Businesses of all types and sizes throughout the United States, Mexico and beyond bring their disputes to Gardere's litigation team and receive practical, responsive, boutique-style attention in return. Our clients have access to the firepower and value of a well-known and highly-regarded Firm's capabilities and interdisciplinary strengths.
Gardere has a national and international energy practice formed around our Energy Industry Team, which is a multidisciplinary group of approximately 80 attorneys with diverse backgrounds, experience and skills specific to the energy industry. Our team includes attorneys who have served as in-house counsel for major energy companies, providing a depth of insight into our clients' needs, issues and concerns. We understand and regularly practice in virtually every sector of the energy, and we represent a wide variety of industry participants from multinational corporations to individuals.
From our offices in the United States and Mexico, our International Practice helps clients operate in today’s global economy. We have more than 30 professionals operating as a boutique within an Am Law 200 law firm and are able to provide focused service with the resources of a large firm. We understand that clients who are engaged in the global marketplace need lawyers who can operate seamlessly across multiple jurisdictions. Our international experts are multi-lingual, are culturally fluent and intimately familiar with various legal systems across the world, especially those in Latin America. Whether you need help with commercial transactions, regulatory matters, customs and import regulations, immigration matters, M&A and joint ventures, international disputes, or international tax planning, Gardere’s international team is here to assist you.
We represent domestic and foreign private funds in all aspects of fund formation, fund operations, platform and add-on acquisitions, and portfolio company operations. Our team has a reputation for being the go-to-lawyers for private equity funds, hedge funds, venture capital funds and family offices. We are known for our vast deal experience, the efficient way we staff and manage our work, and the way we maintain our relationships. We get deals done with sophisticated, strategic, and practical advice tailored to the needs of our clients.
*Not admitted to practice law.
Currently, hotels, restaurants and bars that hold a Texas mixed-drink permit, pay a 14 percent mixed-beverage gross receipts tax on each beer, mixed drink or wine they sell. This tax is in effect an excise tax, paid by the permit holder. The tax was traditionally calculated into the cost of the beverage as part of the total cost of the drink. Establishments with only beer and/or beer and wine permits (not mixed-beverage permits) do not charge this tax, and it is not added to the cost of the beverage. Instead, such locations charge customers a sales tax on these beverages, paid by the consumer.
Effective Jan. 1, 2014, with the passage of HB 3572, the mixed-beverage gross receipts tax will change from a 14 percent tax paid exclusively by mixed-drink permit holders to a 6.7 percent gross receipts tax paid by the mixed-drink permit holder coupled with a 8.25 percent mixed-beverage sales tax paid by the consumer. This creates a savings for hotels, restaurants and bars, assuming drink prices remain the same, because 8.25 percent of the price can be added to the listed drink price and passed along to the consumer, with a lower percentage of 6.7 percent gross receipts tax paid by the mixed-drink permit holder. Thus, earnings of 8.25 percent are able to be immediately retained and added to the mixed-beverage permittee's bottom line, assuming the sales tax component is passed along. Another advantage is that 8.25 percent of the current mixed-beverage sales tax will no longer be counted as income, potentially saving money on fees, premiums, rents and taxes that may be calculated based on the gross revenues of the retailer.
As an example, prior to the change, a $5.00 drink would net the permit holder $4.30 because of the $.70 mixed-beverage gross receipts tax remitted to the Texas State Comptroller. After the change, assuming the drink price remains the same, with the 6.7 percent gross receipts tax included and passing the mixed-beverage sales tax on to the customer, the permit holder would net $4.67 (rounding up), an increase of $.37 per drink, but the customer would pay $5.43 instead of $5.00. Alternatively, the hotel, restaurant or bar could decide to keep the drink prices the same, while footing the gross receipts tax and mixed-beverage tax as before, or it could decrease drink prices proportionally while passing the mixed-beverage sales tax on to the customer such that the end drink price paid by the customer is still $5.00.
Opponents of the tax change point out that customers are likely to see an increase in what they pay for a drink due to permit holders being unlikely to reduce the sales price of the drink while passing on the mixed-beverage sales tax on to the consumer. Proponents of the bill have stated that the change in tax will promote transparency (customers are now made aware of the tax and see the tax) and equity (mixed-beverage permittees can now pass on the same sales tax as beer and beer and wine permittees) in alcohol taxes. The State has estimated that this tax change will result in an increase of $21.3 million to the State in fiscal 2014-15, with cities and counties gaining $6.1 million over the same period.
If you have any questions regarding the substance or application of this tax law change, do not hesitate to contact Gardere Partner Dewey A. Brackin (firstname.lastname@example.org or 512.542.7025) or another Hospitality Industry Team member.
The publications contained in this site do not constitute legal advice. Legal advice can only be given with knowledge of the client's specific facts. By putting these publications on our website we do not intend to create a lawyer-client relationship with the user. Materials may not reflect the most current legal developments, verdicts or settlements. This information should in no way be taken as an indication of future results.
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