Quick Service Restaurants (QSR) Sales Tax Compliance Report: New Options to Consider During a Sales Tax Audit
The Ohio Department of Taxation (“Department”) recently held a series of interested party meetings concerning sales tax compliance for Quick Service Restaurants (“QSRs”), which have received increased scrutiny from the Department recently, and issued a 154-page report intended to provide guidance by discussing the applicable sales tax statutes for predetermined and prearranged agreements for sales tax liability. The QSR Sales Tax Compliance Report discusses additional audit options that QSR vendors may utilize, as well as a new “restaurant compliance program,” which reduces a QSR’s likelihood of being audited and allows a waiver of the 15% penalty if an audit is performed. For audits initiated by the Department, a modified test check, a managed test check, or an enhanced statistical analysis agreement will be offered, in addition to the standard test check option.
For restaurant-initiated audits, a QSR may enter into a prearranged agreement that establishes a set percentage for reporting taxable sales. As of November 3, 2014, the percentage is determined either by a test check or by using an alternative method agreed to by the Department and the QSR.
QSRs must make sure that any agreement executed during the course of the audit is fair and reasonable. It is possible to even contest the results of an executed agreement if they are incorrect based upon erroneous assumptions, including incorrect statistical analysis.
If you have questions regarding the recent QSR Sales Tax Compliance Report or need help navigating through an Ohio sales tax audit or negotiating a sample agreement with the Department, please contact Steve Dimengo, Rich Fry, or Casey Davis.