Which charges of a Georgia document-storage and information-management company are taxable, including boxes, paper records, cloud services, storage, and delivery?

Plain-English summary

A records-management company separately billed 19 categories ranging from boxes and physical storage to pickup, shredding, scanning, cloud backup, hosted software, and medical-record delivery. The Georgia Department of Revenue ruled that only two categories were taxable: boxes, cases, and packaging materials sold to customers, and medical information delivered physically as printed or copied records.

The remaining categories were not subject to sales tax. Physical document and vault storage, account maintenance, access, viewing, refiling, shredding, scanning, indexing, and help-desk support were non-taxable services. Electronic record delivery, hosting, workflow software accessed online, research access, and cloud backup did not transfer tangible personal property and were also non-taxable.

Pickup and delivery charges for moving a customer's stored property were exempt transportation services because they were not delivery charges connected with the company's sale of that property. Fuel surcharges that merely supplemented those transportation charges received the same exempt treatment.

What this means for you

Records-storage and warehouse businesses

Charges for storing, maintaining, administering, accessing, viewing, or refiling a customer's property can be non-taxable storage-warehouse services. Selling the customer boxes or other storage materials is different: those are taxable sales of tangible personal property when no packaging-for-shipment-or-sale exemption applies.

Digital-document and cloud providers

Electronic-only records, online hosting, cloud backup, browser-accessed workflow tools, and online research access were not taxable because the customer received no tangible property and the charges were not for enumerated taxable services.

Accountants and tax professionals

Separately state the revenue categories and identify whether the customer receives tangible property. Physical record copies are taxable; electronic delivery is not. Transportation is exempt here because it moves the customer's property rather than delivering property sold by the service provider.

Common questions

Q: Are document-storage fees taxable in Georgia?
A: No on these facts. Physical document and vault storage, account maintenance, access, viewing, and refiling were non-taxable services.

Q: Are storage boxes and packaging materials taxable?
A: Yes. The company transferred tangible personal property to the customer, and the materials were for storage rather than packaging property for shipment or sale.

Q: Is delivery of a medical record taxable?
A: A physically delivered printed or copied record is taxable. A record delivered only electronically is not.

Q: Are pickup, delivery, and fuel surcharges taxable?
A: No here. They were transportation charges for moving the customer's property and were not associated with a sale of that property by the storage company.

Q: Are cloud backup, online software, scanning, or shredding taxable?
A: No on the stated facts. They were electronically delivered products or non-enumerated services rather than sales of tangible personal property.

Q: Can another records company rely on this ruling?
A: No. It binds the Department only for the requesting taxpayer and specific facts, including the separately stated charge categories.

Citations and references

Statutes and rules:

• O.C.G.A. §§ 48-8-1, 48-8-2(31), and 48-8-30(a) (sales and use tax imposition)
• O.C.G.A. § 48-8-2(33)(A) (definition of sale)
• O.C.G.A. §§ 48-8-3(91) and (94) (electronically delivered software and packaging materials)
• O.C.G.A. § 48-8-3(18) (transportation exemption)
• Ga. Comp. R. & Regs. r. 560-12-2-.75(1) (custom printing)
• Ga. Comp. R. & Regs. r. 560-12-2-.111(4)(a) (electronically delivered software)
• Ga. Comp. R. & Regs. r. 560-12-2-.47 (storage warehouse services)

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2019-09

Original ruling text

Georgia Letter Ruling: LR SUT-2019-09
Topic: Services – Document Storage
Date Issued: October 23, 2019
This letter is in response to your request for guidance on the application of Georgia sales and use tax to certain
information management solutions provided to Georgia customers.
Facts Presented by Taxpayer
Taxpayer is a national provider of lifecycle records and information management solutions. Taxpayer provides
document storage in Georgia, data protection, digital/electronic document management, and certified destruction.
Taxpayer offers digital document management solutions with the integration of traditional or legacy hard copy storage,
supplying its customers with an integrated platform of services and information management solutions. Taxpayer does
not have any ownership interest in the stored items. Taxpayer does not engage in the self-storage business.
Below is a list of revenue categories with descriptions. All revenue categories are separately stated on customer
invoices.
1.

Boxes, Cases, & Packaging Materials: These are storage container boxes, plastic bins, and cases as well as
packaging materials sold to customers for the storage of their documents or other data storage items. These
items are delivered to a customer’s location in Georgia (Materials may include: folders, containers, tapes,
CD, encrypted hard drives, etc.).

2.

Document Storage (Physical Storage): This is the monthly recurring charge for the physical storage in the
State of Georgia of customer materials which include: documents, books, manuscripts, and electronic data
stored on CD, within a controlled environment with limited to no direct access by the customer.

3.

Vault Storage (Physical Storage): This is the monthly recurring charge for the physical storage in the State
of Georgia of customer materials which include: art, antiques, artifacts, sports or entertainment memorabilia,
tapes, tape cases, all other magnetic media, within a climate-controlled facility with limited to no direct access
by the customer.

4.

Document/Vault Storage Perm-Out: This is the one-time labor and administrative fee that is charged to its
customers when a customer has decided to end its storage contract in the State of Georgia and desires to have
their stored items removed and transferred to another facility. This fee includes the cost of inventorying and
verifying the completeness of the items to be removed and reassigning the locations within the system.

5.

Account Maintenance Fees for Document & Vault Storage: This is a monthly administrative fee which varies
based upon the specific customer’s account size. This fee is charged for the monthly administration and
inventory management of the client’s documents and other items in the State of Georgia.

6.

Access and Refiling Fees: This is the charge to retrieve or replace the customer’s materials or to access or
refile the storage containers which is separately stated on the invoice. There is no charge for the initial
placement of storage items. This charge represents subsequent requests from the customer to access or refile
their items. This charge is typically incurred along with Pick-up and Delivery Services.

7.

Pick-up and Delivery Services: This is the charge for the pick-up and delivery of storage items to and from
the customer’s physical location in the State of Georgia and is stated separately on the invoice.

8.

Fuel Surcharges: This is the charge for occasions when the cost of fuel has increased significantly and is
required to be included on invoices which contain pick-up and delivery charges from the State of Georgia.

9.

Access Viewing Room: This is the charge for a customer to come to Taxpayer’s location and use an office
to review their stored documents.

10. Release of Information Services (Physical Delivery): This is a charge for the retrieval, duplication and
    delivery of certain medical information to a third-party other than the client in the State of Georgia. This is
    confidential medical information and is handled and delivered in a secure manner. Taxpayer delivers these
    records to the third party via physical delivery in the State of Georgia or secure mail to a third-party with a
    Georgia address.

Georgia Letter Ruling: LR SUT-2019-09
Topic: Services – Document Storage
Date Issued: October 23, 2019
Page 2 of 4

11. Release of Information Services (Electronic Delivery Method): This is a charge for the retrieval, duplication
    and delivery of certain medical information to a third-party other than the client, who has a State of Georgia
    address. This is confidential medical information and is handled and delivered in a secure manner. Taxpayer
    delivers these records to the third party via electronic or digital delivery via the internet.
12. Certified Shredding & Destruction: This is the charge for the certified destruction of documents, tapes or
    other materials. Taxpayer is requested to pick-up a sealed container, bin or console containing documents to
    be destroyed from the customer’s location. Taxpayer picks up the sealed containers then brings them back to
    the Georgia office location. The materials are contained in Taxpayer’s bins and consoles and are locked and
    sealed for security purposes during this entire process. The entire bin or console is transported to Taxpayer’s
    Georgia location where they are transferred to a third-party who picks up the materials and brings them to
    their facility in Georgia for destruction.
13. Scanning & Digital Imaging: This is the charge for the conversion of a customer’s materials to digital images
    by means of digital scanning for customers with a State of Georgia address.
14. Hosting Services: This is a monthly license fee calculated on a per user basis to access digital images stored
    in the customer’s online virtual warehouse for customers with a State of Georgia address.
15. Workflow Automation Software: This is a monthly license fee charged on a per user basis to customers with
    a Georgia address to access work-flow automation software which permits a customer to scan a document
    and track its movement through various departments within their company. This software is accessed online.
    For example, in the case of an invoice in a customer’s accounts payable department: (1) customer received
    a vendor invoice and the invoice is scanned and uploaded to the cloud platform, (2) the invoice is then
    electronically routed to the applicable department(s) for approval, (3) once approved the invoice is
    electronically routed back to accounts payable to be approved for payment. This software also includes a
    separate charge for the component related to the virtual warehouse for data storage in the cloud.
16. Online Research Tool: This is the monthly charge to customers with a Georgia address for the ability to
    access the online document retention guidelines by State and by discipline.
17. Electronic Digital Cloud Back-Up: This is a monthly charge to customers with a Georgia address for the 24/7
    electronic back-up service. A customer’s data is backed up via the internet and is stored on a remote server
    for emergency data recovery needs. Taxpayer uses a third-party vendor to perform this service.
18. Help Desk Support: This is the monthly charge to customers with a Georgia address for access to the
    telephone helpdesk to address issues that the customer may have with the online services.
19. Data Entry/Indexing: This is the charge to customers with a Georgia address for services related to data entry
    and indexing of such data previously scanned electronically to allow for future search or query abilities.
    Issue
    How does sales and use tax apply to the above charges by Taxpayer to Georgia customers? 1

1
This letter does not address use tax liability that may arise from a customer using and storing tangible personal
property in this state.

Georgia Letter Ruling: LR SUT-2019-09
Topic: Services – Document Storage
Date Issued: October 23, 2019
Page 3 of 4
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. 2 A “retail sale” is any
sale, lease, or rental for any purpose other than for resale, sublease, or subrent. 3
Tangible Personal Property
“Sale” means any transfer of title or possession, exchange, barter, lease, or rental, in any manner or by any means, of
any kind of tangible personal property for a consideration. 4 For example, the sale of custom printing (i.e., the
production of printed material, in accordance with a customer’s order, for the customer’s use or consumption) is the
sale of tangible personal property and is subject to sales tax on the total invoice charge made on the transaction. 5
Taxpayer sells boxes, crates, and packaging materials to customers for storage purposes. Since such sales entail the
transfer of title and possession of tangible personal property for consideration, the sales are subject to sales and use
tax. 6
Taxpayer charges for the retrieval, duplication, and delivery of certain medical information to a Georgia location.
Since the sale of tangible personal property, including the sale of printed or copied material delivered in a tangible
medium, is subject to sales and use tax, Taxpayer’s charges for the release of information services (physical delivery)
are subject to the tax.
Electronically Delivered and Online Products
Unlike sales of tangible personal property, which are generally presumed taxable, sales of information or material
delivered electronically are typically not considered taxable sales. 7 If the requesting party does not receive tangible
property or the right to a tangible item as part of the sale, such sale is not subject to sales and use tax.
Here, Taxpayer charges for records that are delivered solely in an electronic format. Taxpayer also charges for hosting
data online, electronic back-up to a remote server, and access to online/cloud information, data, and software. Since
these charges are not in connection with sales of tangible personal property or sales of taxable services, such charges
are not subject to sales and use tax.
Transportation
The term “retail sale” includes the sale of transportation when made to any purchaser for purposes other than resale. 8
While retail sales of transportation are subject to sales and use tax, Georgia law provides an exemption for charges
made for the transportation of tangible personal property except delivery charges by the seller associated with the sale
of taxable tangible personal property. 9
Taxpayer charges for pick-up and delivery services when Taxpayer brings storage items to and from its storage facility
and the customer’s location. Although these are charges for transportation, pick-up and delivery charges are merely
fees for moving tangible personal property and are not otherwise associated with a sale of that property. Since these
O.C.G.A. §§ 48-8-1, 48-8-2(31), and 48-8-30(a).
O.C.G.A. § 48-8-2(31).
4
O.C.G.A. § 48-8-2(33)(A).
5
Ga. Comp. R. & Regs. r. 560-12-2-.75(1).
6
Although Georgia law provides a sales and use tax exemption for the sale, use, consumption, or storage of materials,
containers, labels, sacks, or bags used for packaging tangible personal property for shipment or sale, the items sold by
Taxpayer are not used for packaging tangible personal property for shipment or sale. O.C.G.A. § 48-8-3(94).
7
See e.g., O.C.G.A. § 48-8-3(91) (providing a sales and use tax exemption for the sale of prewritten software which
has been delivered to the purchaser electronically or by means of load and leave); Ga. Comp. R. & Regs. r. 560-12-2.111(4)(a) (explaining that the sale of computer software delivered electronically is not subject to sales or use tax.)
8
O.C.G.A. § 48-8-2(31).
9
O.C.G.A. § 48-8-3(18).
2
3

Georgia Letter Ruling: LR SUT-2019-09
Topic: Services – Document Storage
Date Issued: October 23, 2019
Page 4 of 4
transportation charges fall within the above exemption, pick-up and delivery service charges are exempt from sales
and use tax.
Taxpayer may include fuel surcharges on an invoice with pick-up and delivery charges. Fuel surcharges are not sales
of fuel and are not delivery charges associated with the sale of tangible personal property. Rather, fuel surcharges only
serve to supplement pick-up and delivery charges. Because Taxpayer’s fuel surcharges are transportation charges akin
to Taxpayer’s pick-up and delivery charges, fuel surcharges are also exempt from sales and use tax.
Other Services
Services are not subject to sale and use tax unless specifically designated as taxable. Specifically, Rule 560-12-2-.47
provides that storage warehousemen are primarily engaged in the business of moving, storing, packing, and delivering
tangible personal property belonging to other persons and that these activities constitute services that are not subject
to the tax.” 10 Therefore, Taxpayer’s charges for storage, maintenance, administration, access, viewing, refiling are for
services that are not subject to sales and use tax.
In addition, charges for other services, such as shredding, scanning, indexing, and help desk support, are fees for
Taxpayer’s knowledge, specialized skills, and expertise. These services are not explicitly identified as taxable services
under Georgia law, so charges made for these services are not subject to the tax.
Ruling
Georgia sales and use tax is levied and imposed on the retail sale of tangible personal property and enumerated
services. Sales of information delivered electronically or accessed online and sales of non-enumerated services are not
subject to sales and use tax. Based on Taxpayer’s description of its revenue categories, charges for Boxes, Cases, &
Packaging Materials and Release of Information Services (Physical Delivery) are sales of tangible personal property
and, thus, subject to sales and use tax. The remainder of the revenue categories are exempt services, non-taxable
services, and sales of property delivered electronically; therefore, such charges are not subject to sales and use tax.
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.

10

Ga. Comp. R. & Regs. r. 560-12-2-.47.