Was Advance exempt when it was formulated for older babies as a breast-milk supplement or cow's-milk alternative?

Plain-English summary

Advance, a Ross Laboratories product, was a nutritional beverage specifically formulated to meet the total nutritional requirements of older babies.

It was recommended either as a supplement to mother's milk or as an alternative to cow's milk.

Tax counsel concluded that Advance qualified as a food product for human consumption under section 6359 and Regulation 1602. Its sales were exempt.

The same letter separately addressed Sustacal and syringes. This page addresses only Advance.

Common questions

Did using Advance as a supplement make it taxable?

No. The source treated the infant nutritional beverage as exempt food.

Could it be used instead of cow's milk?

Yes. That was one of the recommended uses stated in the opinion.

Was the product intended for all ages?

The source specifically described it as formulated for older babies.

Citations and references

• California Revenue and Taxation Code section 6359 (as cited)
• California Sales and Use Tax Regulation 1602 (as cited)
• California Sales and Use Tax Regulation 1591 (including subdivision (h)) — as cited for drug and insulin syringes
• Redacted seller's June 1, 1984 letter asking about Sustacal, Advance, drug syringes, and insulin syringes — request referenced but not reproduced in the official PDF
• Sustacal and Advance product evidence — manufacturers, liquid or beverage forms, nutritional uses, target users, and outcomes described; complete labels, formulations, ingredients, nutrition data, directions, packages, samples, tests, invoices, and sales records not reproduced in the official PDF
• Drug- and insulin-syringe evidence, including prescriptions, pharmacist furnishing, physician directions, diabetes treatment, and sale dates — questions and legal conditions described; prescriptions, pharmacy records, physician directions, product records, invoices, and sales records not reproduced in the official PDF
• Possible later product sale, label or formulation change, syringe furnishing, 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/245-1410.pdf

Original ruling text

245.1410
STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-2641

July 30, 1984

Ms. [S]
[S]
P.O. Box XX
---, CA XXXXX-XXXX
S- – XX-XXXXXX
Dear Ms. [S]:

This is in reply to your letter dated June 1, 1984. You request our opinion as to the correct application of tax to the sale of “Sustacal” and “Advance” concentrated foods. Also, your inquiry concerns the application of tax to the sale of drug syringes. “Sustacal”, a product of Mead Johnson, is a nutritionally complete food in liquid form. This product may be used either as a meal substitute or taken as a person’s sole source of nutrition. “Advance,” a product of Ross Laboratories, is a nutritional beverage which is specifically formulated to meet the total nutritional requirements of older babies. This product is recommended for use either as a supplement to mother’s milk, or as an alternative to cow’s milk. It is our opinion that both Sustacal and Advance qualify as food products for human consumption pursuant to Section 6359 of the Revenue and Taxation Code and Sales and Use Tax Regulation 1602. Therefore, the sale of these products is not subject to tax. With regard to your inquiry concerning the sale of drug syringes, you ask whether a syringe qualifies as a tax exempt medicine because it is prescribed by a physician. Also, you ask whether the sale of insulin syringes is exempt from taxation. In general, syringes do not qualify as tax exempt medicine under Regulation 1591, notwithstanding the fact the syringe is prescribed by a physician. However, an exception to this general rule applies to the sale and use of “insulin syringes.” As provided under Sales and Use Tax Regulation 1591(h), the sale and use of “insulin syringes” is not subject to tax on or after

Ms. [S]

2

July 30, 1984
245.1410

January 1, 1983, provided the insulin syringes are furnished by a registered pharmacist to a person for the treatment of diabetes as directed by a physician. If you have any further questions concerning this matter, please write this office. Very truly yours,

Charles J. Graziano
Tax Counsel
CJG:ba