With the hospitality industry devastated from the coronavirus, we keep hearing the same refrain from restaurant, bar, hotel and venue owners:
Do I have to pay my LBD and sales tax this month?
Unless the State of Tennessee provides tax relief for sales and liquor-by-the-drink taxes, our response is yes. You have to pay your taxes.
Sales tax comes due on the 20th of the month. Liquor-by-the-drink tax was due on the 15th.
We believe the state missed a tremendous opportunity to help the hospitality industry weather the corona crisis.
There is personal liability for failing to pay these taxes. We do not want to see anyone become personally liable for taxes, particularly during pressing financial times.
Keep in mind that a business is collecting sales and liquor by the drink taxes for the state. The state views the tax collections as the state’s money. If you divert tax collections to pay other bills, such as staff, food supplies or rent, you have essentially stolen from the state. The law is stacked in favor of the state on this point.
We hear the Mississippi Sheiks classic 1934 recording of Sales Tax Blues:
Say Walter, we need some cigarettes. Let's go in and get a pack.
Hello boys, what can I do for you?
I'll have a pack of cigarettes.
Alright. Here you are. Be three cents more though.
What's that for?
Sales tax. Haven't you ever heard of sales tax?