The Georgia Department of Revenue recently issued two letter rulings addressing whether certain taxpayers’ purchases qualified for the sale for resale exemption or the sales tax exemption for equipment used in manufacturing. In the first ruling, the taxpayer purchased and leased copier and printing equipment that was made available to customers. Customers using the equipment were charged per page for copies produced. The Department concluded that neither the resale exemption nor the manufacturing exemption applied to the taxpayer’s purchases and leases of copying equipment. The taxpayer was not reselling or releasing the equipment because customers using the copiers did not have full possession and control over their use. Rather, they could use the equipment to make copies only in the location and manner determined by the taxpayer. The Department also concluded that the manufacturing exemption did not apply.
In a second, shorter ruling, the Department concluded that a restaurant’s purchases of items used to furnish the restaurant and to prepare food items were not exempt from sales and use tax. Under Georgia law, restaurants are statutorily excluded from the manufacturing exemption. Furthermore, the Department concluded that the purchases were for the restaurant’s own use and were not resold to customers, thus not qualifying as a sale for resale. Please stay tuned to TWIST for additional sales and use tax developments.