Did fortifying noncarbonated Simply Nutritious Mega C fruit juice with a high dose of Vitamin C make its grocery-store sales taxable?

Plain-English summary

Simply Nutritious Mega C was described as an 86-percent, noncarbonated strawberry-flavored juice beverage from concentrates with 1,000 percent of the recommended daily allowance of Vitamin C.

Regulation 1602 generally treated noncarbonated fruit and vegetable juices as exempt food products. It excluded certain products labeled as supplements or adjuncts, or designed to provide a high nutritional source, but it also said adding nutritional elements to foods traditionally accepted as food—such as vitamin-enriched milk—did not make them taxable.

The supplied label did not describe Mega C as a food or dietary supplement or adjunct. Tax counsel treated it as ordinary noncarbonated fruit juice fortified with Vitamin C, so its retail sales were exempt under section 6359.

The official PDF later added a note that medicinal claims on a label are no longer the test for separating food from medicine. That later guidance does not change the letter's core treatment of fortified traditional juice, but current classification should follow the updated legal framework.

Common questions

Did the very high Vitamin C percentage make the juice taxable?

No. Fortifying a traditional food with nutritional elements did not by itself remove the food exemption.

Would supplement labeling matter?

Yes. The letter relied in part on the absence of food- or dietary-supplement or adjunct labeling.

Did the letter exempt carbonated juice?

No. The product described was noncarbonated.

Citations and references

• California Revenue and Taxation Code section 6359, including subdivision (a) (as cited)
• California Sales and Use Tax Regulation 1602, including subdivisions (a)(2) and (a)(5) (as cited)
• Redacted seller's February 20, 1998 letter asking about retail grocery-store sales of juice products — letter referenced and characterized but not reproduced in the official PDF
• Simply Nutritious Mega C label enclosed with the request — selected product name, flavor, concentrate, vitamin C, juice-content, carbonation, and marketing facts supplied; complete label, ingredients, formulation, nutrition panel, directions, package, samples, tests, invoices, and sales records not reproduced in the official PDF
• Sales and Use Tax Annotation 245.0724 and source-added note dated November 17, 2008 and initialed RDT July 2, 2009 concerning medicinal claims — annotation cited but its text and the note's underlying review or amendment record are not reproduced in the official PDF
• Official Annotation 245.1705's 1999-2 and 2010-1 amendment markers — current annotation supplies neither amendment text nor supporting publication records, and the 1999-2 marker does not appear 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/245-1705.pdf

Original ruling text

245.1705

STATE OF CALIFORNIA

JOHAN KLEHS
First District, Hayward

STATE BOARD OF EQUALIZATION
LEGAL DIVISION (MIC:82)
450 N STREET, SACRAMENTO, CALIFORNIA
(PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0082)
TELEPHONE (916) 322-2976
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
______

March 16, 1998

E. L. SORENSEN, JR.
Executive Director

Ms. [K]
[F]
XXXX --- -----, --- XXXXX-XXXX
Re:

[X]
No Seller’s Permit

Dear Ms. [K]:
This is in response to your letter dated February 20, 1998, in which you ask how tax applies to sales of juice products sold at retail by grocery stores. You enclosed with your letter, as an example, a label from a product called “Simply Nutritious Mega C,” identified as a “delicious strawberry flavored beverage from concentrates,” with one thousand percent of the recommended daily allowance of vitamin C added. The label states that the product contains eighty-six percent juice. In your letter, you indicated your understanding that under Revenue and Taxation Code section 6359(a), the general rule is that sales of food products for human consumption are exempt from tax. As explained in Regulation 1602(a)(2), non-carbonated fruit and vegetable juices are generally deemed to be such food products the sales of which are exempt from tax. However, where the label or packaging describes such juices as food or dietary supplements or adjuncts, or where the products are designed for the purpose of weight management or for the purpose of providing a high nutritional source, they are excluded form the definition of “food products” under subdivision (a)(5) of Regulation 1602. Sales of products that are excluded from the definition of “food products” are not exempt from tax under Regulation 1602.

Ms. [K]

-2-

March 16, 1998
245.1705

Nevertheless, subdivision (a)(5) also provides that the compounding of nutritional elements in items traditionally accepted as food (e.g., vitamin enriched milk and high protein flour) does not make the items taxable. Thus, even if it could be argued that a particular product is designed for the purpose of providing a high nutritional source, if the product is traditionally accepted as food, the compounding of nutritional elements in that product will not keep it from being considered a food product the sales of which are exempt from tax. The label for “Simply Nutritious Mega C” does not contain any information indicating that the product is marketed or sold as a medicine, or as a food or dietary supplement or adjunct. It appears from the label that the product is simply a non-carbonated fruit juice that has been fortified with vitamin C. As such, sales of this product are exempt from tax under Revenue and Taxation Code section 6359. Sales of other non-carbonated fruit juices not marketed or sold as medicines or food or dietary supplements or adjuncts are also exempt from tax under section 6359. If you have further questions, please feel free to write or call me at the address or telephone number listed above. Sincerely,

Kelly W. Ching
Tax Counsel
KWC:cl
cc:

Out-of-State District Administrator (OH)

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.