Was powdered Spirulina Plankton exempt when its label presented nutrition facts but did not call it a dietary supplement?

Plain-English summary

Spirulina Plankton was a dehydrated aquatic plant organism sold as powder. The source described it as a food containing up to 71% vegetable protein, 18 of 22 amino acids, and high concentrations of vitamins, minerals, trace elements, and chlorophyll.

Regulation 1602 treated unusual foods such as seaweed as exempt unless their labels said they were food supplements or equivalent products.

The submitted label gave serving and nutrition information but did not identify the product as a dietary supplement. Counsel therefore classified the plankton powder as exempt food.

The official PDF has an internal date inconsistency: its first page and annotation say April 27, 1981, while pages two and three say January 24, 1992. The matching first-page and annotation date is used here. A later official note also says medicinal claims no longer distinguish food from medicine.

Common questions

Did the high protein percentage make the powder taxable?

No. The source treated the product as unusual food because its label did not present it as a dietary supplement.

Did ordinary nutrition information count as a supplement claim?

Not in the submitted label. The product remained exempt.

Why does this page use the 1981 date?

The letter's first page and official annotation both say April 27, 1981. The later footers on the remaining pages conflict and are disclosed.

Citations and references

• California Sales and Use Tax Regulation 1602 (including its unusual-food and listed-form provisions) (as cited)
• California Sales and Use Tax Annotation 245.0724, dated November 17, 2008 — cited in the July 2, 2009 note concerning medicinal claims
• Redacted seller's April 9, 1981 letter requesting an opinion on Spirulina Plankton — request referenced but not reproduced in the official PDF
• Spirulina Plankton sample label supplied with the request — attachment quoted extensively but not reproduced in the official PDF
• Spirulina Plankton product evidence, including dehydrated aquatic-plant form, protein and amino-acid descriptions, nutrition information, serving size, distributor, and label conditions — facts supplied; complete label, ingredients, formulation, source records, nutrition analysis, package, samples, tests, invoices, advertising, and sales records not reproduced in the official PDF
• Official Annotation 245.1296'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/245-1296.pdf

Original ruling text

245.1296

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-3237

April 27, 1981

Mr. [H]
--- --- --- --P. O. Box ----- ---, CA XXXXX
RE:

S- -- XX-XXXXXX
S- -- XX-XXXXXX

Dear Mr. [H]:
This is in response to your letter of April 9, 1981. You have requested an opinion from this office regarding the correct application of tax to your sales of Spirulina Plankton. We understand that Spirulina Plankton is a dehydrated vegetable, aquatic plant organism which is highly nutritious. It is a food source containing up to 71 percent vegetable protein, 18 of the 22 amino acids, and has high concentrations of vitamins, minerals, trace elements, and chlorophyll. In your letter, you enclosed a sample label for your product. The label states the following: “--- ----- --- Spirulina Plankton Powder”

“Nutrition Information per serving
Serving Size:
Calories:
Protein:
Fat:

3 teaspoons
80
65-71%
6%

Mr. H]

-2-

Fiber:
Carbohydrates:
Minerals:
Moisture:
Selenium:
Distributed by:

January 24, 1992
245.1296

1.5%
13%
6-9%
4-7%
0.4ppm
Dr. --- ---, PHD., DSc.
Author of “--- --- ---”
P. O. Box XXX
--- ---, CA XXXXX
(XXX) XXX-XXXX (--- - ---)

Sales and Use Tax Regulation 1602 provides that tax does not apply to the sale of food products for human consumption. It further provides that the term “food products” does 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

“In determining whether a product falls within category (B), it is important whether the manufacturer has specially mixed or compounded ingredients for the purpose of providing a high nutritional source. For example, protein supplements and vitamin pills are taxable as food supplements. Other items, such as cod liver oil, halibut liver oil, and wheat germ oil, are considered dietary supplements and thus subject to tax even though not specially compounded. However, unusual foods such as brewer’s yeast, wheat germ and seaweed are not subject to tax except when their label states they are a food supplement or the equivalent. Finally, the compounding of nutritional elements in items traditionally accepted as food does not make them taxable, e.g., vitaminenriched milk and high protein flour.” (Emphasis added.)

Mr. H]

-3-

January 24, 1992
245.1296

To the extent the labeling on your product --- --- Spirulina Plankton Powder” does not make any claims concerning possible medicinal benefits and is not labeled as a dietary supplement, we would consider it to fall within the definition of a “food product” as that term is used in Regulation 1602. As such, tax does not apply to your sales of plankton powder. If you have further questions concerning this matter, please write this office again. Very truly yours,

Mary C. Armstrong
Staff Counsel

MCA:ba

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.