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Melanie operates Mel's Bakery in Foxboro, Massachusetts, and has retail stores in Connecticut, Maine, Massachusetts, New Hampshire, and Rhode Island. Mel's Bakery also ships specialty
Melanie operates Mel's Bakery in Foxboro, Massachusetts, and has retail stores in Connecticut, Maine, Massachusetts, New Hampshire, and Rhode Island. Mel's Bakery also ships specialty breads nationwide upon request. Determine Mel's Bakery's sales tax collection responsibility and calculate the sales tax liability for Massachusetts, Connecticut, Maine, New Hampshire, Rhode Island, and Texas, based on the following information: Note: Leave no answer blank. Enter zero if applicable. Required: a. The Massachusetts stores have $505,000 in sales. Massachusetts's sales tax rate is 5 percent; assume it exempts food items. b. The Connecticut retail stores have $404,000 in sales ( $302,500 from in-store sales and $101,500 from catering) and $10,500 in delivery charges for catering activities. Connecticut sales tax is 6 percent and excludes food products but taxes prepared meals (catering). Connecticut also imposes sales tax on delivery charges on taxable sales. c. Mel's Bakery's Maine retail store has $254,000 of sales ( $203,000 for take-out and $51,000 of in-store sales). Maine has a 5 percent sales tax rate and a 7 percent sales tax rate on prepared food; it exempts other food purchases such as take-out purchases. d. The New Hampshire retail stores have $251,500 of dine-in sales. New Hampshire is one of five states with no sales tax. However, it has a room and meals tax rate of 8 percent. New Hampshire considers any food or beverage served by a restaurant for consumption on off the premises to be a meal. e. Mel's Bakery's Rhode Island stores earn $301,500 in sales. The Rhode Island sales tax rate is 7 percent and its restaurant surtax is 1 percent. Rhode Island considers Mel's Bakery to be a restaurant because its retail store has seating. f. One of Mel's Bakery's best customers relocated to Texas, which imposes an 8.25 percent state and local sales tax rate but exempts bakery products. This customer entertains guests regularly and made 10 orders totaling $15,100 of food items this year. Assume Texas only has a sales threshold of $500,000 to establish an economic nexus
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