Was nonalcoholic champagne exempt when it contained more than 30% grape juice?

Plain-English summary

The product contained more than 30% grape juice and was nonalcoholic.

It was also carbonated, bottled to look like champagne, and possibly tasted like champagne. Most importantly, it was not sold as grape juice.

Board counsel classified the product as a carbonated beverage rather than a fruit-juice food product. Its retail sales were taxable.

Common questions

Did the grape juice percentage make the product exempt?

No. The source classified it according to its carbonation and presentation as champagne.

Did the product contain alcohol?

The opinion described it as nonalcoholic.

What marketing fact mattered?

It was not sold as grape juice; it was prepared, bottled, and sold to resemble champagne.

Citations and references

• California Revenue and Taxation Code section 6359 (as reflected in the official annotation)
• California Sales Tax Bulletin 52A(3) (as cited)
• Hollywood Auditing's June 7, 1965 memorandum — referenced; not reproduced in the official PDF
• Tax counsel's June 21, 1965 telephone call with Hollywood Auditing — referenced; no transcript reproduced in the official PDF
• Nonalcoholic-champagne product composition, carbonation, bottling, appearance, taste, and sales presentation — facts stated; underlying formula, bottle, label, samples, tests, advertising, invoices, and sales records not reproduced in the official PDF
• Possible later audit, assessment, refund claim, appeal, or other agency action — no follow-up or final outcome supplied in the official PDF

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/245-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/245-0280.pdf

Original ruling text

State of California

Board of Equalization

Memorandum
To:

Hollywood – Auditing (CWT)

From:

Tax Counsel (RHA)

Subject:

[X]

245.0280
Date:

June 22, 1965

Reference is made to your memo of June 7 and my telephone call to you on June 21 regarding the application of tax to retail sales of “--- Nonalcoholic Champagne”. The product contains grape juice in excess of 30 percent, is carbonated and bottled to give it the appearance of champagne (and may even taste like champagne). It is not sold as grape juice, however. It is our opinion that the retail sale of the product is subject to tax under Bulletin 52A(3) since we would classify it as a carbonated beverage rather than a fruit juice food product.

RHA:dse

[lb]