Marketplace Facilitator Tax FAQ for Restaurant Owners

What is a marketplace facilitator?

A “marketplace facilitator” is a platform that connects buyers and sellers to help facilitate the sale of various goods and services, including food, drinks, groceries, and other retail items. Menufy is considered a marketplace facilitator in certain jurisdictions, as listed below.

How do marketplace facilitator laws impact sales taxes?

Some jurisdictions have enacted laws that make the marketplace facilitator responsible for collecting and remitting sales and use taxes (“sales taxes”) on sales made between buyers and sellers on a marketplace facilitator’s platform. In these jurisdictions, (see list below), Menufy is responsible for collecting and remitting the sales tax owed on sales made through the Menufy platform, directly to the tax authorities. To verify, this means within these jurisdictions listed, Menufy is responsible for filing taxes owed on sales placed via the Menufy platform, and you, the merchant are not. 

Further: Menufy has collected and remitted sales tax directly to the tax authorities in the locations listed since the effective date for each.

**Note: Menufy is responsible for remitting sales tax directly for online prepaid sales to the tax authorities in the locations listed above since the effective date for each.

How does Menufy manage local sales taxes in marketplace facilitator locations?

Menufy will collect and remit all local sales taxes, such as food and beverage taxes imposed by counties and cities, to the tax authorities in the Marketplace Facilitator Locations.  

For orders prepaid online on Menufy’s platform, you do not need to remit the taxes on those orders nor at the end of the year. These taxes have already been remitted by Menufy.

How do the marketplace facilitator laws affect my payouts now and at the end of the year?

If you are in one of the Marketplace Facilitator States, your payouts for your sales will be less the amount of the sales tax that is collected and remitted to the tax authorities by Menufy. For orders prepaid online on Menufy’s platform, you do not need to remit the taxes on those orders nor at the end of the year. These taxes have already been remitted by Menufy. 

If you have paid these taxes, you should consult with your legal and tax advisors about getting the payment refunded by the tax authorities. 

If you have questions about your legal obligations and liabilities, you should always consult your own legal and tax advisors. 

Do I need to include all sales (Cash and prepaid) made on the Menufy platform to my tax authorities, whether local or state?

Menufy will calculate, collect and remit taxes on all orders that are paid through the Menufy platform. For orders paid directly to the merchant outside of the Menufy platform, whether by cash or card, the responsibility for tax collection and remittance lies with the merchant, as Menufy does not collect the taxes on these transactions.

For which orders will Menufy collect and remit tax directly to the tax authorities as a marketplace facilitator?

Menufy will calculate, collect and remit taxes on all orders that are paid through the Menufy platform. For orders paid directly to the merchant outside of the Menufy platform, whether by cash or card, the responsibility for tax collection and remittance lies with the merchant, as Menufy does not collect the taxes on these transactions.

How does Menufy collect taxes on Cash orders made on the Menufy platform?

Menufy will calculate, collect and remit taxes on all orders that are prepaid through the Menufy platform. 

For orders paid directly to the merchant outside of the Menufy platform and cash orders made on Menufy platform, the responsibility for tax collection and remittance lies with the merchant, as Menufy does not collect the taxes on these transactions.

**(Clover customers only) Is Menufy a marketplace facilitator for merchants who use the Clover platform?

No. For merchants who use the Clover platform integration with Menufy, the payment is processed via Clover, so Menufy is not considered a marketplace facilitator here and will not collect, and remit sales taxes owed on such sales.       

Am I liable for sales tax in the event that a marketplace facilitator fails to pay the tax on transactions made through the marketplace?

In general, merchants are not liable if a marketplace facilitator fails to collect and remit the sales tax owed on all sales facilitated through the marketplace.    You should consult your own legal and tax advisors if you have questions about your legal obligations and liabilities. 

For orders prepaid online on Menufy’s platform, you do not need to remit the taxes on those orders nor at the end of the year. These taxes have already been remitted by Menufy.

My local tax authority advised me my taxes have not been paid and require me to pay to avoid being late. How do I show that Menufy paid their portion?

Merchants are only responsible for paying local taxes on sales in the store. For sales processed through the  Menufy platform, Menufy is responsible for collecting and remitting the applicable taxes. These will be paid under Menufy’s name rather than the individual merchants’. You can see your “paid in-store orders” vs “online orders” in your Menufy manager dashboard under the “reports” section. 

You should consult your own legal and tax advisors if you have questions about your legal obligations and liabilities. If you have paid the online sale taxes for Menufy orders, you should consult with your legal and tax advisors about getting the payment refunded. 

Why is Menufy collecting/withholding local taxes while other Marketplace providers only withhold state? Is the local tax being withheld option, and I can opt in to paying it directly myself? 

As a Marketplace Facilitator, Menufy is required to collect and remit all state and local taxes, it is not an optional function. Withholding local taxes is mandatory and cannot be opted out of. When Menufy remits the taxes for these online orders, they are paid for as a Menufy online order. You will not be responsible for paying for these. 

For orders prepaid online on Menufy’s platform, you do not need to remit the taxes on those orders nor at the end of the year. These taxes have already been remitted by Menufy.

Who is responsible for setting tax rates on my menu items?

The tax authorities in each jurisdiction set the sales tax rates, and marketplace facilitators like Menufy merely collect sales taxes at the rates that are set by the tax authorities.

Where are you getting the tax rate?

Menufy uses Avalara’s services for calculating and filing sales and use tax. Avalara is an industry leader in this field.

Where is a detailed explanation of what services are taxed in my area, such as delivery fees, carryout fees etc...

As a Marketplace Facilitator, Menufy is responsible for calculating, collecting, and remitting the applicable taxes. Delivery fees are taxable in the following states were Menufy is determined to be a Marketplace Facilitator:

Alabama, Arkansas, Colorado, Georgia, Indiana, Kentucky, Louisiana, Minnesota, Missouri, Nebraska, North Carolina, North Dakota, Vermont, and Wisconsin. 

*This list is as of time of publishing article. Subject to change. 

What tax information will I need to complete my taxes if my state was changed to Marketplace mid-year?

For sales made using the Menufy platform, you should file the appropriate sales tax returns for all sales made prior to the effective date of the marketplace facilitator laws and regulation in each of the Marketplace Facilitator Locations in which you operate (see the table above).  After that effective date in each such state, Menufy will file the appropriate sales tax returns for sales made using the Menufy platform.

Do I need to report sales taxes collected and remitted by Menufy to the tax authorities?

No. Menufy will report to the tax authorities the sales taxes that it collects and remits on sales made using the Menufy platform. You should consult with your own legal and tax advisors if you have questions about whether you have reporting obligations concerning these sales.

For orders prepaid online on Menufy’s platform, you do not need to remit the taxes on those orders nor at the end of the year. These taxes have already been remitted by Menufy.

How was it decided to change the Menufy platform to a marketplace facilitator?

Various states began to enact marketplace facilitator laws and regulations beginning in and after 2019.  Menufy consulted with its outside legal and tax advisors and, in many instances, with the tax authorities in the specific Marketplace Facilitator Locations, to ensure our compliance with the tax laws and regulations in each state. As a result, it was determined, and in some cases negotiated and agreed upon with the tax authorities, that Menufy would operate as a marketplace facilitator in the specific Marketplace Facilitator Locations as of the implementation dates listed for each state.

What additional references can you provide me with to learn more about marketplace facilitator laws and regulations?

Click on the link here to learn more about Marketplace Facilitator rules by State.

This article is provided for general information purposes only, and is not intended to provide, and should not be relied upon by merchants, or others, as providing legal, tax, accounting, operational or other decisions.  All merchants must and should, if necessary, consult with and rely upon the advice received from their own legal, tax, and accounting advisors.