It has come to our attention at Vine Solutions that many restaurant owners and operators are not aware that when you comp liquor, beer, or wine for your guests that tax is owed to the Franchise Tax Board on that comp at cost.  An example would be a $10.00 glass of wine comped for a guest; that comp would be reduced to its cost (let's say 30% for this example) of $3.00 and then taxed at the local sales tax rate.  If the local sales tax is 9.25%, then the tax due on the example comp would be $0.28.  This expense would then be allocated directly to your liquor, beer or wine cost quarterly when the return is filed. 

The tax expense for comps will show up in your General Ledger report under liquor, wine, or beer expense as "excise tax"; that is the tax expense for your comps for a quarter.  For most restaurants, the total expense won't be more than $150 per quarter with the average for Vine Solutions clients running $50 to $100 per quarter. 

If you have any questions about excise tax, don't hesitate to ask your Vine Solutions Client Manager or GL Accountant.