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TITLE 34PUBLIC FINANCE
PART 1COMPTROLLER OF PUBLIC ACCOUNTS
CHAPTER 3TAX ADMINISTRATION
SUBCHAPTER HHMIXED BEVERAGE TAXES
RULE §3.1001Mixed Beverage Gross Receipts Tax

  (7) Receipts from cover charges, door charges, entry fees, or admission fees that are for entertainment, food specials, and other purposes, and receipts from the sale of temporary membership cards. Sales tax as provided by §3.298 of this title (relating to Amusement Services) is due on these receipts.

  (8) Bad debts. For more information on bad debt refunds or credits, refer to subsection (n) of this section.

  (9) Mixed beverage sales taxes. Mixed beverage sales taxes are not part of the mixed beverage gross receipts tax base. A permittee who sells mixed drinks with mixed beverage sales tax included in the sales price should deduct the mixed beverage sales tax before calculating the mixed beverage gross receipts tax base.

(g) Alcohol loss. No mixed beverage gross receipts tax is due on alcoholic beverages destroyed due to spillage or breakage.

(h) Inventory for cooking. No mixed beverage gross receipts tax is due on alcoholic beverages used in cooking.

  (1) Purchases. Purchases of alcoholic beverages used in cooking must be documented either:

    (A) by purchase invoices that have such beverages clearly denoted by either the seller or purchaser; or

    (B) by separate purchase invoice.

  (2) Storage. Alcoholic beverages used in cooking may be stored with regular bar stock or in a separate storage area.

  (3) Use. The withdrawal from inventory of alcoholic beverages used in cooking must be recorded at the time of withdrawal on a service check or other permanent source record. Use tax as provided by Tax Code, Chapter 151, is not due on alcoholic beverages used in cooking.

(i) Mandatory gratuity charges.

  (1) Reasonable mandatory gratuity charges are excluded from the mixed beverage gross receipts tax base if they are:

    (A) separated from the sales price of the alcoholic beverage served;

    (B) identified as a tip or gratuity by any reasonable means, including such terms as service fee or service charge; and

    (C) disbursed to qualified employees. Any portion of a reasonable mandatory gratuity charge that is retained by the employer is included in the mixed beverage gross receipts tax base.

  (2) Mandatory gratuity charges in excess of 20%. If a mandatory gratuity charge exceeds 20% then the entire mandatory gratuity charge is included in the mixed beverage gross receipts tax base regardless of how the gratuity is disbursed.

(j) Record requirement. Records required by the comptroller for mixed beverage permittees must be kept for a minimum of four years and throughout any period in which any tax, penalty, or interest may be assessed, collected, or refunded by the comptroller, or in which an administrative hearing or judicial proceeding is pending. Records must be made available upon request within a reasonable time for examination by the comptroller or authorized agents or employees. The records, in general, must be contemporaneous and must reflect the total gross receipts from the sale or service of alcoholic beverages and those associated services that are subject to the gross receipts tax, as provided by subsections (c), (d) and (e) of this section. Records may be written documents or their electronic equivalents. Permittees must contact the Texas Alcoholic Beverage Commission for information concerning Texas Alcoholic Beverage Commission record keeping requirements.

(k) Source records.

  (1) The information described in this subsection is required to be printed on a source record in a manner that makes such information clearly evident or by a system of symbols (codes) if such symbols and their meaning are printed on the source record or maintained on the licensed premises.

    (A) Each individual serving of an alcoholic beverage and the price charged. When using service checks, it is permissible to make one entry on a service check for more than one individual serving if all of the servings are of the same type (e.g., 3 Scotch & Water @ $2.00 = $6.00). If all of the servings are not of the same type, a separate entry must be made on the service check for each type of service (e.g., 3 Scotch & Water @ $2.00 = $6.00, 2 Rum & Coke @ $2.00 = $4.00). When using a cash register only, regardless of the type of service, each individual serving must be rung up separately. When using a combination of service checks and a cash register, it is not necessary to itemize each serving on the cash register tape if all the required information is shown on the service check.

    (B) For an alcoholic beverage not served as an individual separate serving, the unit of the serving used and the price charged. When using service checks, units of servings that are more than an individual separate serving shall be recorded as such (e.g., 2 pitchers of beer @ $3.25 = $6.50, 1 pitcher of daiquiri @ $6.00 = $6.00). When using a cash register only, each unit of serving which is more than an individual separate serving must be rung up separately, with the price list identifying the unit of serving. When using a combination of service checks and a cash register, it is not necessary to itemize each serving on the cash register tape if all the required information is shown on the service check.

    (C) Each separate serving or other unit shall be clearly identified as to the kind of drink (e.g., daiquiri, tequila sunrise) or class of beverage (e.g., beer, wine, whiskey). If a cash register does not have sufficient keys for the classification, the price list used for identifying the units of servings must also identify the kinds of servings.

    (D) The date of the transaction. For this purpose the "date" begins as of 3:00 a.m. one day and continues until 3:00 a.m. the next day.

    (E) Complimentary alcoholic beverages, which shall be recorded on service checks only. A check must be prepared for each individual or party served. The check should be prepared as if the service of the complimentary alcoholic beverage was a normal sale and then clearly marked as being complimentary. The service checks should be grouped daily and filed with the daily summary showing the information on the summary as required by subsection (l) of this section.

    (F) Mandatory gratuity charges that exceed 20% of the charge for alcoholic beverages must be recorded and identifiable on a source record. A reasonable mandatory gratuity charge must be recorded and identifiable on the source record only if the gratuity is disbursed to recipients other than qualified employees, including, for example, owners, club managers with no direct involvement in the particular event, janitorial help, chefs, cashiers, and dishwashers. Voluntary gratuities are not to be recorded on a source record.

  (2) Source records shall be maintained in sequence by date.

(l) Daily Summaries. Each permittee must maintain a daily summary that includes the following information:

  (1) all information required to be recorded on source records;

  (2) complimentary alcoholic beverages dispensed, showing the number of services, type of service, kind of drink, and normal selling price;

  (3) alcoholic beverages that were lost through theft, showing the number of containers lost by size, brand, and class. The theft must be reported to the proper police department and must be substantiated by the report of such police department;

  (4) alcoholic beverages that were lost through a disaster, showing the number of containers lost by size, brand, and class. The disaster must be reported to the comptroller;

  (5) alcoholic beverages that were lost through breakage or spillage, showing the number of containers lost by size, brand, and class or type of drink and size. A written report must be prepared at the time of the loss;

  (6) alcoholic beverages that were lost through the cleaning, servicing, or repair of dispensing equipment lines, showing the amount lost by class or type of drink and supported by:

    (A) reports prepared by the permittee at the time of the malfunction; or

    (B) repair/service invoices prepared by the repair/service company;

  (7) alcoholic beverages taken from inventory for use in cooking;

  (8) cover charges, door charges, entry fees, or admission fees. Cover charges, door charges, entry fees, and admission fees are subject to sales tax as provided by §3.298 of this title, unless the Texas Alcoholic Beverage Commission determines that the cover charges, door charges, entry fees, or admission fees collected are in violation of the Texas Alcoholic Beverage Commission rules or regulations; and

  (9) information pertaining to changes made during the month concerning prices, glass sizes, bulk machine (e.g., margarita machine) recipes, ounces per serving, parties, or promotions.

(m) Purchase invoices.

  (1) A record of all alcohol and alcoholic beverages purchased or received showing the date, the name and address of the person from whom purchased or received, the location from where shipped, the location received, the quantity and kind of beverage (brand and class) received, and the total price paid for each brand and class received.

  (2) Alcoholic beverages used in mixing drinks as the secondary ingredient (e.g., vermouth, triple sec) must be supported by purchase invoices which have such beverages clearly denoted by the purchaser.

(n) Bad debts refund or credit.

  (1) A permittee may take a credit against taxes to be paid to the comptroller or claim a refund on taxes paid to the comptroller for bad debt on sales.

  (2) To establish bad debt credit or refund, a permittee's records must show:

    (A) date of sale or service;

    (B) name and address of purchaser;

    (C) source records of sale or service;

    (D) evidence that the gross receipts tax was paid to the comptroller;

    (E) all payments or credits applied to the account of the purchaser;

    (F) a designation that the account is a bad debt; and

    (G) evidence that the account has been or will be claimed as a bad debt deduction for federal income tax purposes.

  (3) To determine the amount of bad debt allowance for tax, all payments or credits in reduction of a customer's account must be applied ratably between alcoholic beverages and other goods sold to that customer.

  (4) If all or part of the amount claimed as a bad debt is later collected, the amount collected must be reported as a taxable receipt in the reporting period in which the collection was made.

  (5) Accounts may not be labeled as a bad debt for the purpose of delaying the payment of the mixed beverage gross receipts tax.

(o) Audit and examination of tax account.

  (1) Determination of tax liability. In examining the tax account of any permittee, the comptroller may compute and determine the amount of gross receipts tax liability based on reports filed with the comptroller, records or information obtained from the permittee, records or information obtained from any seller who furnished alcoholic beverages to the permittee, or such other information as may come to the attention of the comptroller. The comptroller presumes that the disposition of all alcoholic beverages purchased by the permittee is taxable until established otherwise.

  (2) Access to all information. The comptroller may examine all books, records, papers, documents, supplies, and equipment of a permittee. Additional records that may be required to be presented include, but are not limited to, the following:

    (A) all procedure and operation manuals;

    (B) all financial ledgers, journals, and registers;

    (C) all financial statements prepared internally or by an outside bookkeeper, accountant, or certified public accountant;

    (D) all bank statements;

    (E) all federal income tax returns; and

    (F) all state and federal employment tax returns and supporting documents.

  (3) Failure to maintain or make records available for audit. In examining the tax account of each permittee, if the comptroller finds that the permittee has failed to maintain or make available the records required by any regulation of the comptroller, the comptroller may compute and determine the amount of the gross receipts tax liability from any available source or records, and estimates of the tax liability may be made by use of any available records for any period for which the permittee has failed to maintain records or file a report with the comptroller. In the event records are not made available, the comptroller will presume all alcohol purchased was sold. In the absence of records or evidence to the contrary, the comptroller may accept an average pour figure of 1.25 ounces per serving of liquor.


Source Note: The provisions of this §3.1001 adopted to be effective April 3, 1996, 21 TexReg 2475; amended to be effective December 13, 1999, 24 TexReg 11122; amended to be effective October 6, 2008, 33 TexReg 8398; amended to be effective April 28, 2015, 40 TexReg 2276

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