During a discussion
of revisions to the sales tax audit manual relating to board auditors' practice
of getting undercover drinks in bars to determine sales tax, the issue of board
employees not tipping bartenders came up.
Under the
instructions in the manual (Instruction No. 0806.40 and Appendix C), three
auditors are assigned to conduct the test – one of whom is the designated
driver. Drinks for a pour test are to be ordered straight or mixed with water.
The auditor is
instructed to order two identical drinks, one at a time, remove the ice, and
pay for them one at a time. Only the second round is for testing purposes.
Using this method,
the board determines the amount of alcohol per drink, and extrapolates to
determine the amount of sales tax that should have been collected based on how
many bottles of liquor were purchased by the bar.
Ms. Steel pointed
out the problem that when board auditors don't tip after the first drink, they
are likely to get a smaller pour for the second drink. This will result in
overcharging sales tax, as it will indicate that more drinks were poured from
each bottle.
Board staffer
Geoffrey Lyle said a memo could be sent out advising auditors to leave a
reasonable tip. Ms. Yee urged that such a memo be sent. With that
understanding, the audit manual revisions were approved unanimously. (Cal-Tax: The relationship between
tipping and cocktail strength is well known – we are even aware of situations
where bartenders refused to serve a second drink when they were stiffed for a
tip on the first.)
Cal-TaxReports, February 1, 2010
© 2010 California Taxpayers'
Association.
All Rights Reserved.