Was powdered Probioplex exempt as a food product when its label described it as a dietary supplement?

Plain-English summary

Board staff reviewed brochures for three health-food products after the retailers claimed deductions on a sales tax return. This page addresses only Probioplex.

The memorandum described Probioplex as a powdered product whose label called it a dietary supplement. Under the version of Regulation 1602(a)(5) quoted in the source, a product in liquid, powdered, granular, tablet, capsule, lozenge, or pill form was excluded from the food-product exemption when its label described it as a food or dietary supplement or adjunct.

Because Probioplex met both facts—powdered form and express dietary-supplement labeling—tax counsel concluded that its sales were taxable.

The same memorandum separately analyzed DDS Acidophilus and Barley Essence Barley Powder. Their different facts and outcomes do not change the Probioplex conclusion.

Common questions

Did the decision turn only on Probioplex being a powder?

No. The cited rule required both a listed form and a supplement-related label or nutritional purpose. The source relied on the powdered form plus the express dietary-supplement description.

Did the memorandum decide every product sold by these retailers?

No. It addressed only the three products described in the supplied brochures, and this page isolates Probioplex.

Can a current Probioplex product be classified from this page alone?

No. Current formulation, packaging, promotional materials, and law would need to be reviewed.

Citations and references

• California Revenue and Taxation Code section 6359(c) (as cited)
• California Sales and Use Tax Regulation 1602 (including subdivisions (a)(2), (a)(4), and (a)(5)) (as cited)
• G. L. Jordan's April 16, 1991 Return Review memorandum requesting advice — memorandum referenced but not reproduced in the official PDF
• Return Review's February 5, 1991 letter to the taxpayers concerning line 5 deductions for fourth-quarter 1990 — letter referenced but not reproduced in the official PDF
• Taxpayers' brochures describing Probioplex, DDS Acidophilus, and Barley Essence Barley Powder — brochures referenced and quoted in part but not reproduced in the official PDF
• Prior Board-staff conclusion treating Barley Essence Barley Powder as an exempt vegetable-juice product under Regulation 1602(a)(2) — position referenced without an identifier, date, opinion, or supporting record
• Three reviewed health-food products and their labeling and promotional evidence — forms, claims, and outcomes described; complete brochures, labels, packages, ingredients, formulas, samples, tests, invoices, returns, deduction schedules, and sales records not reproduced in the official PDF
• Possible later return adjustment, 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/245-1269.pdf

Original ruling text

State of California

Board of Equalization
Legal Division (MIC:82)

Memorandum
245.1269
To:

Mr. G. L. Jordan
Return Review

From:

John L. Waid
Tax Counsel

Subject:

--- and --- [S]
S- -- XX-XXXXXX

Date:

June 5, 1991

Your memorandum of April 16, 1991, to the Legal Division has been assigned to me for a response. Since the taxpayers have not requested an opinion, I am writing directly to you. The taxpayers are apparently retailers of health food products. In response to your letter to them of February 5, 1991, regarding their line 5 deductions for the Fourth Quarter of 1990, the taxpayers sent brochures describing three of the products that they sell: Probioplex, DDS Acidophilus, and Barley Essence Barley Powder. You have requested advice as to whether or not these products qualify for the food products exemption from sales tax provided by Regulation 1602. OPINION B.

Food Products Exemption

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, the 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, proteins, minerals, or calories. In addition, products for which medicinal claims are made are excluded from the term “food products” by Regulation 1602(a)(4). Based on the above standard, we conclude as follows: (1) Probioplex. This is a powdered product which the label describes as a dietary supplement. The sales of this product are subject to tax pursuant to the above regulation. (2) DDS Acidophilus. According to the brochure, DDS Acidophilus, when consumed before meals, aids in food digestion and in correcting digestive disorders, is a natural

Mr. G. L. Jordan

-2-

June 5, 1991
245.1269

laxative, helps correct lactose intolerance, prevents bad breath, reduces cholesterol, corrects acne problems, and prevents traveler’s diarrhea. A it is a product for which the label makes specific medicinal claims, sales of DDS Acidophilus adjunct are subject to tax. (3) Barley Essence Barley Powder. The brochure indicates that this is a powdered health food made from brown rice and the dried juice of the barley plant. It describes the product as “nature’s, concentrated whole food, containing Vitamins, Minerals, Amino Acids, active Enzymes, and Chlorophyll for complete balanced nutrition.” This product is not described on its packaging as a food or dietary supplement or adjunct, nor does it make any medicinal or weight-loss claims. We have previously concluded that this product qualifies as a vegetable juice product the sales of which are exempt from tax under Regulation 1602(a)(2).

JLW:es
3901I

245.1269.doc