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Taxes in prison

Prisoners will pay sales tax at canteen

Change in law requires inmates to pay tax just like free citizens

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Prisoners will pay sales tax at canteen

Prison inmates will now pay county and city sales tax on food items. The tax on all canteen items will take effect Feb. 1.

Missouri inmates will soon pay state, county and possibly city sales taxes on goods purchased at the canteen or commissary, that according to the Missouri Department of Corrections.

In 2013, offenders in Missouri correctional facilities spent more than $28.8 million in the 21 canteens or commissaries inside prisons across the state. The state tax revenue for 2013, at 4.225 cents per dollar, would have been more than $1.21 million had the policy been in effect then.

The waters as to how, and why now, this policy change came about are somewhat muddied. Apparently legislation to collect the tax before died in the state Senate back in 2005. The change in the law will happen Feb. 1.

Apparently, the lack of a law authorizing the collection of taxes at canteens does not trump the tax collection laws already on the books for every other businesses and someone somewhere derived a conclusion.

"During a recent review of the sales tax laws, it was determined that the sale of commodities by offender canteens is subject to state and local sales tax," said David Owen, communications director for department of corrections, or DOC.

While the law allows for commodities sold to penal institutions to be tax exempt, nothing allows commodities sold to inmates the same status under Missouri Revised Statutes chapter 144 "Sales and Use Tax."

Per Missouri law, the revenue made in a prison canteen or commissary goes into a separate account known as the "Inmate Canteen Fund." The money made, minus expenses, is set aside for what is described as the improvement of recreational, religious or educational services. That law states money in the canteen fund cannot transfer to general revenue per state statute.

The commissary at the county jail could start assessing the same tax. St. Francois County Sheriff Dan Bullock says he will bring up the issue at the next Missouri Sheriffs Association meeting.

St. Francois County is home to two state correctional facilities and the county jail. Another facility, Potosi Correctional Center, is a short drive away in neighboring Washington County. Canteen receipts for 2013 at those three facilities individually were not immediately available.

The following is a breakdown of the new sales tax at those three local facilities.

The Eastern Reception, Diagnostic and Correctional Center (ERDCC) in Bonne Terre's canteen will now collect a 5.975-cent tax per dollar spent on non-food items. Of that 5.975 cents collected per dollar spent, 4.225 cents is a state tax, 1.250 cents is a county tax, no city tax (Bonne Terre) is collected and one-half cent will go to the St. Francois County Ambulance District. Food items will not be subject to state sales tax.  

The tax rate at Farmington Correctional Center, 7.975, is higher due to a 2 cent per dollar city tax. The state and county tax rates are the same as is the one-half cent per dollar rate to benefit the St. Francois County Ambulance District.

Potosi Correctional Center inmates will pay a 7.225-cent per dollar tax on non-food items and a 4.225-cent per dollar tax on food items. The state percentage is the same. Washington County's tax rate is 2.5 cents per dollar. The Washington County Ambulance District will also receive one-half cent per dollar spent.

Some items will remain tax-exempt.

"Items exempt from the canteen sales tax are postage, phone time and any offender organization sale, which are sales that raise money for outside charities or for offender programs within institution," Owen said.

Items available in prison canteens are varied. They range from television sets to ice cream to Ramen noodles. The DOC requests samples of items in many solicitations for canteen resale and for commodities. The DOC solicits bids online at http://doc.mo.gov/DHS/Canteen_Resale_Bidding_Opportunities.php.

Pat Pratt is a reporter for the Daily Journal and can be reached at 573-518-3616 or ppratt@dailyjournalonline.com

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