i am finding this out too. if the 'service charge' is mandatory, then it's taxable. it's like a double whammy and especially hurts in states like CA that have such high sales tax. 8.75% and it's going up in April. argggggh
Yes. Our venue charges an 18% service charge. And then the total of the cost + the service charged is taxed at 5% (for Massachusetts)
Ours is 22% and is taxed at the local sales tax rate.
I'll put the official word on this one (I worked as a catering manager for Westin for a couple years)
Service charge IS taxed. You arent supposed to tax non-tangable services, but in a screwy way they say that the service charge is to cover the upkeep of the facility (even though its not) so that it is taxable.
To calculate it, take your total, add service and then tax the total.
Even if you are out of state, most vendors will still charge tax since they themselves pay the state tax on the services/sales they provide you with.
California tax law sucks.
Out of state poster - Talk to your venue. You never know unless you ask!
Also I know we have a service charge and have to pay the local sales tax. We live in L.A. but are getting married in Anaheim and will be charged their sales tax. I wasn't sure how that was going to be calculated so thanks BeltranBride for breaking it down. :)
If you live out of state you can sometimes get it back tooo.. I grew up in Oregon and there is a form you can fill out so that you can get reimbursed for some sales tax that you pay while out of state.. but sales tax is supposed to serve as a way to tax people who are spending money in the area and therefore using the roads/utilities/resources in the area.. so you don't need to be a resident at all. I would call your local tax board and ask them.