Portland Maine Two state legislators are seeking to introduce a bill that would exempt restaurants from a tax on meals provided free to staffers, according to press reports.
Two state legislators are seeking to introduce a bill that would exempt restaurants from a tax on meals provided free to staffers, according to press reports.
The effort came to light in local press reports about a 17-unit Subway franchisee who was slapped with a $3,000 tax bill, including interest, for the free sandwiches and soft drinks he gave to employees during their shifts. The charge stems from an audit three years ago in which franchisee Loren Goodridge was reportedly asked by the Maine Revenue Services if employees received free meals. Goodridge answered yes, and estimated the value at $5 per meal.
Maine has a 5 percent "use tax" that is levied on items taken out of a business' sales inventory, as the free sandwiches and drinks technically were.
Goodridge told the Associated Press that he may start charging employees 25 cents for their lunches and dinner, which would reduce his tax payment to just 2 cents per free meal, from 25 cents.
But that would not be necessary under the measure Reps. Seth Berry and Rick Burns hope to introduce. The bill would exempt free meals for restaurant employees from the use tax.
Free meals are shielded from taxation in a number of states, including New Hampshire, where Goodridge has three of his Subway restaurants.