What Records Must a Bar or Restaurant Keep to Survive a Mixed Beverage Audit?

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The Comptroller’s mixed beverage rule, 34 Texas Administrative Code Section 3.1001, prescribes the records: a source record for every sale showing each serving and its price, a daily summary, and written documentation at the time of every complimentary drink, loss, theft, disaster, line cleaning, and use in cooking. Together with purchase invoices and inventory counts, these must be kept for at least four years and for as long as any tax matter for the period remains open. They are what an auditor uses to test reported sales against alcohol purchased.

Source records for every sale

A source record is a dated customer service check or ticket, a dated register receipt coded with the required information, or an equivalent the Comptroller approves. The rule requires it to show:

  • each serving and its price. A service check may group identical drinks on one line, such as three of the same cocktail; different drinks need separate lines. On a register alone, each serving is rung up separately;
  • the kind of drink or class of beverage, such as a named cocktail, beer, wine, or whiskey, with a price list that identifies servings if the register lacks enough keys;
  • the date, where a business day runs from 3:00 a.m. to 3:00 a.m.; and
  • complimentary drinks, recorded only on service checks, written up as a normal sale and clearly marked complimentary, with a check for each person or party served.

Mandatory gratuities over 20 percent of the alcohol charge must also be recorded on the source record. Source records are kept in date order.

The daily summary

Each permittee keeps a daily summary with the information from the source records and entries for:

Item Documentation the rule requires
Complimentary drinks number of services, type of service, kind of drink, and normal selling price
Theft containers lost by size, brand, and class, reported to the police and supported by the police report
Disaster containers lost by size, brand, and class, reported to the Comptroller
Breakage or spillage containers lost by size, brand, and class, with a written report prepared at the time of the loss
Line cleaning, servicing, or repair the amount lost by class or type, supported by a report made at the time or the service company's invoice
Alcohol used in cooking recorded when withdrawn from inventory, on a service check or other permanent source record
Cover charges, door charges, entry fees, or admission fees listed in the daily summary as the rule directs

Purchase and inventory records

An audit compares what the business bought with what it reported selling, using purchase data reported by wholesalers and distributors. The business’s own purchase invoices, together with opening and closing inventory counts, are what let it check that comparison. The Comptroller’s general audit guidance also lists records an auditor may request, including sales and purchase invoices, ledgers and journals, financial statements, federal income tax information, the working papers used to prepare tax returns, and electronic data.

How long to keep them

Rule 3.1001 requires mixed beverage records to be kept for at least four years, and throughout any period in which tax, penalty, or interest may be assessed, collected, or refunded, or an administrative or court proceeding is pending.

Why these records decide the audit

The Comptroller’s auditor manual describes records as complete when the taxpayer-provided records are available and reliable for the audit period, and notes that a few missing daily records do not make the records incomplete. With complete sales records and purchase invoices, the audit tests the business’s own records rather than estimating. Without them, the rule allows an estimate from any available source and presumes all alcohol purchased was sold, and every loss that was not documented at the time counts as a sale.

Setting up the routine

  1. Configure the point-of-sale system to itemize each drink by type and price, flag complimentary drinks, and use the 3:00 a.m. day boundary.
  2. Use loss forms for breakage, spillage, line cleaning, and cooking, filled out by the manager on duty when the loss happens.
  3. Count inventory at regular intervals, at least at the start and end of each month.
  4. Reconcile monthly, comparing purchases, inventory change, and reported sales by beverage class.
  5. Store everything for at least four years, longer if any audit or appeal is open.

This article is general information about Texas alcoholic beverage law, not legal advice, and reading it does not create an attorney-client relationship. Statutes and TABC rules change; confirm current requirements with the Texas Alcoholic Beverage Commission, the relevant city or county, or a licensed Texas attorney before acting.

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