Georgia – Taxability of Food Provided to Employees

SALT Report 1469 – The Georgia Department of Revenue amended a sales and use tax rule regarding meals sold or provided without charge to employees to conform to the Streamlined Sales and Use Tax Agreement.  Effective April 4, 2012, the total sales price for food charged to an employee by an employer will be subject to Georgia sales tax.
The following examples illustrate the application of the Georgia sales and use tax to certain transactions regarding food and food ingredients:
  • An employer allows an employee to purchase a $15.00 meal from the menu at a 50% discount. The employer is required to charge Georgia sales tax to the employee on $7.50.
  • An employer provides a meal to an employee and $5.00 is considered a part of the employee’s compensation. The employer is required to charge sales tax to the employee on $5.00.

Food Provided Without Charge by the Employer

Food and food ingredients provided by an employer without charge to an employee are taxable to the employer who must remit use tax on the cost. The following examples illustrate the application of sales and use tax to these transactions:

  • An employer provides a $15.00 meal off the menu at no charge to an employee. The employer is responsible for use tax on the cost of the food purchased to prepare the meal.
  • An employer provides a meal and beverage that is prepared especially for employees. The meal and beverage is provided at no charge to the employee. The employer paid Georgia sales tax on the items used to prepare the meal and beverage when purchased from the supplier. No additional tax is due from the employer on the items used to prepare the employee’s meal and beverage.
  • An employer allows an employee to have soft drinks during work hours without charge. The employer purchased the soft drinks under terms of resale. The employer will be responsible for use taxes on the cost price of all soft drinks provided to employees.

Additionally, if the exact cost of the employee’s food or food ingredients is not represented in the employer’s records, the cost shall be estimated to be 50% of the retail sales price of the food and food ingredients.

For Further Information:

Georgia Department of Revenue – 560-12-2-.65 Meals for Employees