Were Juice Plus+ capsules exempt when their label described fruit-derived ingredients but did not call them supplements or claim a vitamin, mineral, protein, or calorie purpose?

Plain-English summary

Juice Plus+ was sold in gelatin capsules containing a proprietary blend of fruit-juice powder extracts, food enzymes, fibers, food actives, and acidophilus. The company said it marketed the product as real food rather than as a food supplement, vitamin, or diet product.

Capsule form made Regulation 1602(a)(5) relevant, but form alone did not make the sale taxable. The exclusion applied if the package or label described the product as a food or dietary supplement or adjunct, or if the product was designed to remedy a dietary deficiency or change vitamin, protein, mineral, or caloric intake.

The reviewed label did neither. It did not call Juice Plus+ a supplement or adjunct and did not indicate a purpose of increasing, decreasing, or maintaining the covered areas of nutrition. Tax counsel therefore concluded that the product qualified as food and its sales were exempt.

The original opinion also relied on the absence of medicinal claims. A later note in the official PDF says medicinal label claims are no longer used to distinguish food from medicine. The supplement-labeling and nutritional-purpose findings remain separate parts of the source's analysis.

Common questions

Did capsule form automatically make Juice Plus+ taxable?

No. Capsule form triggered the Regulation 1602(a)(5) analysis, but the reviewed label did not meet either stated exclusion condition.

What label facts supported exemption?

The label did not describe the product as a food or dietary supplement or adjunct and did not state a purpose of changing vitamin, mineral, protein, or caloric intake.

Would every product sold under the Juice Plus+ name receive the same result?

No. The conclusion applied to the label and facts reviewed in 1993; different formulation, form, directions, or supplement claims can change the analysis.

Citations and references

• California Revenue and Taxation Code sections 6051, 6091, and 6359 (including subdivision (c)) (as cited)
• California Sales and Use Tax Regulation 1602 (including subdivisions (a)(1), (a)(2), and (a)(5)) (as cited)
• California Sales and Use Tax Annotation 245.0724, dated November 17, 2008 — cited in the July 2, 2009 note concerning medicinal claims
• Market St. Ry. Co. v. California State Board of Equalization (1953), 137 Cal. App. 2d 87, 96, source-printed 290 PO.2d 201
• Standard Oil Co. v. California State Board of Equalization (1974), 39 Cal. App. 3d 765, 769, 114 Cal. Rptr. 571
• Redacted national marketing director's October 28, 1993 letter asking about Juice Plus+ sales — request referenced but not reproduced in the official PDF
• Juice Plus+ bottle label supplied with the request — attachment referenced and quoted in part but not reproduced in the official PDF
• Juice Plus+ product evidence, including gelatin-capsule form, proprietary fruit-powder blend, food enzymes, fibers, food actives, acidophilus, and the representation that it was sold as real food — facts supplied; complete label, formula, ingredients, package, samples, tests, invoices, advertising, and sales records not reproduced in the official PDF
• Sales and Use Tax Regulation 1602 enclosure — stated as included; enclosure copy not reproduced in the official PDF
• Official Annotation 245.1215's Am. 2010-1 notation and the PDF's July 2, 2009 RDT note — amendment materials and separate support for the note not supplied on the annotation page or in the official PDF
• Possible later product sale, label or formulation change, 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/245-1215.pdf

Original ruling text

245.1215

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
LEGAL DIVISION (MIC:82)

MEMBER
First District

450 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 324-3828

BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR.
Third District, San Diego
MATTHEW K. FONG
Fourth District, Los Angeles
GRAY DAVIS
Controller, Sacramento

December 16, 1993

────────
BURTON W. OLIVER
Executive Director

Mr. [W]
National Marketing Director
--- --XXX --- ----- ---, California XXXXX
Re:

[No Permit Number]
Juice Plus+

Dear Mr. [W]:
I am responding to your letter to the Legal Division dated October 28, 1993. You ask if sales or use tax applies to your company’s sales of Juice Plus+. You attached to your letter a bottle label which describes the product, in part, as follows: “Juice PLUS+ provides natural fruit powders, fruit fibers, and food enzymes, along with food actives and acidophilus.... [¶] ... Each preservative free natural gelatin capsule contains a proprietary blend of ... fruit juice powder extracts, food enzymes, fibers and food actives....” You further indicate that it is “being sold as real food, not a food supplement, vitamin or diet product.” OPINION A.

Sales and Use Tax Generally.

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

Mr. [W]

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245.1215

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 PO.2d 201.]) The taxpayer has the burden of showing that he clearly comes within the exemption. (Standard Oil Co. v. St. Bd. of Equalization (1974) 39 Cal.App.3d 765, 769 [114 Cal.Rptr. 571].) B.

Food Products Exemption.

Section 6359, as interpreted and implemented by Regulation 1602, provides an exemption from sales and use taxes for sales of food products for human consumption under certain circumstances. Regulation 1602(a)(2) contains a list of fruit products which are considered “food products.” (Sales and Use Tax Regulations are Board promulgations which have the force and effect of law.) Sub-division (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. Vitamins
2. Proteins
3. Minerals
4. Caloric intake”
   In interpreting and implementing the broad provisions of Section 6359(c), Regulation 1602(a)(5) thus 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. C.

Tax Consequences.

Since Juice PLUS+ is in capsule form, could Regulation 1602(a)(5) apply to exclude this product from the category of “food products?” As you note, the label does not state that this

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product is either a food or dietary supplement or adjunct. It also does not indicate that the purpose of the product is to increase, decrease, or maintain the intake of vitamins, minerals, proteins, or calories. Nor does the label make medicinal claims for Juice PLUS+. Therefore, we conclude that it is a food product the sales of which are exempt from tax under Regulation 1602(a)(1). For your information, I have included a copy of 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:

Reg. 1602

A "medicinal claim" on the product label is no longer used as a basis for differentiating a food product from a medicine. Please see Annotation 245.0724 (11/17/08). RDT. 7/2/09.