Were Vitasoy Vanilla Delite, SoyMoo Non-Dairy Soy Drink, and Edensoy Natural Soy Beverage exempt as ordinary ready-to-use soy drinks?

Plain-English summary

Board staff reviewed labels for Vitasoy Vanilla Delite Natural Soy Drink, SoyMoo Non-Dairy Soy Drink, and Edensoy Natural Soy Beverage.

California had previously treated soy-based drinks as exempt food when they were independent food items used as part of a regular diet or as substitutes for dairy milk.

The three products appeared to be ready-to-use drinks. Their labels merely listed ingredients and did not indicate that they were intended to supplement the purchaser's diet.

Tax counsel therefore concluded that all three qualified as food products and that their sales were exempt from tax.

Common questions

What product features supported exemption?

They were ready-to-use, independent drinks suitable for a regular diet or use as dairy-milk substitutes.

Did the labels call them dietary supplements?

No. The memorandum said the labels merely listed ingredients and did not indicate supplemental use.

Did the source classify every soy beverage?

No. It reviewed three named products and their supplied packaging; different formulation, preparation, or labeling may change the analysis.

Citations and references

• California Revenue and Taxation Code section 6359(c) (as cited)
• California Sales and Use Tax Regulation 1602(a)(5) (as cited)
• Sales and Use Tax Annotations 245.1060 and 245.1091 (as cited)
• Return Review staff member Lori Senitte's December 12, 1991 memorandum requesting product advice — referenced; not reproduced in the official PDF
• Lori Senitte's April 12, 1991 letter requesting the taxpayer's product types and quantities, and the taxpayer's response with packaging copies — letter, response, quantities, and packages referenced; none reproduced in the official PDF
• Vitasoy Vanilla soy drink, SoyMoo Non-Dairy Soy Drink, and EdenSoy Natural Soy Beverage labels and products — ready-to-use character, ingredients-only labels, and absence of supplement or medicinal claims described; source PDF prints “Vanilla Delete” while the current annotation prints “Vanilla Delite,” an unresolved official-source text difference
• Traditional Medicinals' Mother's Milk caffeine-free herbal tea for nursing mothers — separately analyzed in the same memorandum; formula, ingredients, complete packaging, directions, samples, invoices, and sales records not reproduced in the official PDF
• All reviewed soy-drink and herbal-tea packaging and product evidence — facts described; formulas, ingredient specifications, complete labels, packages, samples, preparation records, medicinal or dietary evidence, invoices, and sales records not reproduced in the official PDF
• Internal filename 245.1063 (10-19-04).doc printed at the end of the memorandum — no 2004 revision, maintenance, or approval record reproduced in the official PDF
• Possible 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/245-1063.pdf

Original ruling text

State of California

Board of Equalization
Legal Division (MIC:82)

245.1063
Memorandum
To:

Ms. Lori Senitte
Return Review

From:

John L. Waid
Tax Counsel

Subject:

[N]
S- -- XX-XXXXXX

Date:

January 31, 1992

I am writing this to respond to your memorandum of December 12, 1991, to the Legal Department. You requested advice regarding whether or not the products the taxpayer sells qualify for the food products exemption set forth in Regulation 1602. You attached to your memorandum a letter which you wrote to the [N] on April 12, 1991, requesting information describing the types and quantities of products which they sell. You also attached the copies of the packaging which the [N] sent in response. OPINION A.

Food Products Exemption

In interpreting and implementing the broad provisions of Revenue and Taxation Code Section 6359(c), Sales and Use Tax 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. A. Soy Drinks. The three soy-based drinks for which the taxpayers sent labels are Vitasoy Vanilla Delete Natural Soy Drink, SoyMoo Non-Dairy Soy Drink, and EdenSoy Natural Soy Beverage. We have previously concluded that soy-based drinks which are an independent food item and may be used as part of a regular diet or as a substitute for dairy milk for health reasons qualify as exempt food products. (See, Annot. 245.1060.)

Ms. Lori Senitte

-2-

January 31, 1992
245.1063

These products all appear to be ready-to-use drinks, the labels of which merely list the ingredients. They do not indicate that these products are to be used to supplement the purchaser’s diet nor do they make medicinal claims. Therefore, the products qualify as food products the sales of which are exempt from tax. B. Herbal Tea. The label which the [N] sent for this product denominate it as Traditional Medicinals’ Mother’s Milk and indicates that it is a caffeine-free herbal tea for nursing mothers. We have previously concluded that herb teas qualify as food products provided that no claims of medicinal qualities are made and the labels or packaging do not specifically indicate that they are sold as a dietary supplement or adjunct. (Annot. 245.1091.) While the packaging for this product refers to herbs being used as medicines in a general way, it makes no specific medicinal claims, such as having laxative properties. Therefore, it qualifies as a food product the sales of which are exempt from tax.

JLW:es

245.1063 (10-19-04).doc