The landmark Supreme Court decision in South Dakota v. Wayfair in 2018 that permitted states to tax remote sales and collect sales tax also has a significant impact on McDonald’s owner/operators and other businesses that use delivery services.
Under the Wayfair decision, states have begun implementing Marketplace Legislation where marketplace facilitators – like Uber Eats – are now required to collect and report sales tax. State laws have begun to go into effect as of July 1, with others set to roll out later this fall.
Uber Eats has begun withholding and filing the sales tax on Uber sales as of July 1 in the following states:
- District of Columbia
- New Mexico
- Rhode Island
- South Carolina
- West Virginia
Prior to these laws, sales tax was remitted by owner/operators each month, whether the sales tax was generated from in-store sales or delivery sales. Now, when Uber Eats delivers a meal for a McDonald’s customer, Uber provides the owner/operator the proceeds from the sale less the sales tax and the Uber Eats fee.
In those jurisdictions where there are other taxes on food sales, such as hospitality taxes or meals and beverages taxes, the owner/operator is still responsible for filing and remitting those taxes to the local authorities.
Owner/operators can see their monthly Uber Eats sales and how much Uber is withholding in sales tax by logging into their Uber account to access the Payment Detail Report. This report shows how much tax was collected on sales each month, including sales tax and other auxiliary taxes. There is also a column for the marketplace facilitator tax to show how much Uber Eats is filing and paying on the owner/operator’s behalf. Any difference between those two columns is likely the other auxiliary taxes that are the responsibility of the owner/operators.
As you can see, withholding and filing sales taxes is becoming more complex. Antares Group processes sales tax returns for many of our clients, including our Back Office Solutions clients. If we are not currently handling sales tax reporting for your business, please call our office today for a proposal for this service and we can get you set up before the beginning of the new year.
Tammy Howell is Tax Senior at Antares Group, Inc. She can be reached at firstname.lastname@example.org.