Were a seller's curing-salt sales to butchers exempt when part of the salt was lost or discarded during meat curing?

Plain-English summary

The seller's curing-salt sales to butchers were exempt both as sales of food for human consumption and as sales for resale. Tax counsel concluded that the product was bought to be permanently incorporated into cured meat.

The process did not incorporate every bit of salt: the opinion assumed that a fairly large amount was lost or discarded. That waste did not change the result because the critical question was whether the purchaser bought the product for incorporation into the meat.

The opinion therefore accepted the seller's returns as filed rather than sustaining the proposed assessment based on $27,462.33 of curing-salt sales.

Common questions

Did every part of the curing salt have to remain in the meat?

No. The opinion treated process waste as unimportant where the product was purchased for incorporation and part of it was permanently incorporated.

Why did the salt qualify as food?

The opinion described salt remaining in the meat to inhibit bacterial growth and sodium nitrate and sodium nitrite fixing the meat's red color. It concluded that the curing salt became a permanent ingredient of the meat.

What happened to the proposed additional tax?

The seller's returns were accepted as correct as filed.

Citations and references

• California Sales and Use Tax Law — food-product and resale exemptions applied in the opinion
• Redacted attorney's June 3 and July 8, 1955 letters concerning the curing-salt seller — referenced; not reproduced in the official PDF
• San Francisco office's recent audit and recommended additional-sales-tax assessment based on $27,462.33 of curing-salt sales — audit and recommendation described; returns, audit report, workpapers, schedules, and proposed assessment not reproduced in the official PDF
• Curing-salt composition, preservation and coloring functions, incorporation, waste, butcher customers, and $27,462.33 sales amount — facts stated; underlying formula, ingredient specifications, scientific materials, process records, purchase orders, resale certificates, invoices, and sales records not reproduced in the official PDF
• Acceptance of the seller's returns as correctly filed and copy to San Francisco Auditing — decision and recipient stated; acceptance notice, copied correspondence, and implementation records not reproduced in the official PDF
• Possible later audit adjustment, collection, refund claim, appeal, or other agency action after the stated return acceptance — no subsequent follow-up or 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/245-0340.pdf

Original ruling text

245.0340

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001
TELEPHONE (916) 445-6450

October 6, 1955

Mr. [E]
Attorney at Law
XXX --- ----- --- XX, California

Your letters of June 3 and July 8
Account No. -- - XXXXXX
[ES]

Dear Mr. [E]:
As a result of a recent audit our San Francisco office has recommended an assessment of additional sales tax against your client based on $27,462.33 worth of sales of [W] Curing Salt to butchers for curing meat. You contend that such sales are exempt as “food products for human consumption” and also as sales for resale. It seems clear that the real question is whether the product becomes a permanent ingredient of the meat. If it does, both exemptions are applicable, and if it does not, neither exemption is applicable. We understand that a saline solution in meat kills some types of bacteria and inhibits the growth of many other types of bacteria. Some salt stays in the meat and provides a continuous protection to the meat from bacterial growth although this protection is not perfect. The modern practice is to use salting in conjunction with canning or low temperatures to preserve meat. This allows the meat processor to use less salt and in actual practice the amount of salt used is usually determined by the taste desired in the finished product. Sodium nitrate and sodium nitrite are used in the solution to form nitrous acid which combines chemically with the meat to fix a bright red color in the meat. Unlike uncured meat, this color is relatively permanent and cooking is not likely to produce a brown color. In the curing process, it is assumed that a fairly large amount of the [W] Curing Salt does not become permanently incorporated into the meat but is lost or discarded. Nevertheless we think this is not important. The critical factor is whether this product is purchased for the purpose of being incorporated into the meat. If this is the purpose, it is not significant that the process used entails a large amount of waste.

Mr. [E]

-2-

October 6, 1955
245.0340

We think that [W] Curing Salt is permanently incorporated into the meat and that this product is purchased for that purpose. Accordingly, all sales are exempt both as sales of a food product for human consumption and as sales for resale. Your client’s returns will be accepted as correct as filed. Very truly yours,

Bill Holden
Associate Tax Counsel

BH:bk
cc:

San Francisco - Auditing