KERA News: Private prison operator GEO Group wants $4M in Texas tax refunds, company tells state justices

GEO Group, one of the world’s largest private prison companies, told the Texas Supreme Court Wednesday it shouldn’t have to pay sales taxes on items and equipment it buys to operate prisons in Texas.

The GEO Group’s argument hinges on the word “instrumentality” — according to the Texas Administrative Code, both unincorporated “agents” and “instrumentalities” of the state of Texas or the United States are exempt from sales taxes.

GEO argues its housing of detainees is a governmental function because it contracts with the U.S. government and with Texas counties to operate the prisons. Thus, it says, the company falls under a narrow definition of an instrumentality.

The company asked the high court to rule it’s entitled to a nearly $4 million refund for overpaid sales tax.

Justices immediately questioned why GEO would be considered an unincorporated extension of the government when it’s a for-profit corporation.

GEO Group is an international corporation with 11 facilities across Texas and a head office in San Antonio. Most of the facilities at issue are U.S. Immigration and Customs Enforcement, or ICE, detention facilities, Ahlrich said.

Facilities like these have brought in millions of dollars in profit for GEO as immigration surges. Most of the company’s government funding came from ICE, Newsweek reported.

But GEO has also been scrutinized on a federal level. Prisoners led riots in 2008 and 2009 at GEO’s Reeves County prison — what’s been called the world’s largest private prison — over poor medical care for inmates. A federal investigation into Reeves found the prison, which mostly houses undocumented immigrants, had minimal oversight, over-punished inmates and suffered from understaffing.