Were dehydrated muesli, pasta, chili, and soup meal replacements exempt even though they contained much powder and were designed to reduce calories?

Plain-English summary

A seller described Uni-Vite muesli, pasta, chili, and soup products as complete meal replacements containing at least 35 percent of recommended nutrients per meal. The seller supplied no individual labels or brochures, so counsel could discuss only the product categories generally.

The products were usually dehydrated cereal, pasta, stew, and soup. Although they probably contained a high proportion of powder and were intended to reduce caloric intake, Regulation 1602(a)(5) did not apply in the same way to items traditionally accepted as food.

Cereal, flour products, and soup were listed as food products under Regulation 1602(a)(1). Counsel therefore concluded generally that sales of the described muesli, pasta, chili, and soups were exempt.

The result was not a product-specific classification. Actual ingredients, form, labels, and directions were not reviewed.

Common questions

Did calorie-reduction use make these products taxable?

No. The opinion treated the categories as traditional foods despite that intended use.

Why did their powdered content not control?

They were dehydrated versions of cereal, pasta, stew, and soup—items traditionally accepted and listed as food.

Was a particular Uni-Vite product definitively approved?

No. Counsel expressly lacked the labels and brochures needed for a specific-product opinion.

Citations and references

• California Revenue and Taxation Code sections 6051, 6091, 6359 (including subdivisions (c) and (c)(2)), and 6369 (as cited)
• Statutes of 1991, chapter 85, section 8 — cited as enacting Revenue and Taxation Code section 6359(c)(2) for fabricated snacks
• California Sales and Use Tax Regulations 1602 (including subdivisions (a)(1), (a)(2), and (a)(5)) and 1603 (as cited)
• Market St. Ry. Co. v. California State Board of Equalization (1953), 137 Cal. App. 2d 87, 96, 290 P.2d 201
• Standard Oil Co. v. State Board of Equalization (1974), 39 Cal. App. 3d 765, 769, 114 Cal. Rptr. 571
• Federal Food and Drug Administration minimum daily requirements for listed vitamins and minerals — quoted through Regulation 1602(a)(5) without a separate federal source citation
• Redacted seller's August 5, 1991 letter describing Uni-Vite products and asking for sales-and-use-tax advice — business description quoted; complete request not reproduced in the official PDF
• Uni-Vite product range, including tapes, videos, educational materials, shakes, soups, bars, muesli, chili, and pasta, with 35-percent-per-meal and combined 100-percent RDA nutrient claims — facts quoted; labels, brochures, formulas, ingredient specifications, directions, packages, samples, nutrient analyses, invoices, and sales records not reproduced in the official PDF
• Prior treatment of food bars and shakes and snack-food-industry treatment of meal bars as fabricated snacks — positions stated without identified opinions, industry publication, survey, or other supporting record
• Emergency Regulation 1602 enclosure — stated as enclosed; enclosure copy not reproduced in the official PDF
• Copy to Return Review Supervisor O. A. McCarty and possible later product sale, audit, assessment, refund claim, appeal, or other agency action — copy notation present; no copy, 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/245-0765.pdf

Original ruling text

245.0765

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 324-3828

September 16, 1991

Mr. [C]
The [D]
XXXXX --- ----- ---, California XXXXX
RE:

S- -- XX-XXXXXX

Dear Mr. [C]:
The Legal Division has been asked to respond to your letter to the State Board of Equalization dated August 5, 1991, and it has delegated that responsibility to me. You have requested advice regarding the applicability of sales and use tax to certain food items which you sell. I.

FACTUAL BACKGROUND
You describe your business as follows:
“I sell the complete range of Uni-Vite products, tapes, videos, and other educational material that are subject to tax, and the range of food products which includes shakes, soups, bars, muesli, chili, and pasta’s which are each used as a complete meal to totally replace ordinary food. “Each of these meals contains 35% or more of all the RDA recommended nutrients as well as other trace elements, and in combination these foods provide over 100% of the RDA recommended proteins, vitamins, amino acids and trace elements.”

You do not include any labels or brochures describing individual items, so I cannot render an opinion as to a specific product. I can, however, discuss sales taxes as applied to these products generally.

Mr. [C]

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II.

OPINION

A.

Sales and Use Tax Generally

September 16, 1991
245.0765

In California, except where specifically exempted by statute, Revenue and Taxation Code Section 6051 imposes an excise tax, computed as a percentage of gross receipts, upon all retailers for the privilege of selling tangible personal property at retail in this state. (Unless otherwise stated, all statutory references are to the Revenue and Taxation Code.) “[I]t shall be presumed that all gross receipts are subject to tax until the contrary is established. The burden of proving that a sale of tangible personal property is not a sale at retail is upon the person who makes the sale …” (§ 6091.) “Exemptions from taxation must be found in the statute.” (Market St. Ry. Co. v. Cal. St. Bd. of Equal. (1953) 137 Cal.App.2d 87, 96 (290 P.2d 201.) “The taxpayer has the burden of showing that he clearly comes within the exemption.” Standard Oil Co. v. State Bd. of Equalization (1974) 39 Cal.App.3d 765, 769 [114 Cal.Rptr. 571].) B.

Food Products Exemption

Revenue and Taxation Code Section 6359, interpreted and implemented by Regulations 1602 and 1603, provides an exemption from sales and use taxes for the sales of food products for human consumption under certain circumstances. Subdivisions (1) & (2) of Regulation 1602(a) contain a list of products which, either singly or in combination, are considered “food products”. Regulation 1602(a)(5), however, excludes certain items from the definition of “food products” as follows: “(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: 1. 2. 3. 4.

Vitamins
Proteins
Minerals
Caloric intake”

Regulation 1602(a)(5), subsequently, however, restricts the limitation on the definition of “food products” as follows:

Mr. [C]

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September 16, 1991
245.0765

“Tax, however, does not apply to any such products which either are exempted by Section 6369, respecting prescription medicines, or are complete dietary foods providing the user in the recommended daily dosage with substantial amounts of vitamins, proteins, minerals and foods providing adequate caloric intake. An example of the latter is a food daily requirement providing the user with the following: 1. 2. 3.

70 grams of high quality protein
900 calories
Minimum daily requirements as established by the Federal
Food and Drug Administration of the following vitamins:
A, B1, C, D, Riboflavin, and Niacin or Niacinamide; the
following minerals: Calcium, Phosphorus, Iron and
Iodine.”

In interpreting and implementing the broad provisions of Section 6359(c), Regulation 1602(a)(5) sets up a two-step analysis. The threshold question is whether or not the food product under discussion is in one of the enumerated forms – liquid, powdered, granular, tablet, capsule, lozenge, or pill. If so, then its sales are taxable if one of the two following conditions also occurs: (A) its label or package describes it as a food supplement, food adjunct, dietary supplement, or dietary adjunct; or (B) it is prescribed or designed to remedy specific dietary deficiencies or to increase or decrease generally the intake of vitamins, protein, minerals, or calories. The subsequent references to “such products” in that subsection refer to products which occur in one of the enumerated forms, not products for which the claims prescribed in subsections (A) and (B) are made. C.

Tax Consequences
Based on the above standards, we conclude as follows:
1.
Uni-Vite Bar. We had previously considered that food bars were analogous to candy bars which are listed as “food products” in Regulation 1602(a)(1) and so not subject to tax. However, the Legislature recently enacted Section 6359(c)(2) (Stats. 1991, Ch. 85, §8) which makes sales of “fabricated snacks” subject to tax. Since the snack food industry appears to consider meal bars as fabricated snack foods, we conclude that these products are excluded from the definition of “food products” under the above statute with the result that sales of these items are now subject to tax. 2. Muesli, Pasta, Chili, and Soups. These products are usually described as dehydrated cereal, pasta, stew and soup products, respectively. Regulation 1602(a)(5) states that it does not apply to items traditionally accepted as food even though other nutritional items have been compounded in. Although they probably contain a high proportion of powder, these items represent products traditionally accepted as foods. Cereal, flour products, and soup are among the items defined as “food products” under

Mr. [C]

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September 16, 1991
245.0765

Regulation 1602(a)(1). Therefore, despite the fact that these products are designed to decrease caloric intake, their sales are exempt from tax under the above authority. 3. Shakes. This is usually a powdered drink mix sold for the purpose of weight loss or maintenance. As a result, we have previously concluded that such Drinks are powdered products produced or designed to decrease caloric intake, and are excluded from the definition of a “food product” under Regulation 1602(a)(5). Their sales are thus subject to tax. For your information, I have enclosed a copy of Emergency Regulation 1602. I hope the above discussion has answered your question. If you need anything further, please do not hesitate to write again. Sincerely,

John L. Waid
Tax Counsel
JLW:es
Enclosure:
cc:

Emergency Reg. 1602

Mr. O. A. McCarty – Supervisor Return Review