Does a Georgia restaurant pay sales tax on kitchen equipment, cookware, shelving, cleaning supplies, tables, and chairs bought to open the business?

Plain-English summary

A restaurant bought ice makers, refrigerators, freezers, work tables, ranges, sinks, pots, pans, utensils, shelves, cleaning supplies, chairs, and tables when it opened. It asked whether those purchases were exempt from Georgia sales and use tax.

The Department ruled that all of the listed purchases were taxable. The restaurant used the property to prepare food and accommodate customers; none of it became part of a meal sold to the customer. The purchases therefore were for the restaurant's own use, not tax-free resale.

The restaurant could not use Georgia's manufacturing exemption either. Georgia law expressly excludes restaurants from being treated as manufacturers for that exemption.

What this means for you

Restaurant owners

Budget sales or use tax on startup and replacement kitchen equipment, cookware, furniture, shelving, and operating supplies. Using an item to prepare something you later sell does not mean the item itself was bought for resale.

Food-service businesses

The ruling distinguishes equipment and supplies from items that actually become part of the food sold. The listed durable goods and operating supplies remained the restaurant's property or were consumed in its operations.

Accountants and tax professionals

Do not claim Georgia's manufacturing-equipment exemption for a restaurant. The statute and regulation specifically exclude restaurants from the qualifying manufacturer definition.

Common questions

Q: Are refrigerators, ranges, and ice makers exempt restaurant equipment?
A: No. They are tangible personal property used by the restaurant and are subject to sales or use tax.

Q: Are pots, pans, utensils, and cleaning supplies purchased for resale?
A: No. They are used or consumed by the restaurant and do not become part of the meals sold to customers.

Q: Can restaurant tables and chairs qualify for the manufacturing exemption?
A: No. They are taxable furniture, and restaurants are excluded from the manufacturing exemption in any event.

Q: Can another restaurant rely on this ruling?
A: No. It binds the Department only for the requesting taxpayer and facts, though the ruling states the general treatment of property used by a restaurant.

Citations and references

Statutes and rules:

• O.C.G.A. §§ 48-8-1 and 48-8-30(a) (sales and use tax imposition)
• O.C.G.A. § 48-8-2(31) (definition of retail sale)
• O.C.G.A. § 48-8-38 (presumption of taxability)
• O.C.G.A. § 48-8-3.2 and § 48-8-3.2(a)(10) (manufacturing exemption and restaurant exclusion)
• Ga. Comp. R. & Regs. r. 560-12-2-.115(6)(e) (restaurant property)
• Ga. Comp. R. & Regs. r. 560-12-2-.62(2)(j) (restaurant exclusion)

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2018-06

Original ruling text

Georgia Letter Ruling Number: LR SUT-2018-06
Topic: Restaurants
Date Issued: July 26, 2018
This letter is in response to your request for guidance on the application of Georgia sales and use tax to the purchase
of restaurant equipment.
Facts Presented by Taxpayer
[Redacted] (“Taxpayer”) is a restaurant. Taxpayer purchased equipment when the business opened in 2016. The
startup equipment that Taxpayer purchased includes ice makers, refrigerators, freezers, work tables, ranges, sinks,
pots, pans, cooking utensils, shelves, cleaning supplies, chairs, and tables. These items are used to prepare food for
customers and to furnish the restaurant.
Issue
Is Taxpayer’s purchase of equipment and furniture exempt from Georgia sales and use tax?
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
A “retail sale” is a sale of tangible personal property for any purpose other than for resale. 2 Consequently, purchases
of tangible personal property for resale are excluded from the definition of “retail sale” and are not subject to sales
and use tax. However, purchases of tangible personal property for one’s own use are retail purchases that are subject
to the tax unless an exemption applies.
Tangible personal property used by a restaurant is not purchased for resale and, as such, is subject to sales and use
tax. 3 In this case, Taxpayer purchased items for use in the operation of its restaurant: to prepare food and accommodate
customers. The items did not become a part of a meal sold to customers. The purchase of equipment and furniture was
not for resale and, thus, was subject to sales and use tax unless an exemption applies.
Sales and use tax is broadly imposed on all retail purchases of tangible personal property, and all purchases are
presumed taxable unless the contrary is established. 4 Exemptions from taxation are strictly construed, and an
exemption will not be granted unless the relevant provision clearly and distinctly shows that such was the plain and
unambiguous intention of the General Assembly. 5 Georgia law provides an exemption for manufacturers to make tax
exempt purchases of equipment necessary and integral to the manufacture of tangible personal property in a
manufacturing plant. 6 However, restaurants are statutorily excluded from being considered manufacturers for purposes
of this exemption. 7 As such, Taxpayer cannot claim that purchases are tax exempt pursuant to the manufacturing
exemption.

O.C.G.A. §§ 48-8-1 and 48-8-30(a).
O.C.G.A. § 48-8-2(31).
3
Ga. Comp. R. & Regs. r. 560-12-2-.115(6)(e) (providing rule and list of examples).
4
O.C.G.A. §§ 48-8-1, 48-8-30(a), and 48-8-38.
5
Ga. Comp. R. & Regs. r. 560-12-1-.18.
6
O.C.G.A. § 48-8-3.2; Ga. Comp. R. & Regs. r. 560-12-2-.62.
7
O.C.G.A. § 48-8-3.2(a)(10); Ga. Comp. R. & Regs. r. 560-12-2-.62(2)(j).
1
2

Georgia Letter Ruling Number: LR SUT-2018-06
Topic: Restaurants
Date Issued: July 26, 2018
Page 2 of 2
Ruling
Tangible personal property used or consumed by a restaurant is not purchased for resale and, consequently, is subject
to sales and use tax. Georgia law provides a sales and use tax exemption for manufacturers making qualifying
purchases, but Taxpayer, as a restaurant, cannot claim the benefits of the manufacturing exemption. Therefore,
Taxpayer must pay tax on all purchases of the subject equipment and furniture.
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. The facts herein are those presented by the
taxpayer and the Department accepts them as true for this ruling. If the facts presented herein change, are not true,
are different, or material facts have been omitted, the conclusions reached in this ruling may change. 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.