Was Osmolite exempt when it was liquid nutrition for oral total or supplemental feeding?

Plain-English summary

Osmolite was an isotonic liquid food designed for patients particularly sensitive to hyperosmotic feeding. It could be used for total or supplemental nutrition by oral feeding.

An eight-ounce serving provided 250 calories. The principal ingredients were water, hydrolyzed corn starch, sodium and calcium caseinates, coconut oil, and soy protein.

Section 6359 excluded liquid and other listed-form products when sold as dietary supplements or adjuncts. Counsel concluded that Osmolite was not sold that way.

Osmolite therefore qualified as exempt food.

Common questions

Did liquid form make Osmolite taxable?

No. The source found it was not sold as a dietary supplement or adjunct.

Could it provide all of a patient's nutrition?

Yes. The opinion says it could be used for total or supplemental nutrition by oral feeding.

Did the opinion address tube feeding?

It specifically described oral feeding; this page does not extend the conclusion beyond the stated facts.

Citations and references

• California Revenue and Taxation Code section 6359 (as cited)
• Redacted pharmacy supervisor's February 1, 1984 letter to Tax Counsel Donald Hennessy requesting an opinion on Osmolite — request referenced but not reproduced in the official PDF
• Osmolite product evidence, including isotonic liquid form, source-qualified patient purpose, oral total or supplemental feeding, 250 calories per eight-ounce serving, principal ingredients, and absence of supplement or adjunct sales status — facts supplied; complete label, formulation, ingredient specifications, nutrition data, directions, medical-use materials, package, samples, tests, prescriptions, invoices, and sales records not reproduced in the official PDF
• Possible later product sale, label or formulation change, route-of-use 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/245-1620.pdf

Original ruling text

245.1620

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
916/445-6493

March 7, 1984

Mr. [T]
Pharmacy Supervisor
[H]
XXXXX --- ----- ---, CA XXXXX

S- -- XX XXXXXX

Dear Mr. [T]:
Your letter of February 1, 1984 to Mr. Donald Hennessy, Tax Counsel, has been referred to me for reply. You request our opinion as to the correct application of tax to your sale of “Osmolite.” Osmolite is an isotonic liquid food which provides the user with complete balance nutrition. Apparently, this product is designed for patients who are particularly sensitive to hyperosmotic feedings, and can be used for the total or supplemental nutrition by oral feeding. An eight ounce serving of this product provides the user with 250 calories. The principal ingredients are water, hydrolyzed corn starch, sodium and calcium casenates, coconut oil, and soy protein. California Sales and Use Tax Law imposes a tax on the sale or use of tangible personal property in this state, unless such sale or use is otherwise exempt from taxation. Pursuant to Section 6359 of the Revenue and Taxation Code, the sale of and the storage, use, or other consumption in this state of “food products” for human consumption is exempt from tax. This exemption, however, does not apply to preparations in liquid, powdered, granular, tablet, capsule, lozenge, or pill form sold as dietary supplements or adjuncts. We are of the opinion that Osmolite is not sold as a dietary supplement or adjunct. Consequently, tax does not apply to the sale of this product since it comes within the definition of a “food product” as provided under Section 6359 of the Revenue and Taxation Code. Very truly yours,

Charles J. Graziano
Tax Counsel
CJG:ba