diff --git a/app/models/prompt.rb b/app/models/prompt.rb
index cdae4bb6a4..9a2ed13cd4 100755
--- a/app/models/prompt.rb
+++ b/app/models/prompt.rb
@@ -175,6 +175,13 @@ def restricted_tags
 
       # tag_type is one of a set set so we know it is safe for constantize
       allowed_tags = tag_type.classify.constantize.with_parents(tag_set.fandom_taglist).canonical
+
+      if restriction.send("#{tag_type}_restrict_to_tag_set")
+        allowed_tags = allowed_tags.where(
+          id: tag_set_associations.where(parent_tag_id: tag_set.fandom_taglist).select(:tag_id)
+        )
+      end
+
       disallowed_taglist = tag_set ? tag_set.send("#{tag_type}_taglist") - allowed_tags : []
 
       # check for tag set associations
diff --git a/spec/models/prompt_spec.rb b/spec/models/prompt_spec.rb
index ab5254441b..a61ee88863 100644
--- a/spec/models/prompt_spec.rb
+++ b/spec/models/prompt_spec.rb
@@ -43,5 +43,68 @@
         expect(prompt.errors[:base][0]).to include("not in the selected fandom")
       end
     end
+
+    context "when restrict_to_fandom and restrict_to_tag_set are both enabled" do
+      let(:fandom_character) { create(:character, canonical: true) }
+
+      before do
+        create(:common_tagging, filterable: fandom, common_tag: fandom_character)
+        create(:common_tagging, filterable: fandom, common_tag: non_fandom_character)
+        create(:tag_set_association, tag: fandom_character, parent_tag: fandom, owned_tag_set: owned_tag_set)
+      end
+
+      let!(:challenge) do
+        create(:gift_exchange,
+               offer_restriction: create(:prompt_restriction,
+                                         character_restrict_to_fandom: true,
+                                         character_restrict_to_tag_set: true,
+                                         owned_tag_sets: [owned_tag_set]))
+      end
+
+      it "marks the prompt as valid when the character is in the tag set" do
+        signup = build(:challenge_signup, collection: collection)
+        prompt = build(:offer,
+                       tag_set: create(:tag_set, tags: [fandom, fandom_character]),
+                       collection_id: collection.id,
+                       challenge_signup: signup)
+        expect(prompt).to be_valid
+      end
+
+      it "marks the prompt as invalid when the character is canonical in the fandom but not in the tag set" do
+        other_character = create(:character, canonical: true)
+        create(:common_tagging, filterable: fandom, common_tag: other_character)
+        signup = build(:challenge_signup, collection: collection)
+        prompt = build(:offer,
+                       tag_set: create(:tag_set, tags: [fandom, other_character]),
+                       collection_id: collection.id,
+                       challenge_signup: signup)
+        expect(prompt).not_to be_valid
+      end
+    end
+
+    context "when only restrict_to_fandom is enabled (not restrict_to_tag_set)" do
+      let(:fandom_character) { create(:character, canonical: true) }
+
+      before do
+        create(:common_tagging, filterable: fandom, common_tag: fandom_character)
+      end
+
+      let!(:challenge) do
+        create(:gift_exchange,
+               offer_restriction: create(:prompt_restriction,
+                                         character_restrict_to_fandom: true,
+                                         character_restrict_to_tag_set: false,
+                                         owned_tag_sets: [owned_tag_set]))
+      end
+
+      it "marks the prompt as valid when the character is canonical in the fandom even if not in the tag set" do
+        signup = build(:challenge_signup, collection: collection)
+        prompt = build(:offer,
+                       tag_set: create(:tag_set, tags: [fandom, fandom_character]),
+                       collection_id: collection.id,
+                       challenge_signup: signup)
+        expect(prompt).to be_valid
+      end
+    end
   end
 end