A major source of local government revenue is the meals tax. Most states authorize the right of local governments to raise revenues utilizing a meals tax. It is defined differently in each state. If a business is involved in the food service sector the bookkeeper needs to grasp the fundamental concepts of how the food tax is structured. In addition, this tax collection process is accounted for in a similar manner as sales tax.
Sales tax is a state mandated tax whereby consumer goods are assessed a fee on the final price. Sales tax serves as a form of revenue to the state to augment tax revenues. In most states, a portion of the sales tax is passed back to the locality for certain programs and compliance with the law.