Is sales tax due on food, meals, soft drinks, and candy sold to inmates in federal prisons in Texas?

Plain-English summary

The requester asked the Texas Comptroller's Tax Policy Division for written confirmation that sales tax does not apply to food items sold to prisoners confined in federal prisons. The Comptroller replied that it could no longer give that confirmation, because the law had changed.

House Bill 462 added a new Subsection (g) to Section 151.314 of the Texas Tax Code, making food products, meals, soft drinks, and candy sold to inmates taxable, effective October 1, 1995. The only carve-out is for meals, soft drinks, and candy that a correctional facility serves to inmates for free, as part of the incarceration itself — those remain untaxed. The letter is explicit that this new policy also applies to prisoners in federal prisons, not just state prisons.

Before House Bill 462, sales of food items to prisoners confined in prisons operated under state authority were exempt, and there was no similar statutory exemption for federal prisoners. Even so, the Comptroller had previously extended the same exemption to food sold to federal inmates "for consistency." With the law change, the Comptroller now applies the same taxable treatment to both state and federal prison inmate food sales.

What this means for you

Vendors and contractors selling food to federal (or state) correctional facilities

If you sell food products, meals, soft drinks, or candy to inmates — whether through a prison store, vending machines, or similar arrangement — those sales became taxable as of October 1, 1995, regardless of whether the facility is a state or federal prison. You can no longer treat these sales as exempt based on older guidance.

Correctional facilities providing meals directly to inmates

If your facility serves meals, soft drinks, or candy to inmates at no charge, as part of housing and feeding them during incarceration, that free provision is not a taxable sale and remains untaxed. The tax applies to sales — items inmates or others pay for — not to food given to inmates without charge.

Anyone relying on older Comptroller guidance about prison food sales

This letter specifically notes that a prior response the requester received "was correct at that time" but that the Comptroller's policy changed. If you have older guidance treating food sales to federal prisoners as exempt, that guidance no longer reflects current law after October 1, 1995.

Common questions

Q: Does sales tax apply to food sold to inmates in federal prisons?
A: Yes, as of October 1, 1995. House Bill 462 added Subsection (g) to Tax Code Section 151.314, and the Comptroller applies that same taxable treatment to inmates in federal prisons as it does to inmates in state prisons.

Q: Is there any exception?
A: Yes. Meals, soft drinks, and candy that a correctional facility serves to inmates without charge, as part of incarceration, are not taxed. The taxable change applies to sales of these items.

Q: Were food sales to prisoners always taxable?
A: No. Before House Bill 462, sales of food items to prisoners in state-operated prisons were exempt, and the Comptroller had also been treating federal-prison food sales as exempt for consistency, even though no statutory exemption existed for federal prisoners specifically. That changed with the October 1, 1995 effective date.

Q: Can I rely on an earlier Comptroller answer that said these sales were exempt?
A: Not for sales after October 1, 1995. This letter tells the requester that an earlier response was correct only "at that time," because the Comptroller's policy — and the underlying law — subsequently changed.

Citations and references

Statutes and rules:

• Tex. Tax Code § 151.314(g), added by House Bill 462 (taxing food products, meals, soft drinks, and candy sold to inmates, effective October 1, 1995)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9510L1375C13

Original ruling text

October 23, 1995

Dear **:

Thank you for your letter of October 13, 1995. You asked for a written
confirmation that sales tax is not applicable to the sale of food items to
prisoners confined in federal prisons.

I'm unable to provide that confirmation. The response you received from
*** was correct at that time. However, we have changed our policy.

House Bill 462 added Subsection (g) to Section 151.314 of the Texas Tax Code
so that food products, meals, soft drinks, and candy sold to inmates are taxed.
The meals, soft drinks, and candy served by correctional facilities to inmates
as part of the incarceration and without a charge to the inmates are not taxed.
The effective date of this change is October 1, 1995. This policy will also
apply to prisoners in federal prisons.

Prior to House Bill 462, sales of food items to prisoners confined in prisons
operated under the authority of the state were exempt. No similar exemption
existed for federal prisoners. However, for consistency, the comptroller
adopted a policy of exempting food items sold to federal prisoners. We will
now apply the same policy of taxing food items sold to inmates in federal
prisons as inmates confined in state prisons.

This opinion is based on the facts presented. If there are any additional or
different facts, the opinion may change.

Sincerely,

Sales Tax Policy Division

NOTE: Previous Accession Number 9510604L