Starting October 1, 1995, does Texas sales tax apply to food, meals, soft drinks, and candy sold to inmates confined in a jail, prison, or other correctional facility?

Plain-English summary

This 1995 letter from the Texas Comptroller's Tax Policy Division follows up on two telephone conversations about how House Bill 462 changes the sales tax treatment of food sold to county jail inmates.

Before the bill, Texas Tax Code Section 151.314(d)(3) exempted food products, meals, soft drinks, and candy for human consumption when sold to a patient or inmate of a hospital or other institution licensed by the state for the care of humans — and that exemption covered jail and prison inmates as a category of "institution" inmate.

House Bill 462, effective October 1, 1995, added a new subsection (g) to Section 151.314 that carves correctional facilities back out of that exemption. As quoted in the letter, the new subsection says the (d)(3) exemption "does not apply to food products, meals, soft drinks, and candy for human consumption sold to a person confined in a correctional facility operated under the authority or jurisdiction of or under contract with this state or a political subdivision of the state."

The letter explains that this change is broad: it applies to sales made to any person confined in a correctional facility, regardless of whether that facility is run directly by the state, a city, or a county, or is instead operated by a private company under contract with the state, city, or county. The Comptroller also enclosed a copy of its September 1995 "Legislative Update" publication, which discusses the bill.

What this means for you

Vendors and food-service contractors selling to jails and prisons

If you sell food products, meals, soft drinks, or candy to people confined in a correctional facility, this letter confirms that as of October 1, 1995 those sales lost their prior tax exemption under Section 151.314(d)(3). That is true whether the facility is operated by the state, a city, a county, or a private contractor working for one of those governments — the letter is explicit that private operation under a government contract does not preserve the exemption.

Operators of jails, prisons, and other correctional facilities

The letter distinguishes correctional facilities from other licensed institutions (like hospitals) still covered by the original Section 151.314(d)(3) exemption. Only sales to inmates confined in a correctional facility are affected by the new subsection (g) carve-out; the letter does not address food sold to patients of other types of state-licensed institutions, which remain governed by the pre-existing exemption.

Accountants and tax professionals advising correctional-facility vendors

Because this letter is from 1995 and reflects a specific statutory amendment (House Bill 462) taking effect October 1, 1995, confirm current law before relying on it — the STAR system notes that letters may no longer reflect current policy even where not marked superseded.

Common questions

Q: Does the sales tax exemption for food sold to hospital or institution patients still apply to jail and prison inmates after October 1, 1995?
A: No. House Bill 462 added subsection (g) to Tax Code Section 151.314, specifically removing food, meals, soft drinks, and candy sold to correctional facility inmates from the exemption in subsection (d)(3), effective October 1, 1995.

Q: Does it matter who operates the correctional facility?
A: No. The letter states the change applies to sales to anyone confined in a facility "operated by the state, city or county or by a correctional facility operated by a private entity under contract with the state, city or county."

Q: What was the situation before House Bill 462?
A: Before the bill, Tax Code Section 151.314(d)(3) exempted food products, meals, soft drinks, and candy sold to a patient or inmate of a hospital or other institution licensed by the state for the care of humans — which covered correctional facility inmates as well until the new subsection (g) took effect.

Q: Where can I find more detail on House Bill 462?
A: The letter references the Comptroller's "Legislative Update" publication for September 1995, which discusses the bill on its last page.

Citations and references

Statutes and rules:

• Tex. Tax Code § 151.314(d)(3) (exemption for food/meals/soft drinks/candy sold to patients or inmates of state-licensed institutions)
• Tex. Tax Code § 151.314(g) (added by House Bill 462, effective October 1, 1995 — excludes correctional facility inmates from the (d)(3) exemption)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9509L1426B03

Original ruling text

September 25, 1995

Dear ***:

This is a follow-up to our two telephone conversations regarding the affect
of House Bill 462 on sales to county jail inmates.

Texas Tax Code Section 151.314(d)(3) exempts food products, meals, soft
drinks, and candy for human consumption when sold to a patient or inmate of
a hospital or other institution licensed by the state for the care of
humans. House Bill 462 that becomes effective October 1, 1995, adds
subsection (g) to Section 151.314 that reads:

The exemption provided by Subsection (d)(3) does not apply to food
products, meals, soft drinks, and candy for human consumption sold to a
person confined in a correctional facility operated under the authority
or jurisdiction of or under contract with this state or a political
subdivision of the state.

The bill applies to any sales of mentioned products to any person confined
to a correctional facility whether operated by the state, city or county
or by a correctional facility operated by a private entity under contract
with the state, city or county.

I am enclosing our publication "Legislative Update" for September 1995
that mentions this bill on the last page.

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

You may call me toll free 1-800-531-5441, extension 3-4683. The direct
line is 512/463-4683. You may also write to Tax Policy Division,
Comptroller of Public Accounts.

Sincerely,

Eddie C. Washington
Tax Policy Division