Were FIBERMED biscuits taxable because the container called them a high-fiber supplement?

Plain-English summary

FIBERMED's container described the product as a “High-Fiber Supplement.” Its ingredients included corn and wheat bran, wheat flour, oat flakes, corn germ meal, brown sugar, starch, shortening, flavorings, leavening agents, salt, and citric acid, blended and baked into biscuits.

Counsel classified the biscuits as a cereal product within section 6359(b)(1)'s food definition.

The dietary-supplement exclusion in section 6359(c) applied to preparations in liquid, powdered, granular, tablet, capsule, lozenge, or pill form. FIBERMED biscuits were not in one of those forms.

Their sales were therefore exempt despite the “high-fiber supplement” wording.

Common questions

Did the word “supplement” on the container control?

No. The product's baked-biscuit form kept it outside the listed supplement forms.

What food category did counsel use?

Counsel treated FIBERMED as a cereal product.

Would a powder or tablet with similar claims necessarily receive the same result?

No. The conclusion depended on the biscuits not being in a listed liquid, powder, tablet, capsule, or similar form.

Citations and references

• California Revenue and Taxation Code sections 6051 and 6359 (including subdivisions (b)(1) and (c)) (as cited)
• California Sales and Use Tax Regulation 1602 (as cited)
• Redacted seller's undated letter requesting an opinion on FIBERMED biscuits — request referenced but not reproduced in the official PDF
• Empty FIBERMED container and side-panel ingredient list supplied with the request — container referenced and ingredient list reproduced in text but the container and complete label are not reproduced in the official PDF
• FIBERMED product evidence, including high-fiber-supplement description, listed ingredients, blending, baking, biscuit form, and cereal classification — facts supplied; complete container, label, ingredient specifications, formulation, nutrition data, manufacturing records, samples, tests, invoices, and sales records not reproduced in the official PDF
• Sales and Use Tax Regulation 1602 enclosure — stated as enclosed; 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/245-1418.pdf

Original ruling text

245.1418

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
(916) 322-3684

May 22, 1986

Ms. [M]
XXXX --- ----- ---, CA XXXXX
Dear Ms. [M]:
Your letter requesting an opinion concerning the correct application of tax to the sale of FIBERMED biscuits has been referred to me for a response. Enclosed with your letter is an empty FIBERMED container which describes the product as a “High-Fiber Supplement”. The list of ingredients on the side panel indicates the product is made with corn bran, brown sugar, wheat flour, corn starch, wheat bran, oat flakes, corn germ meal, vegetable shortening (partially hydrogenated soybean oil), sodium bicarbonate, vanilla flavor, peanut butter flavor, ammonium bicarbonate, baking acid, sodium proprionite, salt and citric acid. These ingredients are blended and baked into biscuits for consumption. You request our opinion as to whether FIBERMED biscuits are a food product the sale of which is exempt from tax or a “taxable food supplement”. Revenue and Taxation Code section 6051 imposes tax on the sale of tangible personal property in this state unless such sale is specifically exempted from taxation by statute. Section 6359 of the Code exempts the sale of food products for human consumption from tax. Section 6359(b)(1) defines “food products” to include “cereals and cereal products, … vegetables and vegetable products, fruit and fruit products, spices and salt, sugar and sugar products ….” Section 6359(c) provides that “food products” do not include “medicines and preparations in liquid, powdered, granular, tablet, capsule, lozenge, and pill form sold as dietary supplements or adjuncts” (emphasis added). Applying the above criteria, we are of the opinion that FIBERMED biscuits, as described, are a cereal product and therefore a food product pursuant to section 6359(b)(1). Accordingly, sales of FIBERMED biscuits are exempt from tax. FIBERMED biscuits are not “food supplements” pursuant to section 6359(c) since they are not prepared in a liquid, powdered, granular, tablet, capsule, lozenge or pill form.

Ms. [M]

-2-

May 22, 1986
245.1418

We hope the above information is helpful. Enclosed for your review and reference is a copy of Sales and Use Tax Regulation 1602 (Food Products) which interprets and applies the Code. If you have any further questions on this topic, please do not hesitate to write this office.

Very truly yours,

Robert J. Stipe
Tax Counsel
RJS:sr
Enc
cc:

J. Fisher – Culver City Auditing
M. M Laxer – Culver City Auditing
Director, [K]
XXXX --- ----- ---, CA XXXXX