
Gross income from jukeboxes is subject to the service and other activities B&O tax.