The Iowa Department of Revenue has made corrections to an article issued in the June 2008 edition of eNews, discussing the taxability of complimentary beverages and meals provided by bars, restaurants, and hotels/motels. The corrections clarify that complementary alcoholic beverages, soft drinks, candy, and other items that are not tax exempt as food are taxable as goods consumed when given to customers or employees because these items are normally subject to tax. Prepared meals are also subject to tax when given to customers. However, food consumed without charges by at-work employees is not taxable because it is intended for the employee’s consumption pursuant to an employer’s agreement, not intended for sale. Meals and beverages sold to employees at a reduced price that are not tax exempt as food are subject to tax based on the reduced selling price. When hotels or motels advertise complimentary meals as part the room rental, the tax is already being paid because it’s included in the room rate. Therefore, the hotel would not owe additional use tax. However, if the customer is ordering food from the hotel’s restaurant or room service, where there is a separately stated charge and the person received the meal free, it would then be subject to use tax. (E-mail, Iowa Sales or Use Tax on Complimentary Items Given to Customers or Employees, Iowa Department of Revenue, February 12, 2009