Restaurant sneaks $0.25 fee for water and 10.5% tax when the local rate is 7.5%
Sep 11, 2014, 8:53 am
#16
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It isn't even a question. Donations should not be taxed as a matter of law. You aren't receiving any product or service to tax. In fact, the person donating should get to write it off, but in this method you are passing your money through a company and they are taking credit for the donation. They are the ones to write it off. Supermarkets and some retail chains do this too, and they leverage donation write offs against corporate taxes.
The main difference in my case is that they also taxed me, where supermarkets are typically set up to provide the donation line item separately from the taxable total. I highly doubt they were factoring the donation as income, as it would make their income artificially high until whatever quarter they actual make their donation, at which point it would look artificially low. If they then point to the "pass thru" as the explanation for the P/L changes, I'm assuming someone (IRS, stockholders?) would ask why they are collecting tax on a pass-thru to donation.
The main difference in my case is that they also taxed me, where supermarkets are typically set up to provide the donation line item separately from the taxable total. I highly doubt they were factoring the donation as income, as it would make their income artificially high until whatever quarter they actual make their donation, at which point it would look artificially low. If they then point to the "pass thru" as the explanation for the P/L changes, I'm assuming someone (IRS, stockholders?) would ask why they are collecting tax on a pass-thru to donation.
The first entry has to debit cash and credit something, probably income if it rings up as miscellaneous. Let's say they're clever and set up a liability account; charitable contributions payable, so it goes on the balance sheet.
The second entry credits cash when they pass the donation on and has to debit something, an expense if they haven't set up the liability. If they've set up the liability account, that's what they debit.
In both instances, it's neutral on the P&L and has no effe3ct on income taxes owed.
Neither the IRS nor shareholders see the level of detail that would reveal them collecting taxes on a charitable contribution. However, the state tax authorities might spot it in an audit. I don't know if the state would keep the money or credit it back to the company - it belongs to neither entity but how are they going to get it back to you, the duped consumer?
Sep 11, 2014, 9:46 am
#17
Join Date: Jul 2014
Location: Boston, MA
Posts: 63
You're either an accountant or you're not.
The first entry has to debit cash and credit something, probably income if it rings up as miscellaneous. Let's say they're clever and set up a liability account; charitable contributions payable, so it goes on the balance sheet.
The second entry credits cash when they pass the donation on and has to debit something, an expense if they haven't set up the liability. If they've set up the liability account, that's what they debit.
In both instances, it's neutral on the P&L and has no effe3ct on income taxes owed.
Neither the IRS nor shareholders see the level of detail that would reveal them collecting taxes on a charitable contribution. However, the state tax authorities might spot it in an audit. I don't know if the state would keep the money or credit it back to the company - it belongs to neither entity but how are they going to get it back to you, the duped consumer?
The first entry has to debit cash and credit something, probably income if it rings up as miscellaneous. Let's say they're clever and set up a liability account; charitable contributions payable, so it goes on the balance sheet.
The second entry credits cash when they pass the donation on and has to debit something, an expense if they haven't set up the liability. If they've set up the liability account, that's what they debit.
In both instances, it's neutral on the P&L and has no effe3ct on income taxes owed.
Neither the IRS nor shareholders see the level of detail that would reveal them collecting taxes on a charitable contribution. However, the state tax authorities might spot it in an audit. I don't know if the state would keep the money or credit it back to the company - it belongs to neither entity but how are they going to get it back to you, the duped consumer?
Sep 25, 2014, 8:41 am
#19
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Join Date: Mar 2014
Posts: 1,684
Sxytxn,
It's a big country. People somewhere likely are. The law only impacts medium to large sized businesses though. A lot of the pushback is more ideological than anything especially in southern states. They don't like a liberal black man telling them that they should give their employees benefits so they don't have to rely on the state.
Did the OP ever do anything here?
It's a big country. People somewhere likely are. The law only impacts medium to large sized businesses though. A lot of the pushback is more ideological than anything especially in southern states. They don't like a liberal black man telling them that they should give their employees benefits so they don't have to rely on the state.
Did the OP ever do anything here?
Oct 1, 2014, 5:16 am
#20
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Still not as bad as the €2-3 euros I was charged for tap water in Copenhagen. They too, could point to a line in the middle of a 30 page menu, but it wasn't verbally disclosed, and wasn't obvious.
Oct 1, 2014, 6:18 am
#21
Join Date: Nov 2011
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Another example: At a hawker court in Singapore, I don't expect them to tell me they don't give away free napkins
Oct 1, 2014, 8:44 am
#22
Join Date: Jun 2001
Location: Tucson, AZ, USA
Posts: 1,124
I often find that in shopping malls, (and sometimes in airport food courts, too) that there is a charge for tap water. In the malls it is because of the number of people that request water without a purchase. In other food courts it may be because of the cost of mandated wages. (If a business locates in an airport, many municipalities have a mandated minimum wage about $.25 to $3.00 higher than surrounding areas that are not in the airport)
The tax may very well be a specific local tax that has been set up to "benefit" from shoppers from surrounding areas. Sort of like car rental surtaxes.
Without intense research, it would be difficult to actually determine if the nefariousness was from the worker, the business, the mall, or the taxing authority.
The tax may very well be a specific local tax that has been set up to "benefit" from shoppers from surrounding areas. Sort of like car rental surtaxes.
Without intense research, it would be difficult to actually determine if the nefariousness was from the worker, the business, the mall, or the taxing authority.
Oct 1, 2014, 9:22 am
#23
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Oct 1, 2014, 11:08 am
#24
Join Date: Jun 2004
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Oct 1, 2014, 1:09 pm
#25
Join Date: Feb 2011
Posts: 19
Hahnewasser was not free
In food service, most extraneous costs like salt & pepper, plastic silverware and napkins are factored into food costs. Tap water has such a small cost per ounce that it's basically free. Since that little bit of water is basically free, hence no food-cost calculations, restaurants will charge a nominal fee for the to-go cup to recoup the cost of that cup and add a few cents' profit.
Also, some cities have a meals tax; Charlottesville, VA being one where you pay the regular sales tax plus an extra 4% tax on prepared foods (not groceries). However, with cursory research I don't see this as being the case in Durham.
You probably just paid 25 cents for a 2-cent cup, a fraction of a penny's worth of tap water, and a few seconds of a churlish server's time, which is pretty standard. I don't think it's a scam to gain profit from thousands of tiny charges; it's just a way to add a bit of profit margin to a business with pretty tiny margins. You pay way more per ounce for sodas, by the way. A $1.85 30-ounce Coke costs the restaurant about 35 cents.
In Zurich the tap water is excellent, and it's called Hahnewasser. It's free, but you have to ask for it.
Also, some cities have a meals tax; Charlottesville, VA being one where you pay the regular sales tax plus an extra 4% tax on prepared foods (not groceries). However, with cursory research I don't see this as being the case in Durham.
You probably just paid 25 cents for a 2-cent cup, a fraction of a penny's worth of tap water, and a few seconds of a churlish server's time, which is pretty standard. I don't think it's a scam to gain profit from thousands of tiny charges; it's just a way to add a bit of profit margin to a business with pretty tiny margins. You pay way more per ounce for sodas, by the way. A $1.85 30-ounce Coke costs the restaurant about 35 cents.
In Zurich the tap water is excellent, and it's called Hahnewasser. It's free, but you have to ask for it.
Oct 1, 2014, 1:49 pm
#26
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What was the line in the menu if it wasn't verbal? Was it pictorial?
Oct 1, 2014, 5:25 pm
#27
Join Date: Oct 2007
Location: BOS
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If I am not a customer at your restaurant and I ask for water, it would not seem unreasonable for you to charge me for the cup.
If I am a customer I certainly would not come back and if I had not paid for my to-go meal yet, I might just walk away and let you deal with the fact that it is costing you more than you wanted to charge me. Until I hand over the cash, it is not my food.
But if I'm in a hurry then it would be stupid of me to make a fuss over a quarter. Just not come back. And write it up on Yelp.
If I am a customer I certainly would not come back and if I had not paid for my to-go meal yet, I might just walk away and let you deal with the fact that it is costing you more than you wanted to charge me. Until I hand over the cash, it is not my food.
But if I'm in a hurry then it would be stupid of me to make a fuss over a quarter. Just not come back. And write it up on Yelp.
Oct 2, 2014, 5:17 pm
#29
Join Date: Sep 2005
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Restaurants charging for tap water? The culinary equivalent of a baggage fee
http://www.marketwatch.com/story/res...fee-2014-10-02
http://www.marketwatch.com/story/res...fee-2014-10-02