XP: Is a service charge taxable?

lls31

I posted this on my local board (Northeastern PA) but it doesn't get much action over there, so I figured I'd try this board as well.

Does anyone know if service charges are taxable in PA?  Our venue charges the price pp, a 21% service charge, and 6% PA sales tax.  

I was under the impression that this meant the following:

$10,000 total venue cost (this is just an example)

+ $2,100 (service charge)

+ $600 (tax)

------------------

$12,700

The coordinator at the venue is telling us this:

$10,000 total venue cost

+ $2,100 (service charge)

------------------

$12,100

+ $726 (tax)

------------------

$12,826

I was under the impression that the service charge would not be taxable, but we're being told that it is.  

tashabear08

As far as I understand you can only charge sales tax on a tangeble product.  Not on a service.

daria24

I also answered you on CC, but my wedding is in Central PA and my service charge was taxed, because it is not gratuity for the staff. I double checked with the venue, but it does state in my contract that the 20% service charge is taxable. 

lls31

I contacted the PA Dept of Revenue and this is the response I received, in case anyone else is wondering:

The service charge is included when computing the Sales tax due on the transaction. Only amounts separately stated and identified as "gratuity" or "tip" are exempt from tax.