So how do they define a coke?

Verbosely, of course.

EXAMPLE 15

ABC Distributing distributes sweetened beverages to a restaurant in Seattle. The distribution consists of:

10 five-gallon Bag-in-box (BiB) concentrates for the restaurants soda dispenser, five (5) of these BIBs are zero calorie (diet) drink syrups;

720 twelve-ounce canned beverages (all non-diet);

20 Bottles of flavored syrups.

The restaurant utilizes the flavored syrups for their dessert creations or as an ingredient in other non-beverage items.

Question 1: What items are subject to the SBT?

Answer: The five (5) BiBs of non-diet concentrate and the 720 canned beverages are subject to the SBT. The diet soda concentrates are not subject to the SBT because they are excluded from the definition of a sweetened beverage. Generally, the 20 bottles of flavored syrups would be subject to the SBT because based on the manufacturers instructions they are to be used to make sweetened beverages. The restaurant, however, uses these for creating desserts. Therefore, these syrups may be excluded from the SBT.

Question 2: How much sweetened beverage tax is due on this distribution?

Answer: $487.20

ITEM TOTAL Oz SB per ITEM NUMBER OF ITEMS TOTAL OUNCES TAX

(0.0175/oz.)

BiB 3,840 x 5 19,200 $336.00

Cans 12 720 8,640 $151.20

TOTAL $487.20

- One BiB contains 640 oz. of concentrate. If the manufacturers instructions provide for 2 ounces per 12-ounce drink, then there is approximately 3,840 ounces of sweetened beverage per BiB.

Question 3: What documentation does the distributor need to obtain from the restaurant if it wishes to exclude the syrups from the SBT

Answer: The distributor will need to obtain documentation from the restaurant operator that the syrups purchased are not used to create sweetened beverages but are intended for other purposes. For example, the distributor may secure from the restaurant a written statement that clearly provides those specific syrups are not used for sweetened beverages but instead are used in the production of certain meal items. The document should be signed by an individual authorized to sign off on tax matters for the restaurant. The distributor will need to retain this signed statement as documentation for the syrups it excluded from the SBT in this instance. If the distributor does not obtain documentation from the restaurant operator, then they should remit the SBT on the distribution of the flavored syrups to the restaurant.