Was Sundance Natural Juice Sparkler exempt when it was carbonated and contained 70% fruit juice?

Plain-English summary

In 1987, Board staff had told the retailer that Sundance Natural Juice Sparkler was an exempt food product because staff believed it contained 100% fruit juice.

The Board later learned that the product contained only 70% fruit juice. The official annotation also describes it as carbonated. Senior Tax Counsel Mary C. Armstrong corrected the earlier advice and stated that the product was not exempt.

For the addressed retailer, the change was prospective only. Its new taxable status took effect January 1, 1990. The tax treatment of the other products listed in the 1987 letter remained unchanged.

Common questions

Why did the Board reverse the earlier result?

The earlier advice assumed the product contained 100% fruit juice. The later information showed only 70% fruit juice, and the annotation classified the product as a taxable carbonated beverage.

Was the change retroactive for the addressed retailer?

No. The letter made the change prospective only, effective January 1, 1990, for that retailer.

Did the letter change the treatment of the other products reviewed in 1987?

No. It expressly said their treatment remained the same.

Citations and references

• E. L. Sorensen, Jr.'s March 5, 1987 Board staff letter classifying five beverage or granule products sold by the addressed retailer's stores — letter referenced and corrected in part but not reproduced in the official PDF
• Unidentified later information that Sundance Natural Juice Sparkler contained 70% rather than 100% fruit juice — fact supplied without source, date, formulation, label, package, test, or manufacturer record in the official PDF
• Copy notice to the redacted district office making the retailer-specific status change prospective from January 1, 1990 — copy recipient shown; district implementation, audit, assessment, refund, customer treatment, and other follow-up not supplied in the official PDF
• Official Annotation 245.1720's statement that the product was carbonated and taxable as a carbonated beverage — carbonation and that express classification appear on the current annotation but not in the official PDF
• Possible later product sale, juice-content 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/245-1720.pdf

Original ruling text

245.1720

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 324-5589

November 13, 1989
Ms. [A]
[R]
XXXX --- ----- ---, -- XXXXX
S- -- XX-XXXXXX
Dear Ms. [A]:
On March 5, 1987 Mr. E. L. Sorensen, Jr., of this office wrote to you regarding the correct application of tax to the following beverage products sold by your stores: Tree Top Sparkling Grape Juice Sundance Natural Juice Sparkler Koala Springs Sparkling Mineral Water Juice Meier’s Pink Sparkling Grape Juice Marin Brand Lecithin Granules Mr. Sorensen’s letter incorrectly listed Sundance Natural Juice Sparkler as an exempt food product because he believed that this product contained 100% fruit juice. We have since been informed that Sundance Natural Juice Sparkler contains only 70% fruit juice. As such, this product is not exempt from tax. The application of tax to the remainder of the items listed in Mr. Sorensen’s letter remains the same. We apologize for any inconvenience this may have caused you or your customers. By copy of this letter, we are notifying our [City] District office that this change in tax status as it applies to
[R] is prospective only effective January 1, 1990. If you have further questions regarding this matter, please write or call this office. Very truly yours,

Mary C. Armstrong
Senior Tax Counsel
MCA:sr
cc:

[City] District Administrator