Are inmate purchases from a Georgia prison commissary exempt from sales tax when inmates use money received as gifts?

Plain-English summary

Georgia did not exempt retail purchases made by incarcerated individuals at prison commissaries. The result did not change when an inmate paid with money received from family, friends, church members, or other sources as a gift.

The commissary operator therefore had to collect sales tax on its taxable retail sales to inmates. The ruling noted that a seller could elect to absorb the tax instead, but then had to give the buyer written evidence of that election and remain responsible for paying the tax.

Common questions

Q: Does an inmate's status create a Georgia sales-tax exemption?

A: No. The ruling found no exemption specific to purchases by incarcerated individuals.

Q: Are purchases exempt when the inmate received the purchase money as a gift?

A: No. The source of the funds did not change the tax treatment.

Citations and references

• O.C.G.A. §§ 48-8-1, 48-8-30(a)-(b) -- sales tax imposition and dealer collection
• O.C.G.A. § 48-8-2(8)(F)-(G) -- dealer definition
• O.C.G.A. § 48-8-35 -- dealer duty and liability for uncollected tax
• O.C.G.A. § 48-8-36 -- seller election to absorb tax
• Ga. Comp. R. & Regs. r. 560-12-1-.18 -- strict construction of exemptions

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2012-01

Original ruling text

State of Georgia
Douglas J. MacGinnitie
Commissioner

Department of Revenue

Frank M. O’Connell
Director

Administrative Division – Office of Tax Policy
Suite 15107
1800 Century Blvd.
Atlanta, Georgia 30345-3205
(404) 417-6649

November 1, 2012

This is in response to your letter related to the applicability of Georgia sales and use tax to
inmate purchases of tangible personal property made at prison commissaries located in this state.
Facts
The operator of the Correctional Facility commissary collects sales tax on its retail sales of
tangible personal property made to inmates. Inmates make purchases using funds received from
family members, friends, church members, and other sources.
Issues

1. Are inmates exempt from the payment of Georgia’s sales and use tax on purchases of
   tangible personal property made at correctional institution commissaries located in this state?
2. Are inmate purchases of tangible personal property exempt from Georgia’s sales and use tax
   when the purchase is paid for by money gifted to the inmate?
   Analysis
   Georgia levies and imposes a tax (subject to certain specific exemptions) on the retail purchase,
   retail sale, storage, use, or consumption of tangible personal property and on certain enumerated
   services. 1 Every purchaser of tangible personal property at retail in Georgia is liable for a tax on
   the purchase at the rate of 4 percent of the sales price of the purchase, plus any applicable local
   sales taxes.
   The dealer making the taxable sale must collect the tax from the purchaser and remit the tax to
   the Department. 2 The definition of “dealer” includes a person who; “sells at retail, offers for sale
   at retail, or has in his possession for sale at retail, or for use, consumption, distribution, or storage
   for use or consumption in this state tangible personal property,” and “manufactures or produces
   1
   2

O.C.G.A. §§ 48-8-1 and 48-8-30(a).
O.C.G.A. § 48-8-30(b)(1).

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November 1, 2012
Page 2 of 3

tangible personal property for sale at retail or for use, consumption, distribution, or storage for
use or consumption in this state.” 3
“Each dealer shall add the amount of the tax imposed under this article, as far as practicable, to
the sale price or charge. The tax shall be a debt from the purchaser or consumer to the dealer
until it is paid and shall be recoverable at law in the same manner as authorized for the recovery
of other debts. Any dealer who neglects, fails, or refuses to collect the tax provided for in this
article upon a retail sale of tangible personal property made by him, his agent, or his employee
when the sale is subject to the tax shall be liable for and shall pay the tax himself.” 4 Effective
July 1, 2012, sellers may (but are not required to) “absorb” the tax that they would otherwise
charge purchasers, but in such a case, the seller must provide the buyer with written evidence
that the seller will be liable for and pay any tax that the buyer is relieved from paying. 5
“Sale” means any transfer of title or possession, exchange, barter, lease, or rental, conditional or
otherwise, in any manner, by any means of any kind of tangible personal property for a
consideration. 6 “Sales price” means the total amount valued in money, whether paid in money or
otherwise, for which tangible personal property or services are sold.
Exemptions from taxation are strictly construed and an exemption will not be granted unless the
Act clearly and distinctly shows that such was the plain and unambiguous intention of the
General Assembly. 7 Georgia’s code section related to sales and use tax exemptions, O.C.G.A. §
48-8-3, does not provide an exemption specific to purchases made by incarcerated persons
located in this state; nor, does the code section provide an exemption for purchases made with
consideration received as a gift by the individual making the purchase.
Rulings

1. Georgia statute does not provide an exemption from the payment of sales and use taxes for
   purchases made by incarcerated individuals. Unless the operator of the correctional facility
   elects to absorb the tax, as a dealer located in this state, it must collect sales tax on all of its
   retail sales of tangible personal property and taxable services made to inmates.
2. Georgia law does not provide an exemption from the payment of sales and use taxes for
   purchases made by incarcerated individuals – including those purchases paid for by funds
   received as gifts.

3

O.C.G.A. § 48-8-2(8)(F)&(G).
O.C.G.A. § 48-8-35.
5
O.C.G.A. § 48-8-36.
6
O.C.G.A. § 48-8-2(33)(A).
7
Ga. Comp. R. & Regs. r. 560-12-1-.18.
4

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November 1, 2012
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Conclusion
The opinions expressed in this ruling are based upon the information contained in your request
and limited to the specific transactions and taxpayer in question. Should the circumstances
regarding the transactions change, or differ materially from those represented, then this ruling
may become invalid. In addition, please be advised that subsequent statutory or administrative
rule changes or judicial interpretations of the Statutes or Rules upon which this advice is based
may subject similar future transactions to a different tax treatment than that expressed in this
response.

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