The Texas liquor tax is actually two taxes on the same drink. A mixed beverage permit holder pays a 6.7 percent gross receipts tax out of its own pocket and collects an 8.25 percent sales tax from the customer, and both get reported monthly to the Texas Comptroller of Public Accounts.1State of Texas. Texas Tax Code Section 183.021 – Tax Imposed on Gross Receipts of Permittee From Mixed Beverages2State of Texas. Texas Tax Code Section 183.041 – Tax Imposed on Sales of Mixed Beverages and Related Items Confusing the two, or missing that both apply, is one of the fastest ways to run up penalties.
The Two Taxes and How They Work
The gross receipts tax is an occupation tax. The state charges it to the permit holder for the privilege of selling liquor, at 6.7 percent of total receipts from drink sales, including mixers, ice, and nonalcoholic beverages sold for mixing with alcohol on the premises.1State of Texas. Texas Tax Code Section 183.021 – Tax Imposed on Gross Receipts of Permittee From Mixed Beverages The business absorbs it. It never appears as a line on the customer’s check.
The mixed beverage sales tax works like a conventional sales tax. At 8.25 percent of the sales price, it is added to the bill and paid by the customer, then remitted to the Comptroller.2State of Texas. Texas Tax Code Section 183.041 – Tax Imposed on Sales of Mixed Beverages and Related Items
A quick example. A bar that generates $10,000 in monthly drink revenue owes $670 in gross receipts tax from its own funds and collects $825 in sales tax from customers to send to the state.
Who Owes These Taxes
Both mixed beverage taxes apply only to holders of a mixed beverage permit issued by the Texas Alcoholic Beverage Commission, which authorizes the sale of distilled spirits, wine, and beer for on-premise consumption.3Texas Alcoholic Beverage Commission. TABC License and Permit Types Full bars, cocktail lounges, and restaurants serving liquor fall in this bucket.
Establishments that hold only a wine and beer retailer’s permit are outside this system. Their alcohol sales are subject to regular sales and use tax, not the mixed beverage taxes.4Texas Comptroller of Public Accounts. Mixed Beverage Taxes Frequently Asked Questions The 6.7 percent gross receipts obligation never kicks in for them. Misidentifying which permit you hold can lead to filing the wrong returns entirely.
Mixed beverage permit holders also need a separate sales tax permit, whether or not they sell food or other non-alcohol items.5Texas Comptroller of Public Accounts. Mixed Beverage Taxes
Exemptions
Texas Tax Code Section 183.023 carves out a short list of situations where the taxes do not apply. The exemptions are narrower than most permit holders expect.6State of Texas. Texas Tax Code Chapter 183 – Mixed Beverage Taxes
- Beverages served free of charge at a private function where no one pays consideration. The word “private” does the heavy lifting; comping a drink at the bar as a promotional gesture is a different analysis.
- Drinks served to patients, inmates, or their bona fide guests at hospitals, nursing homes, and charitable institutions.
- Beverages served in a private club registration permit area to members or their guests.
- Beverages served by a nonprofit organization or political subdivision at a charitable function.
Even when a transaction qualifies, the permit holder must still report the volume of alcohol involved. The Comptroller uses those records to verify that untaxed liquor reached an eligible recipient rather than a taxable sale.
Filing and Deadlines
Both taxes are reported monthly. The gross receipts tax uses Form 67-100, and the sales tax uses Form 67-101.7Texas Comptroller of Public Accounts. Form 67-100 – Texas Mixed Beverage Gross Receipts Tax Report You file both reports even in months with zero alcohol sales.4Texas Comptroller of Public Accounts. Mixed Beverage Taxes Frequently Asked Questions
Reports and payments are due by the 20th of the month following the reporting period. If the 20th falls on a weekend or legal holiday, the deadline shifts to the next business day.4Texas Comptroller of Public Accounts. Mixed Beverage Taxes Frequently Asked Questions Webfile submissions must be in by 11:59 p.m. Central Time on the due date.8Texas Comptroller of Public Accounts. File and Pay
To complete either form, you need your eleven-digit Texas taxpayer number, total gross receipts from all alcohol sales separated from food and merchandise revenue, and the exact amount of sales tax collected from customers. Reconciling daily sales against your point-of-sale system throughout the month prevents a scramble at filing time.
Electronic Filing Thresholds
The Comptroller’s Webfile system, accessed through the eSystems portal, handles most filings. Payment can be made by electronic check or credit card. Credit card payments carry a processing fee of $1.00 on amounts up to $100 and 2.25 percent plus $0.25 on anything above that.8Texas Comptroller of Public Accounts. File and Pay
Electronic filing is not optional at higher volumes. If you paid $50,000 or more in either mixed beverage tax during the prior state fiscal year (September 1 through August 31), you are required to file electronically. If you paid $10,000 or more, you must pay electronically. At $500,000 or more, you must use TEXNET, the state’s same-day electronic payment network.8Texas Comptroller of Public Accounts. File and Pay
Penalties for Late Filing or Payment
Missing the deadline gets expensive quickly, and the penalties stack.9Texas Comptroller of Public Accounts. Penalties for Past Due Taxes
- A $50 penalty applies to any report filed after the due date, even if no tax was owed.
- Payment 1 to 30 days late: 5 percent penalty on the unpaid tax.
- Payment more than 30 days late: 10 percent penalty.
- Payment still unpaid past the Notice of Tax Due date: an additional 10 percent, for 20 percent total.
Interest starts accruing on the 61st day after the due date at a variable rate the Comptroller sets each January. Businesses required to file or pay electronically who fail to do so face a separate 5 percent penalty for the format violation alone.8Texas Comptroller of Public Accounts. File and Pay A bar that files a paper return two months late on a $5,000 liability could owe the 10 percent late-payment penalty, the $50 late-report fee, the 5 percent electronic-filing penalty, and accruing interest all at once.
Records to Keep
Your records need to support every line on Forms 67-100 and 67-101. That means reconciled daily sales reports, documentation of any comped beverages, and records of adjustments or credits for returned products. The IRS generally expects businesses to retain tax returns and supporting documents for at least three years from the filing date, with the window extending to six years in situations such as substantial underreporting.
Federal law separately requires retail alcohol dealers to maintain records of every shipment received, including the quantity, supplier, and date for all distilled spirits, wine, and beer. These can be purchase invoices or a separate logbook with the same information.10Alcohol and Tobacco Tax and Trade Bureau. Beverage Alcohol Retailers