Are alcoholic beverages at bars and restaurants taxable?
You bet they are.
WEHOonline received a letter pointing out that some bars charge, say, $8 for a drink and include the tax, while other places charge $8 and then add the tax on top. The merchant is responsible for paying all sales tax monthly based on sales — but the policy varies.
An anonymous letter was sent to City Attorney Lauren Langer and a number of city council members. Although the letter pinpointed specific bars in the Rainbow District, our research indicated that the perplexing issue affects other bars and patrons throughout the city and is not limited to the Rainbow District. We opted to publish the letter in full, but edited out the finger-pointing at any specific establishment.
It is important to note that a $10.00 drink can end up costing $11.05 — and some bars and nightclubs do not offer coin change.
Re: Rounding up checks for cash payers in WeHo bars
Dear City Attorney:
As you should be aware, there are certain relatively new or recently sold bars in West Hollywood that have been adding sales tax to drink prices in order to advertise one price but grab an extra 10.5% in profit. While all drinks are taxed, usually the tax is rolled into the final price — not added on top.
95% of bars charge a flat dollar amount to the customer that includes sales tax, unless they are part of a large chain. In such cases, those bars carry coin to make change.
While the bar has a right to add sales tax to the check, it is not allowed to fail to provide proper change to customers paying in cash.
I just visited ABCDEF and purchased a drink for $5. The check came out to $5.53, including the sales tax. When paying with cash, I was charged $6.00 since the bar keeps no coins for making change. If I paid with a credit card, I would have paid only $5.53. This is not only unfair rounding — since they will not even keep quarters for change — but nearly all normal drink prices will result in a final check exceeding $0.53, thus rounding everything up to the next dollar. The same is true at LMNOPQ.
As you know or should know, there are many underbanked customers who either do not have cards or choose not to use them in bars.
Although the bar should know better and not set out to cheat customers, they should be aware of the general legal principles:
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Restaurants in California generally may not round up a customer’s check, especially for cash payments, unless it is clearly and conspicuously disclosed beforehand.
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Deceptive Practice: Rounding up the bill without informing the customer is considered an undisclosed charge and a deceptive practice under California consumer protection laws.
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“Honest Pricing Law”: California’s “Honest Pricing Law” (SB 478), effective July 1, 2024, aims to ban “junk fees” and requires businesses to include all mandatory fees and charges in the initial advertised price.
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No Unfair Rounding: If a restaurant rounds up the bill in a way that consistently overcharges customers over time, it could be considered an illegal practice.
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Disclosure is Key: If a restaurant intends to round up (for example, to simplify cash transactions), they must clearly inform customers beforehand.
California law prioritizes ensuring that the price a customer sees is the price they pay.
No customer would accept pumping 8.6 gallons of gas and having the gas station round it up to 9 gallons. No customer would accept buying 3/4 of a pound of food and having the store round it up to a pound. It’s the same principle.
Please counsel the correct department within the city (Business Licensing or another code enforcement department) to look into this and end this practice — thereby complying with the law.
I am copying WEHOonline on this letter so that they will be able to follow your progress on helping to stop cheating customers. Given that certain councilmembers are routinely seen in the bars they should be observant of this unusual practice.
Thank you.
Footnote: The City of West Hollywood requires all merchants to accept cash payments.
Why don’t these people who comment focus on the clear violation of the state law. Instead of creating nonsensical rationals for legitimizing illegal behavior, why not understand that the law is simple. Patrons are entitled to the correct change for a purchase. Period. I really think that some commenters simply have no reading and comprehension skills. I look for to the city attorney’s actions. In the meantime, patrons should bring nearly exact change to pay when using cash. Thereafter, they can report the bartender’s snarky comments (that will no doubt be forthcoming) to the manager. At a time when tariffs… Read more »
If you aren’t an alcoholic…….the price of an occasional drink isn’t a concern.
Obviously that’s not the point, it’s an issue of transparency. Plenty of people who aren’t you want to know exactly what they’re being charged for in day to day life and this amounts to a substantial amount of money businesses could be generating over a long period of time, solely by not being fully transparent.
Rich! Lawlessness if perfectly fine in this case, huh?
What a f****** hypocrite you are, Ham.
Journalists are under no obligation to protect the criminal actions of local businesses. If a public business does this, that is public knowledge in common. There is no need to censor the article. What, are they advertisers to this publication? Is there that kind of crash and cynical conflict of interest? I bet so.
or there is no need to single out one business when across the street another does the same thing. we do not have any paid staff, that is zero, its a volunteer effort with the goal of supporting the community, there are no accredited journalists here. you can appreciate what we offer or not. the goal was to solve the problem not be a judge and jury to incriminate one business versus another.
There are a number of bars – in west West Hollywood and east West Hollywood – that do not accept cash. This has been the norm since the pandemic. Two of these establishments tell you straight out, no cash sales. Yes, that may limit the patrons that frequent the bar, but that is the bar’s prerogative. Some bars don’t accept Apple Pay, some do. Some establishments don’t have the infrastructure for phone payments. Some bars prefer cash period and do not accept cards or phone payments. Bars are not public utilities and should be able to process payments in the… Read more »
Are you a bar owner? This provision’s intent is clearly to prevent all establishments from phasing out cash collectively at some point, which would be discriminatory against people who can’t get other payment methods. Just go on down the street to another establishment eventually could cease without protections for the consumer. Comprende?
Thank you.
And who did you have in mind that would be “discriminated” against for not using other payment methods? Please keep the race card in the deck. That s### is old news and won’t fly for at least another four years.
People who primarily get paid in cash.
LOL! Look at you leaping right to race, wow that was weird. Got a real persecution complex of your own going there, huh? You see, primarily this push to eliminate cash, and in particular coins in society is foremost deliberately discriminatory against the homeless and the merely impoverished who don’t have access to other payment methods for various reasons. Race isn’t at issue here, sorry to disappoint you. Nice ironic choice of username on this one.