Why were sales of Crystal Geyser Sparkling Mineral Water taxable while noncarbonated Kern's Nectar qualified as an exempt food product?

Plain-English summary

A seller asked why Crystal Geyser Sparkling Mineral Water was taxable while Kern's Nectar, which contained 21 percent fruit juice, was not.

Regulation 1602(a)(2) included fruit juices within food products but excluded carbonated beverages. Tax counsel explained that a noncarbonated product containing some fruit or vegetable juice qualified as a food product, whether sold liquid or frozen.

Kern's Nectar therefore qualified because it was noncarbonated and contained fruit juice. Crystal Geyser did not qualify because it was carbonated, so its sales were taxable.

Common questions

Did the nectar have to be 100 percent juice?

No. The letter said some fruit or vegetable juice was sufficient for the described noncarbonated product.

Why was the sparkling mineral water taxable?

Because Regulation 1602(a)(2) excluded carbonated beverages from the food-product definition applied in the letter.

Did the letter analyze every sparkling-water product?

No. It addressed the named products and the regulation then applied.

Citations and references

• California Sales and Use Tax Regulation 1602 (including subdivision (a)(2)) (as cited)
• Journal of the California Assembly (1970), pages 336-339 (as cited)
• Redacted seller's March 11, 1997 letter asking why Crystal Geyser was taxable and Kern's Nectar was not — request referenced but not reproduced in the official PDF
• Crystal Geyser and Kern's Nectar product evidence, including carbonation, noncarbonation, and the stated 21-percent fruit-juice content — facts supplied through the request and conclusion; complete labels, formulations, ingredients, juice calculations, packages, samples, tests, invoices, 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
• 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/245-1415-250.pdf

Original ruling text

245.1415.250

STATE OF CALIFORNIA

JOHAN KLEHS
First District, Hayward

STATE BOARD OF EQUALIZATION
450 N STREET, SACRAMENTO, CALIFORNIA
(PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0082)
TELEPHONE (916) 324-3828
FAX (916) 323-3387

DEAN F. ANDAL
Second District, Stockton
ERNEST J. DRONENBURG, JR.
Third District, San Diego
KATHLEEN CONNELL
Controller, Sacramento
_______
JOHN CHIANG
Acting Member
Fourth District, Los Angeles

April 28, 1997

_______
E. L. SORENSEN, JR.
Executive Director

Mr. [F]
[G]
XXXXX --- ----- ---, California XXXXX
RE:

S- --- XX-XXXXXX
Fruit Juices

Dear Mr. [F]:
I am responding to your letter to the Legal Division dated March 11, 1997. You ask why sales tax applies to your sales of Crystal Geyser Sparking Mineral Water but not Kern’s Nectar. You state that Kern’s Nectar is 21% fruit juice. Regulation 1602(a)(2) includes “fruit juices” within the definition of “food products” but excludes “carbonated beverages.” Consequently, as long as a non-carbonated product contains some vegetable or fruit juice, whether liquid or frozen, it qualifies as a food product. (See, Journal of the Assembly (1970), pp.336-339.) As a result, Kern’s Nectar qualifies as a food product, but carbonated Crystal Geyser does not. Sales of the latter are thus taxable. 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
Senior Tax Counsel
JLW:sr