What taxes are sales of liquor for consumption on the premises to nonprofit and government entities subject to?

Generally, sellers of liquor for consumption on the premises must collect and remit both liquor-by-the-drink (“LBD”) tax as well as sales tax on those sales.

However, nonprofit and government entities are exempt from paying the sales tax on their purchases of tangible personal property. Therefore, a person who sells liquor directly to a nonprofit or government entity for its own consumption on the premises must collect and remit LBD tax on the sale, but the seller will not collect sales tax on the sale. For more information, read important notice 15-20.

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