Are parchment sheets exempt packaging materials when a food business first uses them during baking and later uses them to package the food?

Plain-English summary

The parchment sheets were taxable because food businesses used them during cooking before using them as packaging. Each food item was placed on a sheet and baking screen, baked in an oven, and then moved with the same sheet into a clamshell box for shipment or sale.

Georgia's packaging exemption applied only to materials used solely for packaging and not bought for reuse. Because the sheets served first as cooking materials, their later packaging role did not satisfy that condition. The seller therefore had to collect tax from its purchasers.

Common questions

Q: Why did later use as packaging not qualify for the exemption?

A: The exemption required sole use for packaging. Using the sheets during baking was a separate taxable use.

Q: Who had to collect the tax under the ruling?

A: The taxpayer selling the parchment sheets had to charge tax on its sales to the food-business purchasers.

Citations and references

• O.C.G.A. § 48-8-3(94) -- packaging-material exemption
• Ga. Comp. R. & Regs. r. 560-12-2-.25(2) -- packaging-material exemption
• Ga. Comp. R. & Regs. r. 560-12-2-.115(6)(e)(1) -- restaurant property used or consumed

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2016-10

Original ruling text

Date Issued: April 4, 2016
Georgia Letter Ruling: LR SUT-2016-10
Topic: Packaging Supplies

This letter is in response to your request for guidance on the application of Georgia sales and use tax to parchment
sheets sold by Taxpayer.
Facts as Presented by Taxpayer
Taxpayer sells parchment sheets to its Purchasers throughout Georgia. While ultimately used to package a food item
for shipment or sale, parchment sheets are initially used by the Purchasers in the preparation of the food item sold. A
food item is placed on the parchment sheet and then onto a baking screen. The food item, parchment sheet, and baking
screen are then placed in an oven where the food item is baked. When the food item is removed from the oven, the
parchment sheet and food item are placed into a clam shell box for shipment and sale.
Issue
How is tax appropriately applied to Taxpayer’s sales of parchment sheets to Purchaser when the parchment sheets
sold are first used by the Purchasers in the food item preparation process but subsequently are used to package the
food item for shipment or sale?
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, certain enumerated services, and utilities. 1 Tangible personal
property used or consumed by a restaurant is subject to tax.2 Accordingly, parchment sheets used for cooking are
taxable to the Purchaser.
Although Georgia law provides an exemption for packaging materials, the exemption does not apply in this case. 3 The
exemption applies to “containers and packaging materials used in a trade or business for packaging tangible personal
property for shipment or sale if such items are used solely for packaging and are not purchased for reuse by the seller
or shipper of the tangible personal property.”4 Because Taxpayer’s Purchasers use the individual parchment sheets in
the baking process, the parchment sheets are not used solely for packaging and thus do not qualify for the packaging
exemption.
Ruling
Based on the facts provided, Taxpayer must charge tax on its sales of parchment sheets to Purchasers.
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. Subsequent statutory
or administrative rule changes or judicial interpretations of the statutes or rules upon which this ruling is based may
subject similar future transactions to different tax treatment than that expressed in this ruling.

1

O.C.G.A. §§ 48-8-1, 48-8-2(31)(A), 48-8-30.
Ga. Comp. R. & Regs. r. 560-12-2-.115(6)(e)(1).
3
O.C.G.A. § 48-8-3(94).
4
O.C.G.A. § 48-8-3(94); Ga. Comp. R. & Regs. r. 560-12-2-.25(2).
2