Could Aureomycin be bought tax-free when incorporated into sheep feed?

Plain-English summary

Aureomycin sold under the Aurofac A brand could be purchased with a resale certificate when it was incorporated into sheep feed that the manufacturer resold. Adding the drug did not disqualify that manufactured feed from the nontaxable treatment described in the memorandum.

The portion used in feed for the manufacturer's own animals was taxable. For that portion, the manufacturer was the consumer, and the memorandum said mixing a drug into feed did not create an exemption for a drug sold directly to a consumer.

Citations and references

• The published memorandum relies on an earlier Animals and Feed annotation but cites no numbered statute or regulation.

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/110-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/110-0400.pdf

Original ruling text

STATE BOARD OF EQUALIZATION
OFFICE CORRESPONDENCE

110.0400
Sacramento, California
December 20, 1956

To:

Marysville – Auditing (TCL)

From:

Headquarters – Sales Tax Counsel (BH-JJD)

Re:

S--- B--- C---, Ltd.
R---

Account -- - XXX

This is in reply to your letter of December 7 concerning the application of the tax to the purchase of Aureomycin by the above mentioned account under the brand name of Aurofac “A”. You state that the Aureomycin is purchased under a resale certificat for the purpose of being incorporated into a sheep feed which the taxpayer manufactures, but that a certain amount of the feed is not resold but is fed to animals belonging to taxpayer. We agree completely with your conclusion that the drug may be purchased under a resale certificate, incorporated into the feed, and resold without disqualifying the feed as a non-taxable product. We also agree with your conclusion that the annotation dated March 7, 1952, under “Animals and Feed” is applicable and that the amount of drug which is used by taxpayer in feeding his own animals would constitute “a drug sold directly to a consumer; there is no basis in the Law for exemption from the tax even though the drug is mixed with a feed”. The taxpayer would be liable for tax on the cost of that portion of the Aureomycin which becomes a component of the feed which is fed to his own animals.

Bill Holden
JJD:cl