The Indiana Department of Revenue recently ruled that food delivery charges are subject to sales tax. A pizza franchise did not collect tax on its delivery charges under the assumption they were not taxable. The pizza franchise relied on the audit of another franchise in making this incorrect assumption.
The ruling found that delivery charges are taxable as part of the sale of prepared food. Further, the ruling found that the taxpayer could not rely on the audit of another franchise in making a sales tax determination. However, reliance on the audit was sufficient to prove the taxpayer was not subject to a penalty for willful negligence.