Episode Transcript
[00:00:08] Speaker A: Welcome to Taxing Poetic. My name is Tim Howe and I'm here with Jenny Carter and JB. And today's episode, episode three, is going to be. It's not just a Southern thing. We're talking about hospitality, sales and used taxes. And in our first segment, we're going to be talking with Jenny Carter, my fellow post. And she's going to kick it off with a little bit of nerdy news.
[00:00:29] Speaker B: Nerdy news. You know, it's my favorite. All news should be nerdy. Oh, yes. I own it proudly. Yes. So here on taxing poetic, we like to keep our listeners up to date with upcoming news, legislative updates, and things you might not know about that don't hit the Washington Post, New York Times, Atlantic Journal Constitution headlines, perhaps. So, first segment on Nerdy News here, first bit of info from your favorite state of Colorado, their retail delivery fee.
[00:01:00] Speaker A: We have to talk about this again.
[00:01:01] Speaker B: Yes.
[00:01:01] Speaker A: You know, you've already gotten me in trouble once.
[00:01:03] Speaker B: I know.
[00:01:04] Speaker A: I think we're going to get audited by Colorado.
[00:01:07] Speaker B: No, that's probably personally, even though I.
[00:01:09] Speaker A: Have no nexus there. Personally.
[00:01:11] Speaker B: Yes. Letters in the mail.
[00:01:12] Speaker A: Letters in the mail.
[00:01:13] Speaker B: Letters in the mail. Yes. So we had talked about it on another episode about Colorado and their retail delivery fees, which is the $0.27 on all taxable transactions. Transactions. Correct.
[00:01:23] Speaker A: If you're delivering by anything but a horse, donkey, hay cart, whatever, something. If it's a motorized vehicle, you're getting taxed.
[00:01:31] Speaker B: Drone.
[00:01:32] Speaker A: Drone. Yes. Drone would qualify.
[00:01:34] Speaker B: For real?
[00:01:34] Speaker A: For reals.
[00:01:35] Speaker B: Dang.
[00:01:36] Speaker A: All right.
[00:01:36] Speaker B: Okay. Well, we kind of poo pooed this law. Know it's going to get overturned.
[00:01:40] Speaker A: Right?
[00:01:40] Speaker B: It's kind of silly.
[00:01:42] Speaker A: Well, just the way that they passed it. Right?
[00:01:43] Speaker B: Just the way they passed it. That's right. Yeah. Go listen to that episode. You'll hear Tim's opinions.
[00:01:47] Speaker A: Exactly.
[00:01:47] Speaker B: They're quite extensive anyway, so we know that's not going to happen in any other states. However, we were proven wrong for once.
[00:01:55] Speaker A: Oh, great.
[00:01:56] Speaker B: I know. Minnesota and New York are apparently looking at implementing the same type of tax.
[00:02:01] Speaker A: See, this is what happens when you get people trapped in side houses with snow and stuff. That's why we stay down here in the South. They just think up new tax.
[00:02:07] Speaker B: Exactly. I know. They're like, oh, this would be fun.
[00:02:10] Speaker A: Move to the south, get into the sun, man. It's nice down here.
[00:02:13] Speaker B: I know. So not only Minnesota and New York, but other states are thinking, oh, this would be nice for us, too. So there's some rumblings in other states. So just keep an ear out for that, we'll obviously update you all here on taxing poetic with anything new we hear about these retail delivery fees being passed in other states.
[00:02:30] Speaker A: Well, thanks for the nerdy news update.
[00:02:32] Speaker B: You are welcome.
[00:02:33] Speaker A: Scaring us with more fun stuff coming out from the States, and that's actually going to be a perfect segue and lead us right into our next segment, which is be our Christopher guest.
We actually have a guest with us here today. Her name is not Christopher Guest. That's just the name of the segment. Thanks to JB. Way to go, JB.
[00:02:49] Speaker C: Thank you.
[00:02:50] Speaker B: He just wants him to come on the show.
[00:02:51] Speaker A: I know. We're going to try to line.
[00:02:52] Speaker B: Yeah, we're going to hashtag make that go viral.
[00:02:54] Speaker A: But today we have Donna McMurray with us, who is the head of legislation and tax policy for SyNexus. Donna, it's very nice to have you here with us today.
[00:03:04] Speaker D: Thank you. I'm happy to be here.
[00:03:06] Speaker A: Awesome. And I think Donna was going to turn around and give us a little bit of her background. And how did you get know sales and Newstax and just tell us a little bit about yourself.
[00:03:14] Speaker D: All right, well, I got into sales Newstax right out of college. I actually audited for a state south of here, so don't hold that against me.
[00:03:21] Speaker A: You were an auditor?
[00:03:22] Speaker D: I was an auditor.
[00:03:23] Speaker B: There's not too many states south of here.
I'm thinking about the map. Okay. All right.
[00:03:29] Speaker A: You're not a strong geography person.
[00:03:30] Speaker B: No. I mean, I might be from that state, so, no offense. I love it.
[00:03:36] Speaker D: I was an auditor, and I got tired of being the bad guy.
[00:03:39] Speaker B: Good move.
[00:03:40] Speaker D: Yeah. Came to the light.
[00:03:42] Speaker A: Awesome.
[00:03:42] Speaker D: So I did work as an auditor for a while. Managed to get all the way out of sales tax at one point in My career. It's one of those things that people find out you know something about and then you're right back in it and been in it ever.
[00:03:55] Speaker B: Just like the Godfather three. Just when you think you're out. Exactly. Pull you back in.
[00:03:59] Speaker D: That's exactly right.
[00:04:00] Speaker B: Yes. So here you are.
[00:04:02] Speaker D: And here I am. So, yeah, one day went to work for a large chain that invented the chicken sandwich.
[00:04:08] Speaker A: Oh, my goodness. Don't know who that would be.
[00:04:10] Speaker B: Yeah, I never heard of them.
[00:04:11] Speaker D: Spent almost ten years there.
[00:04:13] Speaker A: Popeyes.
[00:04:14] Speaker B: That's it.
[00:04:16] Speaker D: They just reinvented the chicken.
[00:04:18] Speaker B: There you go. Yes.
[00:04:20] Speaker D: Not quite the same thing, but really close.
[00:04:24] Speaker A: I love it.
[00:04:24] Speaker D: Yes.
[00:04:25] Speaker A: Well, do you have some additional things that you might want to tack on to Jenny's nerdy news?
[00:04:30] Speaker B: Sure.
[00:04:31] Speaker D: So first to know, for anybody with locations in Mississippi, at least 13 of them have extended their lodging and restaurant taxes. They were set to expire sometime this year. Now it's 27 or 28.
[00:04:43] Speaker A: So they didn't just extend it by a year. They decided to extend it by four years. In five years.
[00:04:47] Speaker D: Exactly.
[00:04:47] Speaker A: That's fantastic.
[00:04:48] Speaker D: At that point, they'll probably do it again.
[00:04:50] Speaker B: Explain these types of taxes to me. So let's see. Lodging and restaurant taxes.
[00:04:56] Speaker D: Yes.
[00:04:57] Speaker B: Okay. So there's tacking them on to.
[00:05:00] Speaker D: So typically, food and beverage tax is a tax on prepared food sold by a restaurant.
[00:05:06] Speaker B: Okay.
[00:05:06] Speaker D: So if you go to the grocery store and get chicken wings or whatever, you're not going to pay the prepared food tax, but if you go to a sports bar and get chicken wings, you're going to pay that prepared food tax.
[00:05:17] Speaker B: Got it.
[00:05:17] Speaker D: So it's an additional tax rate on top of the state and local sales tax. Another local.
[00:05:24] Speaker B: Another local tax, yes.
[00:05:25] Speaker D: And it's only for restaurants.
[00:05:27] Speaker B: Okay. Got it.
[00:05:29] Speaker D: And they range anywhere from one to five, six or more percent. So they can be pretty hefty.
[00:05:35] Speaker B: Sure.
[00:05:36] Speaker A: Wow.
[00:05:37] Speaker B: It doesn't help with cutting prices. That's for sure.
[00:05:40] Speaker D: No, absolutely nobody's cutting prices.
[00:05:42] Speaker B: I know. No, you're right.
[00:05:44] Speaker A: So how long have you actually been doing food and beverage tax?
[00:05:47] Speaker D: A little over two decades, which dates me, but yes, little over two decades. So I spent almost ten years at the chicken place, and then I went to a roast beef place. Who?
[00:05:58] Speaker B: Roast beef place.
[00:05:59] Speaker D: Roast beef place. Hardest that could be.
Who then purchased another brand and another brand and so on and so on. And they ultimately became the second largest restaurant company in the country.
[00:06:12] Speaker A: Oh, wow.
[00:06:12] Speaker B: Okay.
[00:06:13] Speaker A: You were constantly having to stay on top of rate changes and understand the legislation.
[00:06:18] Speaker D: Yes, we did. All the time. Because it changes constantly. As you know, the rates change.
We, with Synexus help, filed 950 tax returns a month.
[00:06:29] Speaker A: That's awesome.
[00:06:30] Speaker B: Yes. I have the scars to prove it.
[00:06:32] Speaker D: I know.
[00:06:33] Speaker B: The mental diamond scars. Yes.
[00:06:36] Speaker A: And we can absolutely have Donna on for another segment to talk, just purely about delivery fees and taxation.
[00:06:43] Speaker C: Yes.
[00:06:43] Speaker A: Her favorite topic of the moment.
[00:06:45] Speaker B: Yes.
[00:06:46] Speaker D: I'll be honest. I'll go hungry before I'll order delivery.
[00:06:51] Speaker A: Honestly, I absolutely love it. What's the weirdest thing that you've heard of in sales and news? Talk to me about, or talk to us. Excuse me. About one of the craziest things that you've seen from a legislative perspective.
[00:07:04] Speaker D: Well, anybody been to Ohio?
[00:07:07] Speaker B: Not in a while.
[00:07:08] Speaker D: Round on the ends and high in the middle. So Ohio, let's say you're, I don't know, a coffee chain.
[00:07:15] Speaker B: Right.
[00:07:16] Speaker D: So Ohio has laws that say that food consumed off the premise is not taxable. Okay, that sounds easy. Right? So I go through the drive through. I take it to go, it's not taxable. But you have to look at what's their definition of food. So food is anything consumed for nutritional value or taste, but it can't have sugar in it, or it can't have certain exclusions. Certain things are excluded. It can't be a soft drink, can't be alcohol. It can't be like some kind of supplement.
[00:07:47] Speaker B: Who ever thought a law would have to define food?
Just food? Hey, I put it in your. And I eat it. Yes, that's food.
[00:07:55] Speaker D: Exactly.
[00:07:56] Speaker A: But see, what you don't understand is that food, because of these grocery taxes, like what Donna was talking about, food has to be specifically defined by some of these jurisdictions. Right. Because there's actually a lower rate for groceries.
[00:08:09] Speaker D: Exactly.
[00:08:09] Speaker A: Right.
[00:08:10] Speaker D: Yes, but Ohio has also said so a sweetened beverage might not be taxable, but if it's got a dairy product in it, then the dairy overrides the sugar. So you can go in and order black coffee. That's food, not taxable.
[00:08:25] Speaker B: Okay.
[00:08:26] Speaker D: Hey, could you put a shot of caramel in there for me? Oh, now it's got sugar in it. Now it's not food, so it's taxable.
[00:08:32] Speaker B: The whole item is taxable. Item is taxable. Not just the shot.
[00:08:34] Speaker D: Or put a little caramel in there for me. Oh, wait, I want some whipped cream on the top. Oh, now it's dairy. So now it's food again. It just magically becomes food again, and it's not taxable to go.
[00:08:46] Speaker B: One of my questions for you is going to be, why is hospitality tax so complex? And now I think, well, there you go, starting to figure out why. Because food is not food.
[00:08:56] Speaker D: Food is not food. Unless you add whipped cream.
[00:08:58] Speaker B: Unless I. Whipped cream or some caramel or some flour, maybe. Who knows, right?
[00:09:03] Speaker D: Well, that's a different thing. Then it's a cookie, maybe.
[00:09:06] Speaker B: What about spam and cheese whiz? Are they considered food?
[00:09:09] Speaker D: Oh, only to certain people.
[00:09:10] Speaker B: Okay.
[00:09:12] Speaker A: I don't think any of those people are in this room.
Although I do prefer my cheesesteaks. For those of people listening from Philadelphia, cheesesteak isn't a cheesesteak without the whiz.
[00:09:22] Speaker B: Oh, that's true. You can get it. Yes. With the whiz.
[00:09:25] Speaker A: Got to get it.
[00:09:26] Speaker B: Quite delicious.
[00:09:27] Speaker A: Absolutely.
[00:09:28] Speaker D: Now that's made for redtail dip.
[00:09:29] Speaker B: Sorry, only thing I'll eat.
But is it like that in every state, like in Ohio, or do several states have those kind of not to that degree distinction?
[00:09:42] Speaker D: There are some that have prepared food doesn't qualify for food and food products or food and food ingredients, which may be a grocery exemption. But then you get things like say you're back at your wing place. You want a bottle of wing sauce. Well, if you bought it at the grocery store, it would be tax exempt because it's a grocery product. But if you buy it from the restaurant, it might not qualify for that grocery exemption. So you could pay no tax at the grocery store, or you could pay full tax at the restaurant.
[00:10:14] Speaker A: And that kind of comes into play in like a state like California, right, where they basically look at the percentage of your sales and they say, okay, if 80% or greater of your sales are for prepared food for people in the restaurant, or if you're operating as a restaurant, if you sell grocery qualified products, you're going to have to tax them at the full rate because you're not a grocery store chain. Whereas like convenience stores and other things, a lot of their sales are grocery type items. So if they sell a piece of prepared food, they may not have to charge the full boat of the food and beverage tax or the full sales and use tax rate. Everything they would sell would qualify for grocery because they're greater than 80% grocery type items.
[00:10:54] Speaker B: Well, I feel, yes, a little overwhelmed.
[00:10:57] Speaker D: Aren't you glad you asked?
[00:10:58] Speaker B: I know. I'm glad we have you in this industry to explain these things to us.
[00:11:03] Speaker A: You want to tax. Poetic about Piffs for about 2 seconds. Don't you just love piffs? Picking on Colorado again, right?
[00:11:10] Speaker D: It seems to be a theme.
[00:11:12] Speaker A: It is a.
[00:11:13] Speaker D: So someplace I used to work, which shall remain nameless, actually used that like a cuss word. Oh, Piff. Because they were tired of dealing with them. A PIF is a project improvement fee, which is not actually a tax, and it's not actually just subject for restaurants. So it's typically a fee that is put in place by a developer for their development area to recoup some of the infrastructure costs.
[00:11:38] Speaker B: Like a real estate developer.
[00:11:40] Speaker D: Yes, exactly.
[00:11:41] Speaker B: Can I just get my own taxes put out there for.
[00:11:46] Speaker D: You can call it a fee.
[00:11:47] Speaker B: A fee. Oh, a fee. There you go.
[00:11:49] Speaker A: But you know what we would call that? We would call it a gif. A jif, a Jenny. Improvement fee.
[00:11:57] Speaker D: Improving.
[00:11:57] Speaker B: No, it needs to be, yes, a crowdfunding source.
I need lots of improvement.
[00:12:05] Speaker D: But starting your own. So sometimes the cities and the counties don't even know anything about it.
[00:12:11] Speaker B: So they don't have to get that cleared by the local government.
[00:12:13] Speaker D: Not necessarily. Not necessarily what?
[00:12:17] Speaker B: I did not know.
[00:12:18] Speaker A: They'll use it to Pay for like lighting. Right.
[00:12:20] Speaker D: Street lamps, ingress and egress just to develop the land, the infrastructure, the roads around the complex.
[00:12:28] Speaker B: Okay.
[00:12:28] Speaker A: Drainage. They're putting in a retention pond and needing to put in drainage pipes and stuff like that to feed off of it. You'll see PIFfs come in for that. And we have to file those returns.
[00:12:41] Speaker D: Like a tax return. It's a fee, but it's not. It's a fee, but it has to be filed like a tax return. And to make it more fun, sometimes that fee can be included in the sales tax base for the state.
[00:12:51] Speaker B: Yes, that does sound familiar. Now.
[00:12:54] Speaker D: Okay, so trying to get a point of sale system to do that calculation is almost impossible, right? But the PIF will be in the sales tax base.
[00:13:03] Speaker A: So explain that to our audience for like 2 seconds. So when you're saying it's included in the taxable base, so what I would have is, okay, I buy three cheeseburgers, an order of fries, and then when I get to the subtotal, what happens next?
[00:13:16] Speaker D: So the subtotal, then you calculate the PIF, which is maybe 1% or it could be 3% or more. And so then you get your next subtotal and then you apply your state and local sales tax.
[00:13:28] Speaker A: Wasn't that a tax on tax?
[00:13:30] Speaker D: No, it's a tax on a fee.
[00:13:31] Speaker B: Tax on fee.
[00:13:32] Speaker D: It's a tax on a fee.
[00:13:33] Speaker A: No. Taxation without representation, folks. Come on. It's Revolutionary War. Well, we're going to start it all over again.
[00:13:40] Speaker B: That's what the PIFF sounds like.
[00:13:41] Speaker A: Instead of throwing tea into Boston, we're going to start throwing chicken sandwiches into a lake.
[00:13:46] Speaker B: And cheeseburgers. Well, if you want to make it.
[00:13:48] Speaker D: A little more complicated, some states will do, or some jurisdictions do it the other way. So there is an actual restaurant tax in Kentucky where the state sales tax is in the restaurant base.
So you have the subtotal.
[00:14:02] Speaker A: Is that Elizabeth Town?
[00:14:04] Speaker D: Cape Girardo. So maybe it's a Cape Girrado. So we'll pick up Missouri now. But yes, so you get your subtotal, your three cheeseburgers and fries, subtotal, add the sales tax for the state rate, and then you get your next subtotal and do the restaurant tax.
[00:14:21] Speaker A: There we go.
[00:14:21] Speaker B: You say taxation without representation, but it's not even a government tax.
[00:14:25] Speaker A: Well, see, and that's what's so interesting is that they actually don't. And that's why a lot of people, when we talk about tax legislation and how easy it is to pass transaction level taxes, because a lot of constituents don't even see this penny or two pennies. They don't really think about it when it comes out of their restaurant bill, or they don't look to question it. But when you start talking about an income tax and it's 1% of your income, obviously that makes a big deal for a lot of people. Right. So, yeah, it is kind of interesting how more folks haven't really challenged some of these fees. I mean, Panama City's got one, right? Their restaurant tax is almost like a tax on tax type. But, yeah, you don't really get representation. These folks have the ability, because of the state statute, that they can have the flexibility to go and enact these fees if they see fit.
[00:15:15] Speaker B: So the state empowers them to enact the fees.
[00:15:17] Speaker A: It's actually a state empowers the local municipality to basically govern it. And what will typically happen is it's somebody during a zoning or approval or something like that, within a city, they'll go ahead and get the approval for the fee, and then the fee will turn around.
[00:15:28] Speaker B: Know, I have filed many PIF returns, and I had no idea, honestly, that that is how it worked behind the scenes.
[00:15:35] Speaker D: Yes.
[00:15:35] Speaker A: It's usually city or county, right, Donna?
[00:15:37] Speaker D: Well, the PIF is usually just a development, so it could be your target.
[00:15:42] Speaker A: Shopping center or development authority. Like a group of people that will just approve and granted they're made up of folks that are part of the city or part of the county. But, yeah.
[00:15:51] Speaker B: Do they have any end? Like, oh, we're going to do this for two or three years until the development is paid for?
Or is it just.
[00:15:58] Speaker D: They say that usually it's till the development is paid for, but it's more like ten or 15 years.
[00:16:03] Speaker B: Oh, okay.
[00:16:05] Speaker D: Yeah. And some of the Piffs don't require voter approval, but sometimes the restaurant level taxes may or may not require voter approval.
[00:16:14] Speaker A: So after listening to all that stuff, guess what time it is.
[00:16:19] Speaker B: What time is it, too?
[00:16:20] Speaker A: Pop quiz, hotshot.
[00:16:22] Speaker B: Oh, yeah.
[00:16:22] Speaker A: And we've got our own guest quiz leader today, who is going to be Donna. She's going to be firing the shots at Jenny and.
[00:16:33] Speaker B: Mode here.
[00:16:34] Speaker A: Luckily, JB's off the hook. JB doesn't have to answer anything today. Great.
I can see he's so pleased. He's like, oh, my goodness. Listening to hospitality tax I've glazed over like a donut.
[00:16:47] Speaker D: He's like, even got in the food reference.
[00:16:49] Speaker A: There you go.
[00:16:50] Speaker B: Oh, you got it.
[00:16:50] Speaker C: Well done.
[00:16:51] Speaker A: Yes, Donna, I'm going to turn it over to you.
[00:16:54] Speaker D: All right, here we go.
[00:16:55] Speaker A: Love it.
[00:16:56] Speaker D: Jenny?
[00:16:57] Speaker B: Yes. Donna is for you. Deep breath.
[00:17:00] Speaker D: Okay. All right.
[00:17:00] Speaker B: All right.
[00:17:01] Speaker D: My focus is a PIF. A tax.
[00:17:06] Speaker B: A PIF is not a tax because I learned today it was a fee.
[00:17:11] Speaker D: Very good.
[00:17:12] Speaker A: At least we know she was paying.
[00:17:13] Speaker B: Attention, which doesn't happen all the time. Usually when Tim talks, I just glaze over. Come on.
[00:17:18] Speaker D: Like a donut.
[00:17:22] Speaker A: Using my own reference against me.
[00:17:24] Speaker D: All right, Tim.
[00:17:26] Speaker A: Point for Jenny.
[00:17:27] Speaker D: Point for Jenny. Yes, Tim, here is your first question.
Because restaurants may qualify for manufacturing exemptions in given states, explain to us how you would do a utility exemption calculation.
[00:17:43] Speaker A: In 27 individual parts. No.
[00:17:48] Speaker B: Come on, Chad. GBT.
[00:17:50] Speaker A: Basically what you would have to do is you typically want to look at isolating what your manufacturing equipment is versus your non manufacturing equipment. So you would get a whole list of the items that would typically qualify under the exemption. And then you would look at those individual items and measure what their typical power draw is or their natural gas usage would be. And then once you get that, you can turn around and take that and apply it over a set period of time if the state allows you to do sampling, or you're going to have to take it and measure it based on the particular restaurant and do it over the entire period for the review. And then you can submit it to the state and they'll actually give you a refund on your sales tax back.
[00:18:27] Speaker B: JB, did you understand any of that?
[00:18:28] Speaker C: No. I was like, really hoping he was just wrong.
He was like, actually, no, that's wrong.
He's like, no, actually, no.
[00:18:38] Speaker B: I think you lost me a power draw. Isn't that a hockey reference?
[00:18:40] Speaker C: How do you do, Donna?
[00:18:41] Speaker D: Actually, that's a point for Tim.
[00:18:43] Speaker B: I know. Wow, Tim.
[00:18:46] Speaker A: GPT coming through.
[00:18:48] Speaker B: So annoying.
[00:18:51] Speaker A: We didn't even talk about manufacturing. I'm getting these, like, whiz bangers over here.
[00:18:55] Speaker B: That's why it's annoying. You got any other brain busters for you? You're the one who asked for it.
[00:19:01] Speaker A: I love it.
[00:19:02] Speaker D: All right, Jenny.
[00:19:03] Speaker B: Okay, here's your second question. Okay.
[00:19:05] Speaker D: Ohio.
If you buy a Coke to go, is it taxable or not a Coke to go?
[00:19:14] Speaker B: I am going to have to go with taxable.
[00:19:18] Speaker D: And another point for Jenny.
[00:19:20] Speaker B: Yay. All right. Oh, my gosh. Look, I'm going to be just like you two at the end of this session. Know everything about F B.
[00:19:28] Speaker A: We're gonna get you a Brutus the Buckeye T shirt.
[00:19:30] Speaker B: Oh, okay.
[00:19:31] Speaker A: Yeah.
[00:19:31] Speaker B: Take. No, no. Oh, no. Not allowed.
[00:19:35] Speaker A: Not in this.
[00:19:36] Speaker B: Oh, boy.
[00:19:37] Speaker D: Yikes. All right, sticking with the Ohio theme, Tim? Yes, ma'am.
Water pitcher. You purchase a water pitcher as a restaurant. Taxable or exempt?
[00:19:49] Speaker A: It is going to be taxable.
[00:19:52] Speaker D: You only get half a point for that.
[00:19:56] Speaker A: Why is that?
You're going to learn me. Teach me something.
[00:20:00] Speaker D: Taxable. If the server uses it to refill your water glass, if they set the picture on the customer's table, it's a temporary resale to the customer and is exempt.
[00:20:09] Speaker A: You have to.
[00:20:10] Speaker B: Donna. That is.
[00:20:11] Speaker D: It's isn't.
[00:20:13] Speaker B: How do you even keep track of that? I would just say it's always on the table.
[00:20:17] Speaker A: So, you know, it's funny that you asked that. They used to. And, Donna, actually, when we first worked together, Donna educated me on this in an Ohio audit, which blew my mind.
Auditors used to stand in the lobbies of restaurants and watch people ask if you were going to eat for dine in or to go.
[00:20:37] Speaker D: That's true.
[00:20:38] Speaker A: And if the person actually took their to go food and went and sat down, they would ding you on the audit for that. If you did not go out and tell that person they needed to get up and go outside the restaurant.
[00:20:49] Speaker D: Yes, that is true.
[00:20:50] Speaker B: I have no words for this.
[00:20:54] Speaker D: Isn't that crazy?
[00:20:54] Speaker B: That is crazy.
[00:20:56] Speaker A: The whole idea of customer service just completely goes out the window. But a lot of it is, because the interesting thing in Ohio, this is all written into their constitution, right? So a lot of people have asked, why can't this law get changed? The premise argument seems very old. Because of the advancements in drive thru restaurants.
[00:21:13] Speaker B: Absolutely.
[00:21:14] Speaker A: No, it's because Ohio actually drafted the premise argument, which is what this is all called, into their constitution. So it would take a constitutional amendment to actually change it in the state of Ohio, which is ridiculous to pass. So they just have to find ways around interpreting it and enforcing they will.
[00:21:34] Speaker D: If you have a restaurant and a food court in a mall, they will sit in the food court for a week and watch to do their sample.
[00:21:42] Speaker A: And you have to have it written in your handbook that every employee must ask whether it's to go or dine in. And if it's not written in your handbook, then they automatically assume that everything is for dine in and it's 100% taxable.
[00:21:53] Speaker B: I just call in a restraining order, be like, dude, quit following me.
It's getting a little creepy.
[00:22:02] Speaker D: Yes.
[00:22:03] Speaker C: If you're keeping track. At home, we don't do half point, so I'm sorry, you just didn't get the point there.
[00:22:08] Speaker B: But, Tim, that was a tough one.
[00:22:09] Speaker C: That's a tough one.
[00:22:10] Speaker B: I mean, just setting the life in the NFL.
[00:22:15] Speaker A: Man, I feel so deflated.
[00:22:17] Speaker B: You are, Chad GPT. So you were supposed to know that.
[00:22:19] Speaker A: Okay, that's fine. Actually, I love it. I learned something new today. That is fantastic, Donna. All right, third one. Here we go, Jenny.
[00:22:25] Speaker D: All right, Jenny. True or false?
All local jurisdictions take electronic payments.
[00:22:33] Speaker B: Unfortunately, I know the answer to this, and it is false.
[00:22:36] Speaker A: Come on, man.
[00:22:37] Speaker B: People apparently still like to send in these things called checks, or they'd like to receive them.
[00:22:43] Speaker D: They like to touch them.
[00:22:44] Speaker B: They like to touch them and take them to the bank. And we're still working on that.
[00:22:48] Speaker A: You know, I found my checkbook recently and I hadn't written a check in. I'm guessing probably about like two or three years. And it was like, from three addresses ago. It's so strange. Yeah, isn't it?
[00:22:59] Speaker B: OD to think that you give someone a piece of paper that has your account information on really, you know, it just has your routing number.
[00:23:06] Speaker A: In this day and age. It's weird. We used to not think about know when we were growing up. Hey, yeah, right. Fine. Draft a check, blah, blah, blah, whatever. But nowadays it's like, oh, my God, it has all this information, my signature, like, name, address, bank account.
[00:23:19] Speaker C: Jerry Seinfeld said it just feels like an IOU.
[00:23:22] Speaker B: It does.
[00:23:23] Speaker C: I don't have any money, but if you contact these people, they'll take care of.
[00:23:29] Speaker A: Take care of you.
[00:23:30] Speaker B: Excellent reference. It is. It's so bizarre to me. It's still a thing.
[00:23:33] Speaker A: I love it.
[00:23:33] Speaker B: It's still a thing.
[00:23:34] Speaker A: Well, nice softball.
[00:23:36] Speaker B: I know what you're talking.
[00:23:37] Speaker C: Was it true or false?
[00:23:39] Speaker B: True or false. Exactly. All right, so we'll give you a true false.
[00:23:42] Speaker A: I've already lost, but that's fine.
[00:23:45] Speaker C: Not for the season.
[00:23:46] Speaker A: Not for the season.
[00:23:47] Speaker B: No.
[00:23:47] Speaker A: It is season long competition. I like it, Jamie.
[00:23:49] Speaker D: Thanks. I'm sorry. This is a manufacturing one. Also, does a walk in cooler qualify as manufacturing?
[00:23:55] Speaker A: Oh, this is a great one. Can I give the standard sales tax answer? It depends.
[00:24:00] Speaker D: That is the standard answer.
[00:24:04] Speaker A: It could qualify as a manufacturing piece of equipment if it is integral to the manufacturing process, which, depending on the nature of your restaurant or the nature of your business, if it's an integral part, like in defrosting. If you have a manual that talks about defrosting food and there's like, a multi step process for defrosting it. And it has to go through a walk in cooler. It could 100% qualify because it enacts a chemical or physical change on the actual product. Very good.
[00:24:33] Speaker D: A point for Tim.
[00:24:35] Speaker B: Maybe he gets a point and a half to make up for his last. Make him feel.
[00:24:38] Speaker D: Do you really want a time?
[00:24:39] Speaker B: I know. No, I'm just trying to help his ego.
[00:24:42] Speaker A: Not that I need to help turn. She's trying to turn the knife a little bit harder. Okay. That's all she's doing.
[00:24:48] Speaker B: What, you mean perfectly innocent?
[00:24:50] Speaker C: Here, take the point.
[00:24:52] Speaker B: I do have one quick question for Donna. I just thought of. Yeah, can you tax poetic, just a little bit about the changes with COVID with food delivery and everything we just talked about. I'm thinking about all the delivery fees and the legislative updates. And have there been a lot of changes legislatively or have restaurants pivot because of tax with COVID Changes to our culture, with eating? I mean, I just would be interested to hear your thoughts on that.
[00:25:20] Speaker D: So prior to COVID, we tested a little bit of delivery, kind of played with it here and there, and there wasn't a whole lot of it out there. COVID hit and it went into overdrive. Right. I probably spent the first solid month of lockdown researching delivery fees and delivery transactions and marketplace facilitator laws and how they apply to third party delivery for restaurants. And there was nothing or minimal amount out there, just not a whole lot. And states were kind of like, yeah, we thought about it, but that's as far as we've got. So you're trying to apply 40 year old laws to the gig economy, which is just a little tough.
[00:26:02] Speaker B: Right?
[00:26:03] Speaker D: Not going to lie.
[00:26:04] Speaker B: Not applicable.
[00:26:05] Speaker D: No, not applicable. And so we were delivering. Everybody was delivering. Everybody who had a restaurant that could get anybody with a car out of their house was delivering.
[00:26:15] Speaker A: It's the only way you can make money. Right?
[00:26:17] Speaker D: Right. Because everything was shut down, but the law started coming. And then. And I can't remember the year off the top of my head, Wayfair hit.
And then it was like, oh, they're all marketplace facilitators and they should be collecting. And then they really started moving those laws along with Wayfair. And what happened then is they were applying them to the delivery providers or not, because some states have specifically said, oh, those are not marketplace facilitators. But the complications come in when I have one price in my POS system, and then the third party delivery company is actually selling it at a marked up price. And I can't get that markup back into my system, but I still owe the tax on that. If it's not a marketplace facilitator state or you get a delivery company who they're collecting the tax, and they're doing the calculations, but you have no visibility into their systems to know that they're collecting them correctly. I mean, we can tell them what the rate is, but doesn't mean they've updated their system. The second part of that is, what about destination states where the customer takes possession at their home? Well, I have no idea who they are, where they are, or what their rate is, and I don't know how to calculate that. My POS holds one system or one rate. So what do you do with things like that? So there's lots of questions. The technology is not there on the restaurant side.
[00:27:45] Speaker B: That's what it sounds like to me, that the legislation is coming along, but the technology is lacking behind.
[00:27:50] Speaker A: Welcome to everything.
[00:27:51] Speaker D: Welcome to everything in sales. Exactly.
[00:27:54] Speaker A: We always joke around that the states are the Titanic, and we're the people who are trying to drive the boat and avoid the iceberg. Right. And we're getting all this information, and we're spinning the wheel feverishly, and the state's just not moving. Right. Please, this is not us calling foul on any of our friends who work at the state. It's very difficult to pass legislation to address this stuff. Yes. And it's very complex. And the problem is, the capital market moves so quickly. Like you said, with COVID Right. In a month, things changed, and delivery went from 3% to 90% of what a business was doing, and there was no way for anybody to react to that.
[00:28:31] Speaker D: That's exactly right.
It was a lot. And they're still, to some extent, playing catch up just because it takes so long to get the systems in place. And while the delivery companies may sort of have their systems in place, sort of, the restaurant POS system is not there either. And what's your source of truth? How do you report that? Is my POS right, or is the delivery report right? Probably neither.
[00:29:01] Speaker B: Right.
[00:29:01] Speaker A: So, you know, and this just kind of leads into a whole discussion. We're definitely going to have to have Donna back. I want to spend an entire episode talking about technology with, like, POS systems and rate updates and talking about this whole marketplace facilitator thing. I think that's a great topic. So maybe on another episode, we should definitely have her back.
[00:29:18] Speaker B: Donna, will you please come back, please? Okay.
[00:29:22] Speaker D: For Jenny.
[00:29:22] Speaker B: I know. Thank you. That's what I figured since I did win the contest.
[00:29:25] Speaker D: That's right. That's your prize. I'm sorry. That is your prize.
[00:29:29] Speaker B: Best prize ever. Oh, my. I have so much knowledge now.
[00:29:32] Speaker C: It's a good time for a shameless plug.
[00:29:34] Speaker A: It is.
[00:29:35] Speaker C: You just talked about how complicated this was. Who could help with that?
[00:29:39] Speaker A: We can totally help with that. So if you've absolutely got questions, our nice shameless plug for the afternoon contacts, the Nexus, Jenny and myself, and obviously Donna and our entire team are all very well versed in having to deal with these complicated issues.
For a number of our customers, we're actually excelling in the food and beverage space. We think we're probably one of the best in the industry at handling food and beverage and alcohol taxation. So if you've got those questions, feel free to reach out to Synexis. We'd be happy to help.
[00:30:06] Speaker B: Well, Donna, we have been thrilled to have you today. Like Tim said, we are expecting you to come back. So don't tell us you're know you're washing your hair or to. You have to come back.
[00:30:16] Speaker A: She's going to be drumming up more difficult questions.
[00:30:18] Speaker B: I know. That's right.
Exactly. So, yeah, be sure to give me the easy ones, as usual.
[00:30:24] Speaker D: What I would never do, though, there.
[00:30:26] Speaker C: Was a true false. We do have to apologize to a group of people.
[00:30:29] Speaker B: Oh, my gosh. I was keeping.
[00:30:31] Speaker A: Who did we offend this time?
[00:30:33] Speaker B: Pretty much all 50 states.
[00:30:35] Speaker C: Colorado again. Yes, for sure. I almost wrote it twice.
[00:30:39] Speaker A: I have family that lives in Colorado, and they're probably never going to let me visit them because I keep picking on it constantly.
[00:30:44] Speaker C: I wrote. I just. Let's just get out in front of this, just in case he.
[00:30:48] Speaker A: You really want him to. Come on.
[00:30:49] Speaker C: Case he doesn't like it.
[00:30:51] Speaker A: Okay.
[00:30:51] Speaker C: No.
[00:30:52] Speaker B: Christopher guest is awesome.
[00:30:53] Speaker C: Yeah, heat stroke. Because we really underplayed that. She's like, I got to go. I'm very.
[00:31:00] Speaker B: Heat stroke. Heat stroke can be offended. It sucks.
[00:31:02] Speaker C: Heat stroke's real. People who live in snow.
[00:31:07] Speaker A: Yeah, my apologies on that.
[00:31:08] Speaker C: I wrote down auditors, then I crossed it out, then I wrote it again. So I don't know, we maybe should apologize to them.
[00:31:14] Speaker A: Don is representing auditors fairly, and we actually like dealing with auditors. Auditors are good people.
[00:31:18] Speaker C: So then I think we should apologize. It didn't sound like. Okay, that's not what I.
[00:31:23] Speaker A: Some of them.
[00:31:24] Speaker B: Right.
[00:31:25] Speaker C: Your own lawyers. Because they'll need to protect you from Hardee's and Popeyes.
[00:31:31] Speaker B: No. Our lawyers are going to be thrilled.
[00:31:33] Speaker C: For their retainer fees and then to me. For now, me having to beep out Hardee's and Popeyes.
[00:31:38] Speaker A: I love it.
[00:31:39] Speaker C: And Brutus the buckeye.
[00:31:41] Speaker A: Brutus the buckeye.
[00:31:42] Speaker B: Poor Brutus.
[00:31:43] Speaker A: There are no apologies for Brutus the Buckeye.
[00:31:46] Speaker B: I know.
[00:31:47] Speaker A: No, that's like asking for us to apologize to Allie the alligator.
[00:31:51] Speaker D: I was going to say I was going to throw in a go dogs.
[00:31:53] Speaker B: Here, but I know Allie the alligator.
[00:31:56] Speaker A: Oh, yeah. There is a Florida fan in this room.
[00:31:58] Speaker B: No. Sorry. Now you don't like me. I was hoping she wouldn't find out.
Will you still be my know? I know. Well, we can still be friends and gang up on. Yeah, I know.
[00:32:11] Speaker D: It'll be good, just not during football. I know. It's Florida. It'd be okay.
[00:32:15] Speaker A: They haven't been a problem.
[00:32:17] Speaker B: Fair enough. These days, that's for sure.
Well, thanks again, Donna, for being with us today. We enjoyed it. I have so much more knowledge now. Can't wait to have more the next time you come back. And to all of you out there listening, please subscribe to Taxing poetic like reminder. You don't have to listen to all these episodes in sequence. Just pick and choose whatever strikes your fancy. I mean, we hope all of them strike your fancy, but until next time, stay nerdy.
[00:32:42] Speaker A: Yeah, thanks.
