In recent years, the growth of third-party delivery platforms has brought great convenience to customers but also added complexity for franchise owners. One area that still creates confusion (and costly mistakes) is sales tax remittance.
Whether you use DoorDash, Uber Eats, Grubhub, or several delivery platforms, it’s essential to understand who is responsible for remitting sales tax in each state where you operate. These rules have evolved significantly in recent years, and many franchise operators are unknowingly leaving money on the table.
Why Sales Tax Responsibility Matters
Every state has a different method for determining who must remit sales tax on third-party delivery orders. In some jurisdictions, the restaurant or franchisee is responsible for remitting sales tax. In others, the delivery platform is treated as a marketplace facilitator and is required to collect and remit the tax on the operator’s behalf.
Knowing the rules for each state dramatically reduces the risk of:
• Overpaying sales tax
• Underpaying and facing penalties
• Filing incorrect returns
• Spending unnecessary time reconciling mismatched records
For multi-location or multi-state franchise operators, small errors can quickly compound into serious financial exposure.
Why Sales Tax Overpayments Happen
Many point-of-sale (POS) systems are not fully equipped to distinguish between in-store transactions and orders placed through third-party delivery platforms. As a result, sales tax is often included in gross sales reports, even though the delivery platform has already collected and remitted it. If franchise owners file sales tax returns based solely on POS data without adjusting for third-party remittance, they may pay sales tax twice on the same transaction.
Marketplace Facilitator Laws Continue to Evolve
Nearly all states now have marketplace facilitator laws, but the specifics vary widely, and several states have updated their guidance in recent years. Delivery platforms also regularly update their tax handling practices, often notifying restaurants only by email.
To stay compliant and avoid overpaying:
• Confirm each state’s current sales tax rules annually (or more often if you operate in multiple states).
• Ensure your POS is appropriately configured to distinguish third-party orders where possible.
• Reconcile delivery platform statements monthly to verify tax handling.
• Work closely with your accounting advisor to track changes and adjust filings as needed.
• Ignoring these communications — or assuming last year’s rules still apply — can be a costly mistake.
How Grassi Supports Your Franchise Business
Grassi’s Franchise Services team works with franchise businesses nationwide to identify tax exposure, streamline POS and delivery-platform reconciliations, and ensure accurate sales tax filings. Our specialists help franchise owners:
• Determine who is responsible for sales tax remittance in each operating state
• Review delivery platform statements to identify overpayments or missed deductions
• Correct POS configurations to prevent ongoing issues
• Amend past filings and recover overpaid tax
• Stay ahead of regulatory and platform changes that impact compliance
If you are unsure whether your franchise is remitting sales tax correctly, Grassi can help you review your current process and identify opportunities to reduce risk and protect profitability.
Frequently Asked Questions
Q: Who is responsible for remitting sales tax on third-party delivery orders?
A: It varies by state. In some states, the restaurant or franchisee must remit sales tax. In others, the delivery platform is treated as a marketplace facilitator and is responsible for collecting and remitting the tax.
Q: Can I overpay sales tax even if I am trying to stay compliant?
A: Yes. Overpayments commonly occur when a delivery platform collects and remits sales tax, which is then included in point-of-sale reports and paid again by the franchise owner. Without proper reconciliation, duplicate payments can go unnoticed.
Q: Do marketplace facilitator rules change frequently?
A: Yes. While most states have adopted marketplace facilitator laws, guidance continues to evolve. States and delivery platforms periodically update their tax practices, making ongoing monitoring important for multi-state franchise operators.
Q: How can Grassi’s Franchise Services team help with sales tax compliance and third-party delivery?
A: Grassi’s Franchise Services advisors work with franchise owners to evaluate sales tax responsibilities across operating states, review delivery platform and POS data, and identify potential overpayments or exposure. We also help align reporting processes with current marketplace facilitator rules and support amended filings.
