Was Sustacal exempt when the nutritionally complete liquid could replace a meal or serve as a person's sole nutrition?

Plain-English summary

Sustacal, a Mead Johnson product, was a nutritionally complete food in liquid form. It could be used either as a meal substitute or as a person's sole source of nutrition.

Tax counsel concluded that Sustacal qualified as a food product for human consumption under section 6359 and Regulation 1602.

Its sales were therefore exempt.

The same letter separately exempted Advance, a nutritional beverage for older babies, and addressed general and insulin syringes. This page addresses only Sustacal.

Common questions

Did liquid form make Sustacal taxable?

No. The source treated its complete-nutrition food use as exempt.

Could the product be used as the person's only nutrition?

Yes. That was an express fact in the opinion.

Did the letter address other products?

Yes. It separately addressed Advance and syringes; those conclusions do not define Sustacal's result.

Citations and references

• California Revenue and Taxation Code section 6359 (as cited)
• California Sales and Use Tax Regulation 1602 (as cited)
• California Sales and Use Tax Regulation 1591, including subdivision (h) (as cited for drug and insulin syringes in the shared opinion)
• Redacted requester's June 1, 1984 letter asking about Sustacal, Advance concentrated foods, drug syringes, and insulin syringes — letter referenced and questions characterized but not reproduced in the official PDF
• Sustacal product evidence concerning Mead Johnson manufacture, liquid form, complete nutrition, meal substitution, and sole-source use — facts supplied; complete label, formulation, ingredients, nutrition data, directions, package, samples, tests, invoices, and sales records not reproduced in the official PDF
• Advance product evidence and drug- and insulin-syringe prescription, pharmacist, diabetes-treatment, and sale evidence considered in the shared opinion — selected facts supplied; underlying labels, specifications, prescriptions, dispensing records, invoices, and sales records not reproduced in the official PDF
• Official Annotation 245.1780 restating Sustacal's complete-liquid-nutrition conclusion and July 30, 1984 date — current annotation supplies no additional product or implementation record
• Possible later product sale, label or formulation change, dispensing event, 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/245-1780.pdf

Original ruling text

245.1780

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-2641

July 30, 1984

Ms. [S]
[D]
P.O. Box XX
---, CA XXXXX-XXXX
S- – XX-XXXXXX
Dear Ms. [S]:

This is in reply to your letter dated June 1, 1984. You request our opinion as to the correct application of tax to the sale of “Sustacal” and “Advance” concentrated foods. Also, your inquiry concerns the application of tax to the sale of drug syringes. “Sustacal”, a product of Mead Johnson, is a nutritionally complete food in liquid form. This product may be used either as a meal substitute or taken as a person’s sole source of nutrition. “Advance,” a product of Ross Laboratories, is a nutritional beverage which is specifically formulated to meet the total nutritional requirements of older babies. This product is recommended for use either as a supplement to mother’s milk, or as an alternative to cow’s milk. It is our opinion that both Sustacal and Advance qualify as food products for human consumption pursuant to Section 6359 of the Revenue and Taxation Code and Sales and Use Tax Regulation 1602. Therefore, the sale of these products is not subject to tax. With regard to your inquiry concerning the sale of drug syringes, you ask whether a syringe qualifies as a tax exempt medicine because it is prescribed by a physician. Also, you ask whether the sale of insulin syringes is exempt from taxation. In general, syringes do not qualify as tax exempt medicine under Regulation 1591, notwithstanding the fact the syringe is prescribed by a physician. However, an exception to this general rule applies to the sale and use of “insulin syringes.” As provided under Sales and Use Tax Regulation 1591(h), the sale and use of “insulin syringes” is not subject to tax on or after January 1, 1983, provided the insulin syringes are furnished by a registered pharmacist to a person for the treatment of diabetes as directed by a physician.

Ms. [S]

2

July 30, 1984
245.1780

If you have any further questions concerning this matter, please write this office. Very truly yours,

Charles J. Graziano
Tax Counsel
CJG:ba