Was Mil-Kee-Whey exempt when it was a whey-based dairy beverage not labeled as a supplement and making no weight-loss claims?

Plain-English summary

Mil-Kee-Whey was a whey-based food beverage composed principally of dairy whey, nonfat dry milk, milk protein, and corn syrup.

Its label did not call the product a food supplement or equivalent and did not make weight-loss claims. Tax counsel classified it as a beverage composed at least partly of milk or a milk product under Regulation 1602(a)(1).

Its sales were therefore exempt.

The official annotation lists January 23, 1984, but the published supporting memorandum itself bears January 23, 1987. The source document's date controls this page. A later note also says medicinal claims are no longer used to distinguish food from medicine; the annotation was amended in 2010.

Common questions

What ingredients supported the dairy-beverage classification?

The label listed dairy whey, nonfat dry milk, milk protein, and corn syrup as the principal ingredients.

Did medicinal claims remain part of the published test?

The later official note says medicinal claims are no longer used to distinguish food from medicine.

Why is the issue date 1987 rather than the annotation's 1984 date?

The complete official memorandum visibly states January 23, 1987. This page follows the source document itself.

Citations and references

• California Sales and Use Tax Regulation 1602(a)(1) (as cited)
• California Sales and Use Tax Annotation 245.0724, dated November 17, 2008 — cited in the July 2, 2009 note concerning medicinal claims
• Out-of-State District's November 28, 1983 request asking whether Mil-Kee-Whey qualified as nontaxable food — request referenced but not reproduced in the official PDF
• Mil-Kee-Whey label supplied for review — label referenced and summarized but not reproduced in the official PDF
• Mil-Kee-Whey product evidence, including whey-beverage description, dairy whey, nonfat dry milk, milk protein, corn syrup, and absence of supplement or weight-loss claims — facts supplied; complete label, formulation, ingredient specifications, nutrition data, directions, package, samples, tests, invoices, and sales records not reproduced in the official PDF
• Official Annotation 245.1520'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/245-1520.pdf

Original ruling text

State of California

Board of Equalization

Memorandum
To:

Out-of-State District (LK)

From:

Charles J. Graziano

245.1520
Date:

January 23, 1987

This is in reply to your request of November 28, 1983 in which you ask whether “Mil-Kee-Whey,” a whey based food beverage drink qualifies as a nontaxable food product. The label from this product indicates that Mil-Kee-Whey is principally composed of dairy whey, nonfat dry milk, milk protein, and corn syrup. The product is not described on its label as a food supplement or the equivalent, nor does the label make any medicinal or weight loss claims. Therefore, in our opinion, this product is a beverage compose at least in part of milk or a milk product and as such qualifies as a tax exempt food product under subsection (a)(1) of Sales and Use Tax Regulation 1602.

CJG: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.