Does a company that runs contracted shuttle bus services for business clients owe Georgia sales tax on the flat fees it charges, or is that transportation exempt?

Plain-English summary

A company operates and maintains shuttle bus services for business clients -- running buses for the clients and their employees, customers, and tenants on set routes and hours. The company owns the buses (each seating more than 15 passengers), employs the drivers, pays for fuel, maintenance, and insurance, and is registered with the Georgia Department of Public Safety as a Bus Carrier. It charges each client a flat hourly fee paid monthly; the riders themselves pay nothing. The company asked whether these fees are subject to Georgia sales tax.

The Georgia Department of Revenue ruled that the shuttle service is taxable. In Georgia, the sale of transportation services counts as a taxable retail sale. There is a separate Transportation Services Tax (TST) that applies to "For Hire Ground Transportation Service Providers" -- limousine carriers, ride-share networks, taxi services, and transportation referral services -- and transportation covered by that tax is exempt from sales tax. But a contracted shuttle bus operator is none of those things, so the TST does not apply and its transportation services remain taxable under the sales tax.

The Department also rejected any resale theory: the business clients are the end users of the transportation and do not resell it, so the flat fees are taxable retail sales rather than exempt sales for resale.

What this means for you

Shuttle bus and contract transportation operators

If you provide transportation services in Georgia and you are not a limousine carrier, ride-share network, taxi service, or transportation referral service, your services likely fall under Georgia sales tax rather than the transportation services tax. Being registered as a Bus Carrier and charging a flat contract fee (rather than per-rider fares) does not change that -- the Department still treated the flat monthly fee as taxable.

Businesses that hire shuttle or transportation providers

Expect Georgia sales tax on contracted shuttle or bus transportation you buy for your employees, tenants, or customers. Because you are the end user of the service, you cannot treat the purchase as an exempt sale for resale.

Accountants and tax professionals

The key distinction is between transportation taxed under the TST Act (O.C.G.A. § 48-13-140 et seq.), which is exempt from sales tax under O.C.G.A. § 48-8-3(25), and transportation services that fall under the general sales tax because the provider is not a For Hire Ground Transportation Service Provider. Here the operator failed the TST provider definitions, so the default rule in O.C.G.A. § 48-8-2(6)(B)(i) -- that the sale of transportation services is a taxable retail sale -- governed.

Common questions

Q: Are transportation services taxable in Georgia?
A: The sale of transportation services is treated as a taxable retail sale under Georgia sales tax, unless the transportation is instead subject to Georgia's separate transportation services tax (which then exempts it from sales tax).

Q: Why wasn't the shuttle service exempt under the transportation services tax?
A: The transportation services tax applies only to "For Hire Ground Transportation Service Providers" -- limousine carriers, ride-share networks, taxi services, and transportation referral services. A contracted shuttle bus operator is none of these, so that tax and its exemption did not apply.

Q: The client pays a flat fee and the riders pay nothing -- does that make it a nontaxable sale for resale?
A: No. The Department found the business clients are the end users of the transportation and do not resell it, so the flat fees are taxable retail sales, not exempt sales for resale.

Q: Can I rely on this ruling for my own transportation business?
A: Not automatically. A Georgia letter ruling binds the Department only for the taxpayer and facts it was issued to, and no other taxpayer may rely on it. Your facts -- and your classification under the transportation services tax -- may differ.

Citations and references

Statutes:

• O.C.G.A. § 48-8-30 (imposition of sales/use tax on tangible personal property and certain services)
• O.C.G.A. § 48-8-2(6)(B)(i) ("retail sale" includes the sale of transportation services)
• O.C.G.A. § 48-8-2(31) (retail sale / sale at retail)
• O.C.G.A. § 48-8-2(33)(A) (sale)
• O.C.G.A. § 48-13-140 et seq. (Transportation Services Tax Act; For Hire Ground Transportation Service Providers)
• O.C.G.A. § 48-8-3(25) (transportation subject to the TST Act is exempt from sales and use tax)

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2024-01

Original ruling text

Georgia Letter Ruling: LR SUT-2024-01
Topic: Sale of Transportation Services
Date Issued: May 10, 2024
This letter is in response to your request for guidance on the application of Georgia sales and use tax
to a certain service offered by Taxpayer.
Facts Presented by Taxpayer
Taxpayer contracts with clients to operate and maintain shuttle bus operations for the clients, as well
as for the clients’ employees, customer, tenants, etc. Taxpayer does not provide interstate services to
its clients.
Under its agreements with clients, Taxpayer generally receives a flat fee per hour of service that is paid
monthly. The riders of the shuttle bus do not pay anything directly to Taxpayer for the rides. The client
agreements generally prescribe the shuttle bus operating hours, the routes, and the minimum services
standards for the shuttle bus and the drivers. Under the agreement terms, Taxpayer provides the
transportation services in exchange for a flat fee from the client. No services other than transportation
are contemplated within the agreements as part of or in exchange for the flat fee.
Taxpayer is registered with the Georgia Department of Public Safety as a Bus Carrier. Shuttles
generally have a capacity that exceeds 15 passengers. Taxpayer owns the buses that provide the shuttle
services, and Taxpayer provides and pays for all necessary maintenance, gas, and insurance. Taxpayer
also employs the driver.
Issues

1. Is Taxpayer subject to the transportation services tax laws, 1 and therefore exempt from sales and use
   tax?
2. Does the Taxpayer sell transportation services for resale?
   Analysis
   Georgia levies and imposes a tax (subject to certain exemptions) on the retail purchase, retail sale,
   rental, storage, use, or consumption of tangible personal property and on certain services.2 “Retail
   sale” or a “sale at retail” means any sale, lease, or rental for any purpose other than for resale. 3 “Sale”
   means any transfer of title or possession, transfer of title and possession, exchange, barter, lease, or
   rental, conditional or otherwise, in any manner or by any means of any kind of tangible personal
   property for a consideration. 4 All sales, uses, consumption, distribution, and storage are taxable until
   specifically exempt from taxation by the Georgia Code. Services that are not specifically listed are
   exempt from Georgia sales and use tax.

O.C.G.A. § 48-13-141, et seq.
O.C.G.A. § 48-3-1 and 48-8-30
3
O.C.G.A. § 48-8-2(31).
4
O.C.G.A. § 48-8-2(33)(A).
1
2

The definition of “retail sale” or “sale at retail” includes the sale of transportation services, when made
to any purchaser for purposes other than resale. 5 Georgia levies and imposes a transportation services
tax on For Hire Ground Transportation Service Providers pursuant to Article 8 of Chapter 13 of Title
48 (the “TST Act”). 6 Transportation that is subject to the TST Act is exempt from sales and use tax. 7
“Ground Transportation Service Provider” means a Limousine Carrier, Ride Share Network Service,
Taxi Service, or a Transportation Service Provider. Defined terms not otherwise defined herein shall
have the meaning as set forth in the TST Act.
Rulings
Issue 1
Based on the facts presented, Taxpayer is not a Limousine Carrier, Ride Share Network Service, Taxi
Service, or a Transportation Referral Service. Therefore, it is not a For-Hire Ground Transport Service
Provider. As such, the TST Act does not apply to the Taxpayer, and moreover, unless specifically
exempt elsewhere in the Georgia Code, its transportation services are taxable pursuant to O.C.G.A. §
48-8-2(6)(B)(i).
Issue 2
Based on the facts presented by the Taxpayer, the Taxpayer sells transportation services to its
customers, and the customers are the end-users of the transportation services. The Taxpayer’s
customers do not resell any transportation services. The transportation services constitute taxable retail
sales.
The opinions expressed in this ruling are based upon the information contained in your request and
limited to the specific transactions, facts, circumstances and taxpayer in question. Should the
circumstances regarding the transactions change or differ materially from those represented, this ruling
may become invalid. In addition, 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 ruling.

O.C.G.A. § 48-8-2(6)(B)(i)
O.C.G.A. § 48-13-140(1).
7
O.C.G.A. § 48-8-3(25).
5

6