Texas Mixed Beverage Tax Audit


Texas Tax Group’s Team of Mixed Beverage Tax Consultants
Robert Whorton (31 Yrs), Bob Wallace (33 Yrs), Sandy Smart (11 Yrs),
Wes Boullioun (8 Yrs) and Dino Marcaccio (16 Yrs)

Knowing how to protect yourself in a Texas Mixed Beverage Tax audit (also known as a Liquor Tax Audit) is essential and can help you save thousands of tax dollars. Understanding the 4 “P’s” of a Mixed Beverage Tax audit is a good place to begin.

The four P’s are: Price, Pour, Purchase, and Proof. The result of your audit will depend on these 4 primary elements.

Price: The average sales price of distilled spirits, wine and beer is very important. It is critical to a fair audit that the average sales prices get calculated correctly. In some cases, this is a straight forward matter. POS systems certainly make calculations easier if you have a POS system. But even if the auditor has to look at cash register tapes, he is required to do so. Auditors frequently overstate the average selling price of a drink category and thereby overestimate the amount of tax due in an audit. If you get audited, make sure the auditor gets this right.

Pour: The pour can relate to the size of drink glasses or pitchers, but also relates to the amount of distilled spirits poured into each drink. This element causes more grief and misunderstanding than anything else, and can be very costly if it is understated by the auditor. Many bartenders will be afraid to pour the amount of liquor they really pour during the pour test. They may be afraid TABC will be alerted or the owner will be upset at them. Well, honesty is the best policy. If you usually pour 2 ounces in a drink, then state that and show that during the pour test. Understate the pour, overstate the tax liability due.

Purchases: The state now has access to your alcohol purchase records, and they rely on that data. But guess what? Reported amounts are sometimes inaccurate. This past week I was working on an audit where a vendor reported selling $13,000.00 in alcohol to my client when in fact they had sold only $288. That would relate to about $7,200.00 the state would assess in tax that is clearly not due. Make sure what the state says you bought you did in fact buy.

Proof: It is unfortunate but true that an audit has nothing to do with what happened during the audit period…it has everything to do with what you can prove happened during the audit period. Without adequate documentation, auditors are left to their own devises to arrive at a tax liability. Many bar owners are good at what they do, but not so good at keeping records. Keeping good records will not only help you in an audit situation, but will also help your business in the long run.

A mixed beverage tax audit hinges on these few items. Do not face the auditors alone. Texas Tax Group has a team of former Texas Comptroller State Tax Auditors to stand by you and represent you all the way. Call us today toll free at 855-892-8348 and request a free anti-audit consultation.

New: Texas Mixed Beverage Tax Forms for 2014

Related Sources:
“Estimated” Sales Tax Audit
A Practical Guide to HB 3572
An Open Letter to All Mixed Beverage Permit Holders in the State of Texas
Audit Division and the Fraud Penalty
Mixed Beverage Tax (Liquor Tax) Audit Statistics

Texas Comptroller Helpful Links:
Mixed Beverage Sales Tax
Mixed Beverage Gross Receipts Tax
Mixed Beverage Gross Receipts Tax Audit Manual