Were Pedialyte and the listed oral-electrolyte and diarrhea products taxable?

Plain-English summary

Pedialyte and the four related products listed in the memorandum were nontaxable food products. Tax counsel said the products combined water and sugar or sugar substitutes and were identical, for classification purposes, to sports energy drinks the Board had already treated as nontaxable.

The five products were Pedialyte Oral Electrolyte Maintenance Solution Freezer Pops, Naturalyte Oral Electrolyte Solution, Infalyte Oral Electrolyte Maintenance Solution, Kao Lectrolyte Electrolyte Replenisher packets, and Isomil DF Soy Formula for Diarrhea.

The memorandum said there was no basis to distinguish those dehydration products from the sports drinks and directed that they be classified as nontaxable food without regard to the prior analysis.

Common questions

Was Pedialyte the only product covered?

No. The memorandum expressly listed five products.

Why were the products nontaxable?

Their described water-and-sugar or sugar-substitute formulations matched products already regarded as nontaxable sports energy drinks.

Did the memorandum rely on medical use?

No separate medical exemption was stated. The analysis classified the products as food.

Citations and references

• Program Planning Manager Dennis Fox's May 14, 1997 memorandum raising questions about Pedialyte and similar products — memorandum referenced but not reproduced in the official PDF
• Board's prior nontaxable treatment of unidentified sports energy drinks — treatment referenced without product names, dates, opinions, annotations, analysis, or supporting records in the official PDF
• Unidentified previous analysis that counsel directed staff to disregard when classifying the products as food — analysis referenced but not reproduced or otherwise identified in the official PDF
• Five source-listed Pedialyte, Naturalyte, Infalyte, Kao Lectrolyte, and Isomil products — names and generalized water-and-sugar or sugar-substitute formulations supplied; complete product-specific formulas, ingredients, labels, directions, packages, samples, tests, invoices, and sales records not reproduced in the official PDF
• Official Annotation 245.1632's current five-product list, including its trademark-symbol difference for Kao Lectrolyte — annotation does not explain the registered/trademark-symbol change or supply additional product evidence
• 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/245-1632.pdf

Original ruling text

State of California

Board of Equalization

Memorandum
To:

Mr. Dennis Fox
Program Planning Manager MIC:92

From:

Gary J. Jugum
Assistant Chief Counsel
Telephone: (916) 445-3723 CalNet 485-3723

Subject:

Sales of Pedialyte and Other Dehydration Products

245.1632
Date:

May 16, 1997

This is in response to your May 14, 1997 memorandum to the extent that memorandum raises questions in regard to sales of Pedialyte and similar products. Everyone now agrees that Pedialyte is a nontaxable item. Pedialyte and related products are formulated as combinations of either water and sugar, or water and sugar substitutes, identical to sports energy drinks previously regarded as nontaxable by the Board. There is no basis for distinguishing between these products for sales and use tax purposes. These products should be classified as nontaxable “food products,” without regard to any previous analysis. The nontaxable products in question are as follows: 1. 2. 3. 4. 5.

GJJ:sr

Pedialyte® Oral Electrolyte Maintenance Solution Freezer Pops Naturalyte® Oral Electrolyte Solution Infalyte® Oral Electrolyte Maintenance Solution Kao Lectrolyte® Electrolyte Replenisher (power packets) Isomil® DF Soy Formula For Diarrhea.