If there’s a perk to prison, it’s perhaps that it provides three square meals and a bed. Well, three square meals may not be enough. As a result, certain correctional centers permit people on the outside to purchase optional food items for their friends and family on the inside. An act of kindness? A way to trim the food service budget? An attempt to rehabilitate through the palate? Whatever the motive, one question remains: Are the meals subject to sales tax?
In Virginia as of this writing, the answer is yes. Retail sales and use tax generally applies to “food sold by any retail establishment where the gross receipts derived from the sale of food prepared by such retail establishment for immediate consumption on or off the premises of the retail establishment constitutes more than 80 percent of the total gross receipts of that retail establishment” (VAC § 58.1-611.1).
But beginning July 1, 2016, Virginia exempts “tangible personal property sold by a sheriff at a correctional facility … and sales of prepared food within such correctional facility.” The change is the result of the enactment of HB 1191, Retail Sales and Use Tax: exemption for certain items sold by a sheriff at a correctional facility.
The exemption was established at the request of Virginia Beach Sheriff Ken Stolle and Norfolk Sheriff Bob McCabe. Each created an online meals program that allows friends and family to purchase meals and snacks for inmates. Neither thought about sales tax. Said McCabe, “If we were supposed to pay sales tax, then we didn’t know it.”
When they learned that tax applies to their sales of prepared meals, the sheriffs moved to have an exemption created rather than change their policy to comply with the existing law. McCabe and Stolle contacted Delegate Berry Knight (R) and asked him to present the bill.
According to The Virginian-Pilot, Knight agreed “because he wanted as much sales revenue as possible to go toward running the jail, not to the state for sales tax”— although sales tax is added to the retail sales price, not carved out of it. He also noted that there is no need to “upset the apple cart:” “It’s something they’ve been doing forever anyway. I always say, ‘If it ain’t broke, don’t fix it.’“
Not all lawmakers share that position. Republican Delegate Jason Miyares “voted against the bill because he didn’t like the idea of an inmate not paying sales tax.” He asked, “Why should inmates be able to get food and items tax-free but the general public can’t? … That just seems absurd to me.” And Republican Rob Bloxom opposed the bill because “he didn’t feel the jails’ sales justified an exemption.” In spite of their and other’s opposition, the bill became law.
Come July 1, 2016, correctional facilities will commit no crime when they sell prepared meals and tangible personal property free from sales tax to inmates. But as the law currently stands, those sales are taxable.
Sheriff Stolle isn’t planning to change his practice of not taxing the goods and meals he sells. “I haven’t heard anything from the Department of Taxation. Unless I hear from the Department of Taxation, I’m not going to remit the taxes. I don’t think anybody’s looking for the back taxes.”
Perhaps not. But looking for back taxes is exactly what the Department of Taxation does. And according to department spokeswoman Paige Tucker, “Until the new law takes effect, the department expects all entities to comply with the law.”
You can’t always change sales tax laws, but you can always comply with them. Learn more.