Were amino-acid, vitamin, and mineral mixtures exempt when combined with fruit-flavored liquids as a sole experimental human diet?

Plain-English summary

A research organization was testing fruit-flavored liquids containing mixtures of amino acids, vitamins, and minerals as food for humans.

Participants had consumed the liquids as their sole diet for periods as long as six months under a doctor's supervision.

The mixtures contained the basic nutritive substances of normal food and were intended to substitute for normal food. Board counsel therefore classified them as exempt food products.

The same memorandum separately addressed influenza vaccine purchased for voluntary employee inoculations. This page addresses only the experimental diet.

Common questions

Did the chemical or laboratory character make the mixtures taxable?

No. The source focused on their nutrients and use as a substitute for normal food.

Were the liquids merely supplements to an ordinary diet?

No. The memorandum says they had been served as the sole diet for up to six months.

Was the experiment medically supervised?

Yes. It was conducted under a doctor's supervision.

Citations and references

• California Revenue and Taxation Code section 6359 (as reflected in the official annotation)
• California Revenue and Taxation Code section 6369(1) and (2) — historical medicine exemption applied to influenza vaccine in the same memorandum
• San Jose Auditing's July 11, 1967 memorandum concerning chemicals and influenza vaccine purchased by the redacted organization — referenced; not reproduced in the official PDF
• Experimental fruit-flavored liquids, nutrient mixtures, human sole-diet periods, and doctor supervision — facts stated; underlying formulas, ingredient specifications, protocols, consent materials, participant records, medical records, tests, and study results not reproduced in the official PDF
• Influenza-vaccine purchases, written doctor authorization, doctor contract, employee participation, and nurse administration — facts stated; underlying purchase records, authorization, contract, prescriptions, consent records, medical records, invoices, and administration logs not reproduced in the official PDF
• Possible later research results, product sale, 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/245-0290.pdf

Original ruling text

State of California

Board of Equalization

Memorandum
To:

San Jose – Auditing

From:

Tax Counsel (GAT)

Subject:

[X]

245.0290
Date:

July 21, 1967

This is in regard to your memo of July 11 concerning chemicals and influenza vaccine purchased by “U”. It is our understanding that “U” has been conducting experiments to determine whether fruitflavored liquids containing mixtures of amino acids, vitamins, and minerals can be used safely as food for human beings. These liquids have been served to human beings as their sole diet for periods as long as 6 months. These experiments have been conducted under the supervision of a doctor. Inasmuch as these combinations contain the basic nutritive substances of normal food and are intended to be substitute therefore, it is our opinion that they qualify as exempt food products. It is our understanding that “U” purchases influenza vaccine for voluntary inoculation of its employees. Although a written authorization from a doctor was required for the purchase of the vaccine, no specific prescription is made or required by the doctor for the inoculation of each individual employee. The employees are inoculated with the vaccine by a nurse. Under the foregoing circumstances, it appears that “U”'s employees who desire to be so vaccinated have consented to be the patients of the doctor with whom the center contracted to prescribe and administer or supervise the administration of the vaccine. Thus, since the medicines are prescribed for the treatment of human beings by a person authorized to do so and are furnished by a licensed physician to his own patients for treatment of such patients, the sale and use of the influenza vaccines for such purpose is exempt from tax under paragraphs (1) and (2) of Section 6369.

GAT:ph

[lb]