Must a nonprofit lounge collect Georgia sales tax on food, beverages, tangible goods, and admissions sold to members or the public?

Plain-English summary

The nonprofit lounge had to collect Georgia sales tax on all its retail sales of food, beverages, tangible personal property, and admissions. The result applied to sales to members and guests as well as occasional sales to the public; nonprofit status did not create a general retail-sales exemption.

The organization had to report the tax on Form ST-3. It could purchase resale inventory without tax by giving the seller a properly completed Form ST-5 exemption certificate.

Common questions

Q: Does selling only to members avoid sales tax?

A: No. The ruling required tax on the described retail sales without distinguishing members from the public.

Q: Could the nonprofit buy food and merchandise tax-free?

A: Only when buying inventory for resale and providing a properly completed Form ST-5.

Citations and references

• O.C.G.A. § 48-8-2(31)(C) -- taxable admissions
• O.C.G.A. § 48-8-39(a) -- sales for resale
• Ga. Comp. R. & Regs. r. 560-12-2-.22 -- nonprofit purchases and sales

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2013-13

Original ruling text

State of Georgia
Douglas J. MacGinnitie

Department of Revenue

Commissioner

Frank M. O’Connell
Director

Administrative Division – Office of Tax Policy
Suite 15107
1800 Century Blvd., N.E.
Atlanta, Georgia 30345-3205
(404) 417-6649
June 12, 2013

Georgia Letter Ruling SUT No. 2013-06-12-01 Non-Profit Organizations

This letter is in response to your request for guidance on the application of Georgia sales and use tax to
sales made by a nonprofit organization.
Facts
Taxpayer is a non-profit organization that operates a lounge where it makes sales of food, beverage,
tangible personal property and admissions to members, guests, and occasionally the general public.
Taxpayer is now seeking guidance as to the correct application of sales and use tax to its sales of food,
beverage, tangible personal property, and admissions.
Issue
Are Taxpayer’s retail sales of food, beverage, tangible personal property, and admissions subject to Georgia
sales and use tax?
Analysis
All retail purchases and sales of tangible personal property are taxable unless provided for otherwise.1 Tax
is levied and imposed upon the retail purchase, retail sale, rental, storage, use, or consumption of tangible
personal property and on certain services that occur in this state.2 "Retail sale" or a "sale at retail" means a
sale to a consumer or to any person for any purpose other than for resale of tangible personal property or
certain services.3 Retail sales that are subject to state sales tax include sales of tickets, fees, or charges
made for admission to places of amusement, sports, or entertainment such as billiard or pool rooms,
bowling alleys, theaters, public dance halls, and any other place where an admission fee is charged.4

1

O.C.G.A. §§ 48-8-1 and 48-8-30(b).
O.C.G.A. § 48-8-30.
3
O.C.G.A. § 48-8-2(6)(A).
4
O.C.G.A. § 48-8-2(31)(C).
2

An Equal Opportunity Employer

June 12, 2013
Page 2 of 2

Sales for resale are excluded from the definition of “retail sale.”5 A sale for resale is the transfer of
tangible personal property not for consumption or use, but to be resold by the purchaser in the regular
course of business.6
Generally, no exemption is granted to churches, religious, charitable, civic or other non-profit
organizations. These organizations are required to pay sales tax on all retail purchases of tangible personal
property unless a specific exemption applies. Generally, when such organizations engage in selling
tangible personal property at retail, they are required to comply with the statutory provisions relating to
collection and remittance of the tax.7 Tax collected by a registered nonprofit is remitted using the Form
ST-3 Sales and Use Tax return. However, registered nonprofits may purchase exempt for resale by
providing the dealer with a properly completed Form ST-5 Sales Tax Certificate of Exemption.
Ruling
Taxpayer’s retail sales of food, beverage, tangible personal property, and admissions are subject to
Georgia sales and use tax. Thus, Taxpayer must collect and remit Georgia sales tax on all of its retail sales
of food, beverage, tangible personal property, and admissions.
Taxpayer must remit sales and use tax using the Form ST-3 Sales and Use Tax return. Taxpayer may
purchase inventory exempt for resale by providing the dealer with a properly completed Form ST-5 Sales
Tax Certificate of Exemption.
The opinions expressed in this ruling are based upon the information contained in your request and
limited to the specific transactions 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 those expressed in this response.

5

O.C.G.A § 48-8-2(6) until 01/01/2011; O.C.G.A. § 48-8-2(31) effective 01/01/2011.
O.C.G.A. § 48-8-39(a).
7
Ga. Comp. R. & Regs. 560-12-2-.22.
6

An Equal Opportunity Employer