qbteachmt
Level 15

What you described is translated as, "My client runs a business, but decided to give the money to charity." That is personal donation.

They cannot give the sales tax funds; that isn't theirs to use, keep or give.

And, unfortunately, your client didn't Give Food, so the special pandemic provisions don't apply.

"For the expense to be classified as “advertising,” the business must be able to substantiate that it received a direct benefit for its donation. The cost can then be classified as an “ordinary and necessary business expense." "

This is why I tell my clients to print and display a banner, or make sure they get listed in the event program, or on the uniforms. Then, take pictures for proof. Advertising is not the same as "generating good feelings." You need hard evidence.

Also, keep in mind that it is a typical mistake to write off the Retail Price as Advertising or charity.

"It's a new restaurant, so your ideas are most welcome."

Your client needs a different model. Such as, gives away the food to the population that charity targets. What your person likely intended is to support the charity, either with food or money. The way to do this is to Partner with them, and using their FEIN  and 501(c)(3) status, they would not have run into this dilemma. This becomes a true fundraiser, not personal giving, if you set it up properly.

Example of something that would change: The charity's purpose relates to food, they likely don't need to charge Sales Taxes, for instance, if this is "their" event that your client is sponsoring and supplying, because this is not Unrelated.

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