Were semifrozen slush, ICEE, Slurpee, and similar drinks taxed like snow cones or according to carbonation?

Plain-English summary

California treated soft-frozen slush products as beverages rather than popsicles or snow cones.

That meant carbonation controlled the result. Carbonated semifrozen drinks were taxable, while noncarbonated semifrozen drinks were exempt.

ICEE's brochure called it a new way to serve carbonated drinks, and another brochure described a lively frozen carbonated soft drink. Those products were taxable. Drinks made by two other machines appeared to contain no carbonation and were exempt.

The opinion said any amount of carbonation in the drink made it a carbonated beverage. The published text contains one stray duplicated phrase saying noncarbonated soft drinks were taxable, immediately followed by the opposite statement; the surrounding analysis, specific outcomes, and official annotation all consistently say noncarbonated drinks were exempt.

Common questions

Were these products treated like snow cones?

No. Counsel treated them as semifrozen beverages.

How much carbonation triggered tax?

The source says any amount of carbonation whatsoever.

Did every frozen-drink machine produce taxable sales?

No. The machines producing noncarbonated drinks received the exempt result.

Citations and references

• California Revenue and Taxation Code section 6359 (as cited)
• 1969 amendment to section 6359 concerning liquid or frozen beverages and the carbonated-beverage exclusion — quoted without act, chapter, bill, or amendment section identification
• Redacted requester's “feburary 27,” 1970 letter concerning soft-frozen beverage products — source-printed form preserved; request referenced but not reproduced in the official PDF
• Thomas Putnam's request that Tax Counsel reply — referral stated; underlying request or transmittal not reproduced in the official PDF
• Requester-supplied ICEE brochure and Handy Dan's Icy drink brochure, plus drinks from machines made by redacted S and P manufacturers — claims and apparent carbonation described; brochures were retained but are not reproduced, and formulas, specifications, machine records, CO2 tests, labels, cups, invoices, and sales records are not supplied in the official PDF
• Contradictory sentence fragment stating noncarbonated drinks are both taxable and exempt — source defect preserved; surrounding analysis, product results, and current annotation consistently exempt noncarbonated drinks
• Possible brochure-return request, later 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/245-1020.pdf

Original ruling text

245.1020

STATE OF CALIFORNIA

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

March 12, 1970

[X]

Dear Mr. [X]:
Mr. Thomas Putnam has asked me to reply to your letter of feburary 27, 1970 concerning soft-frozen beverage products marketed variously as “slush”, “Icee”, “Slurpee”, “Blizzard”, etc. We do not view such semi-frozen beverage products as similar to flavored ice products such as popsicles or snow-cones. Rather, we view them as beverages which are subject to tax if they are carbonated. The basis for exempting popsicles and snow-cones was the amendment to a portion of Section 6359 in 1969 which now reads: “‘Food products’ include all fruit juices, vegetable juices, and other beverages except…carbonated beverages, whether liquid or frozen.” While the statute does not clearly include snow-cones, the justification lies in the fact that insofar as they are beverages, they are non-carbonated. Any similar product which is to enjoy the beverage exemption must meet the terms of Section 6359; namely, they cannot be carbonated. Thus, the tests for determining the taxability of these semi-frozen beverages is the same as for other soft drinks sold in your stores - - carbonated soft drinks are taxable, non-carbonated soft drinks are taxable, non-carbonated soft drinks are exempt. The brochure which you provided on “Icee” describes it as “the new way to serve carbonated drinks.” The brochure from Handy Dan’s Icy drink describes it as “a lively frozen carbonated soft drink in colorful flavors.” Accordingly, these are carbonated beverages and subject to tax. It does not appear that the CO2 is more of a requirement of the freezing process rather than a characteristic of the drink. Rather, it appears that these are carbonated beverages in a slightly different form for serving. In any case, any amount of carbonation whatsoever in the drink makes it a carbonated beverage.

Mr. [X]

-2-

March 12, 1970
245.1020

On the other hand, it appears that no carbonation is present in the drinks served through the machine manufactured by “S” or “P” and drinks sold from these machines would be exempt. I have retained the brochures you provided for our records. If you wish them returned, kindly let me know. Very truly yours,

Lawrence A. Augusta
Tax Counsel
LAA:ph

[1b]