How Do Mixed Beverage Taxes Affect Menu Pricing, and What Disclosure Rules Apply on the Customer Check?
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The two mixed beverage taxes land on the menu differently. The gross receipts tax is the permittee’s own tax and has to be built into the drink price, because it may not be charged to the customer. The mixed beverage sales tax may be passed to the customer, either added to the check or included in the menu price. The Tax Code lists the ways each tax may be described on a receipt, and the Comptroller’s rule bars any charge labeled a “Tax Reimbursement.”
Pricing each tax
- Gross receipts tax: inside the price. Tax Code Section 183.0212(c) says the gross receipts tax “may not be separately charged to or paid by the customer.” It is a cost the business covers from its drink revenue, so menu prices have to be set with it in mind.
- Mixed beverage sales tax: the permittee’s choice. It may be added to the customer’s bill or included in the menu price. A business that includes it in the price should keep records showing that its alcohol prices include the tax, so reported sales can be separated into price and tax.
What a receipt may say about the sales tax
Tax Code Section 183.042 lets a permittee’s invoice, bill, service check, ticket, or other receipt include any of these:
- a statement that the mixed beverage sales tax is included in the sales price;
- a separate statement of the amount of mixed beverage sales tax on the item;
- a statement of the combined mixed beverage taxes, meaning the gross receipts tax the permittee will pay on the item plus the mixed beverage sales tax on it; or
- a statement of the combined amount of the mixed beverage sales tax and the general sales tax on all items on the receipt.
What a receipt may say about the gross receipts tax
Section 183.0212 allows two informational statements:
- a separate statement disclosing the amount of gross receipts tax the permittee will pay on the item, which must clearly disclose that it is payable by the permittee; or
- a combined statement of the gross receipts tax the permittee will pay and the mixed beverage sales tax on the item.
The Comptroller’s rule, 34 Texas Administrative Code Section 3.1001, describes the informational statement as one that is not shown as part of the charges to the customer, and it prohibits any charge labeled a “Tax Reimbursement” on a receipt, bill, or invoice.
Sample receipt lines (illustrative wording)
| Line on the check | Allowed? | Basis |
|---|---|---|
| "Mixed beverage sales tax included in price" | yes | Section 183.042, statement that the tax is included |
| "Mixed beverage sales tax [amount]" | yes | Section 183.042, separate statement of the tax on the item |
| "Mixed beverage taxes [amount]" covering the gross receipts tax the permittee will pay plus the mixed beverage sales tax | yes, as a statement; the gross receipts part is not added to the amount due | Section 183.042, combined statement |
| "Gross receipts tax paid by [business name]: [amount], for your information, not charged to you" | yes, if it is not part of the amount due | Section 183.0212, informational disclosure |
| "Tax reimbursement [amount]" | no | Rule 3.1001 prohibits a charge with that label |
| "Liquor tax [amount]" added to the total to recover the gross receipts tax | no | Section 183.0212(c) bars charging that tax to the customer |
The wording in the first four lines is illustrative; what matters is that each line does what the statute allows, and that the gross receipts tax, alone or in a combined line, is never added to what the customer pays.
The mistake to avoid
The line is between disclosing the gross receipts tax and charging it. A check that adds a line such as “liquor tax” or “tax reimbursement” to cover the permittee’s gross receipts tax turns the permittee’s own obligation into a charge on the customer, which the statute forbids. It also creates a second exposure: under Tax Code Section 111.016(a), a person who collects money represented to be a tax holds it in trust for the state and is liable for the full amount collected.
Setting up the point-of-sale system
- Decide whether the sales tax is added or included, and apply the choice consistently across menus, the point-of-sale system, and records.
- Build the gross receipts tax into drink prices, not into a separate charge.
- Configure receipt text to use only the statements the Tax Code allows, and make any gross receipts tax disclosure clearly informational rather than part of the amount due.
- Separate alcohol, ice and mixers, food, and other items on the check, since they fall under different taxes and different returns.
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.