When did California exempt carbonated fruit juice, and when did preservatives or other additives make it taxable?

Plain-English summary

The opinion drew a line between carbonated products that were 100% natural fruit juice and products containing preservatives or other additives.

Three sparkling juice products contained preservatives. Counsel concluded that they were not exempt natural fruit juice, so their sales were taxable.

The letter initially exempted Sundance Natural Juice Sparkler because staff believed it was 100% natural juice without additives or preservatives. That product-specific conclusion was later corrected in Annotation 245.1720 after the Board learned Sundance contained only 70% fruit juice. For the addressed retailer, the correction applied prospectively beginning January 1, 1990.

The source also exempted the submitted lecithin granules on their own labeling facts; this page addresses only the carbonated-fruit-juice analysis.

Common questions

Could a carbonated fruit juice qualify for the food exemption?

Under this opinion, yes—if it was considered 100% natural fruit juice.

What made the three reviewed sparkling juices taxable?

They contained preservatives, which prevented treatment as natural fruit juice under the stated rule.

Was Sundance actually a valid example of the exemption?

No. The Board later learned it contained only 70% fruit juice and corrected that product-specific advice.

Citations and references

• California Revenue and Taxation Code sections 6051 and 6359 (as cited)
• California Sales and Use Tax Regulation 1602(a)(2) and 1602(a)(5) (as cited)
• Redacted retailer's request for an opinion on four sparkling-juice products and Marin Brand Lecithin Granules — request referenced; not reproduced in the official PDF
• Prior Board holdings on natural carbonated fruit juices — described without identifying citations or reproduced opinions in the official PDF
• Sparkling-juice formulations, preservative content, and Marin Brand Lecithin Granules label — facts stated and label language described; underlying formulas, ingredient specifications, labels, samples, tests, supplier records, invoices, and sales records not reproduced in the official PDF
• Sales and Use Tax Annotation 245.1720 and November 13, 1989 correction letter — separately published official opinion correcting Sundance's juice content and tax treatment prospectively for the retailer from January 1, 1990
• Possible later product sales, audits, assessments, refund claims, appeals, or other agency action after the correction — no follow-up or final outcome supplied in either 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/245-0285.pdf
• Later official correction: https://cdtfa.ca.gov/lawguides/annotations/245-1720.pdf

Original ruling text

245.0285

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
916-445-8485

March 5, 1987

[X]
Re:

[X]

Dear [X]:
This letter is in response to your request for an opinion regarding the sales tax status of the following products: [T] Sparkling Grape Juice, [S] Natural Juice Sparkler, [K] Sparkling Mineral Water Juice, [M]’s Pink Sparkling Grape Juice, and [M] Brand Lecithin Granules. California Sales and Use Tax Law imposes sales tax on retailers based on gross receipts from the sale of tangible personal property in this state unless such sale is otherwise specifically exempted from taxation by statute (Rev. & Tax. Code § 6051). Section 6359 of the Revenue and Taxation Code exempts “food products” from sales tax. Sales and Use Tax Regulation 1602 provides: (2) “Food products” also include all fruit juices, vegetable juices, and other beverages, whether liquid or frozen, including all beverages composed in part of fruit or vegetable juice and concentrates, powders, or other bases for such beverages, except: water, including mineral, bottled, and carbonated waters, spirituous, malt or vinous liquors, or carbonated beverages.
*

*

*

(5) “Food products” do not include any product for human consumption in liquid, powdered, granular, tablet, capsule, lozenge, or pill form (A) which is described on its package or label as a food supplement, food adjunct, dietary supplement, or dietary adjunct, and to any such product (B) which is prescribed or designed to remedy specific dietary deficiencies or to increase or decrease generally one or more of the following areas of human nutrition:

[X]

-2-

March 5, 1987
245.0285

1. Vitamins
2. Proteins
3. Minerals
4. Caloric intake
   In determining whether a product falls within category (B), it is important whether the manufacturer has specially mixed or compounded ingredients for the purpose of providing a high nutritional source. For example, protein supplements and vitamin pills are taxable as food supplements. We have held in the past that only those carbonated products which are considered natural fruit juices will qualify as exempt food products· under Regulation 1602. If the carbonated product includes a preservative, such as sodium benzoate, or any other additive, it will not be considered a natural fruit juice and tax will apply to its sale.
   [T] Sparkling Grape Juice, [K] Mineral Water Juice and [M]’s Pink Sparkling Grape Juice are carbonated fruit juices and all contain preservatives. Therefore, sales of such products are not exempt from sales tax. [S] Natural Juice Sparkler, however, is 100 percent natural juice and contains no additives or preservatives and is, therefore, exempt from sales tax.
   [M] Brand Lecithin Granules is described by its label as a natural product derived from the soybean which can be added to your diet by blending it with your favorite juice or beverage. We are of the opinion that [M] Brand Lecithin Granules qualifies as a “food product” pursuant to Regulation 1602 because it is not described on its label as a food supplement, food adjunct, dietary supplement, or dietary adjunct, nor does its label indicate that the product is designed to increase or decrease the user’s vitamin, protein, mineral, or caloric intake. Very truly yours,

E. L. Sorensen Jr.
Tax Counsel
ELS: