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Dedicated July 2016

Venue Tax Question in NJ

Mrs. eD2, on June 29, 2016 at 2:21 PM Posted in Planning 0 9

Hello gals! Today we received our final venue bill and I have a question. Our venue bills us for the service charge/gratuity at 21%. In addition, NJ state tax is 7%. On the final bill, they taxed us on the price per plate and total gratuity. Is that even possible? I'm not sure what the rules and laws are about taxing in NJ... but it seems weird to me that they will tax us on the gratuity. Or is that normal because we are paying it upfront? Should I ask our accountant? The difference in tax is about $250 from what they are telling us we owe versus what I calculate.

9 Comments

Latest activity by joanne, today at 12:20 AM
  • M
    Dedicated July 2016
    Mrs. eD2 ·
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    Nevermind... I found out because it's a service charge, it can be taxed. I'll leave this up in case any other future NJ brides have the same question.

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  • Celia Milton
    Celia Milton ·
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    That doesn't sound legal. You can't tax on service charges, which is why I don't charge tax on what I do.....

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  • M
    Dedicated July 2016
    Mrs. eD2 ·
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    I thought the same... but apparently in NJ Tax Law, you are allowed to tax a service charge.

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  • ELK
    Master March 2018
    ELK ·
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    Yeah my cost is (cost) + (service charge + (7% sales tax) = total

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  • Jacqui76
    Master May 2016
    Jacqui76 ·
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    I'm in NJ. I just looked at my invoice and although I was quoted a pp rate plus 20% service charge, my invoice is broken down into "food," "beverage," and "set-up." The service charge and tax is only charged on food and beverage, not set-up. The tax on the food and beverage was calculated after the 20% service charge was applied.

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  • OurAdventureBegins
    VIP October 2016
    OurAdventureBegins ·
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    Http://www.state.nj.us/treasury/taxation/pdf/pubs/sales/su1.pdf

    I found the publication on the NJ Sales and Use Tax Department. Pg 2 does say that service charges are considered to be fees for administration and are subject to tax.

    HOWEVER

    Charges made for tips and gratuities, including stipulated

    gratuities or service charges, are notsubject to tax when:

    1. The charge is separately stated on the bill or

    guest check given to the customer; and

    2. The charge is specifically designated as a

    gratuity; and

    3. All such monies received by management

    are paid in total to the employees.

    This may explain the inconsistencies between venues. Depending on what they do with the "service charge" will dictate the taxability.

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  • Celia Milton
    Celia Milton ·
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    I'd call them on it, frankly.

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  • joanne
    Just Said Yes September 2018
    joanne ·
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    I’m having a baby shower for my daughter. I was interested in 3 places. There was only one out of the three that charged a hospitality tax, which also charged for a la carte liquor and was 2 and a half times more expensive than the other two and nothing more than an oversized space in a strip mall and a room in the back for a private party. I get the impression that 22% hospitality tax is a tax expected from the restaurant to the tax department and they are charging the customer to pay instead. What is a hospitality tax anyway? I don’t understand why there’s an administrative fee. For what? For administrating their own business and employees? Why would anyone have to pay a venue to do what they do? The restaurant I would think would price their plates by food & chef cost.
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  • joanne
    Just Said Yes September 2018
    joanne ·
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    That’s outrageous! This service fee what does it go to? If it’s to the wait staff then the customer is paying the difference between what the restaurant is paying the staff and what the minimum wage is that employees should be paid? Because everyone knows that restaurants pay wait staff literally a few dollars per hour and they split their tips and pay the bus boy, hostess and sometimes a cut to the restaurant. So basically the customer is paying for what is the responsibility of the restaurant. The costs that they are responsible for in doing business I think wrongfully being passed on to the customer for a bigger profit for them. Lastly a gratuity/tip is for providing good service. Charging a customer a tip included in the tab or reserving a venue is not right. If the service is terrible that should determine the tip and vice versa. This tip thing is out of control lately. I went to a Country Farms convenience store for milk and there was a tip jar on the counter! I got my milk and brought it to the counter and didn’t get a bag either. Then paid for it. So what part of that deserves a tip????🤬
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