Why was Vantage Plus exempt when it was essentially the same powder as taxable Waist-Away Control?

Plain-English summary

Vantage Plus was a powder containing isolated soy protein, fructose, soy bran, natural flavors, minerals, and vitamins. Its label called it a “Complete Meal Replacement,” a “nutrition enhancer,” and a “nutritious alternative,” and said it could be mixed with other foods and beverages.

Counsel believed Vantage Plus was otherwise identical to another product, Waist-Away Control. But Waist-Away's label said it aided weight reduction by decreasing calories and increasing vitamins and proteins, so Board staff treated that product as taxable.

The Vantage Plus label did not say the product was designed to increase or decrease vitamin, protein, or calorie intake and did not call it a dietary or food supplement.

Because Vantage Plus was not sold as a dietary supplement or adjunct, it qualified as exempt food. The memorandum kept the opposite result for Waist-Away Control.

Common questions

Did identical ingredients require identical tax treatment?

No. The source says the products were essentially the same but their labels led to different results.

Did “Complete Meal Replacement” make Vantage Plus taxable?

Not in this opinion. Counsel focused on the absence of supplement terminology and claims about changing vitamin, protein, or caloric intake.

Why did Waist-Away Control remain taxable?

Its label presented it as aiding weight reduction by changing calorie, vitamin, and protein intake.

Citations and references

• California Sales and Use Tax Regulation 1602, including subdivision (a)(5)(B) (as cited)
• Sacramento District's August 27, 1984 mini-memo requesting an opinion on Vantage Plus — mini-memo referenced but not reproduced in the official PDF
• Board's January 20, 1983 memorandum to Leon Adams classifying Waist-Away Control as nonexempt — memorandum referenced and characterized but not reproduced in the official PDF
• Vantage Plus and Waist-Away Control labels reviewed or described in the opinion — selected claims, product form, principal ingredients, and intake representations supplied; complete labels, formulations, ingredient specifications, nutrition data, directions, packages, samples, tests, manufacturer records, invoices, and sales records not reproduced in the official PDF
• Redacted distributor and Board's statement that Vantage Plus and Waist-Away Control appeared identical except for labels — relationship asserted without manufacturer, formulation-comparison, production, or other supporting record in the official PDF
• Official Annotation 245.1900 restating the Vantage Plus label-based exemption and October 1, 1984 date — current annotation supplies no additional label, product, or implementation record
• 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/245-1900.pdf

Original ruling text

State of California

Memorandum

To:

Sacramento District (PZ)

From:

Charles J. Graziano

Subject:

[G]
[B]
S- -- XX XXXXXX

Board of Equalization

245.1900

October 1, 1984

This is in reply to your mini-memo dated August 27, 1984. You request our opinion as to the correct application of tax to “Vantage Plus,” a product distributed by [P]. You have provided for our review a label from this product. As you know, in our memo of January 20, 1983 to Mr. Leon Adams, we stated that “Waist-Away Control,” another product distributed by [P], does not qualify as an exempt food product pursuant to Sales and Use Tax Regulation 1602(a)(5)(B). The basis for our opinion in this matter is that the label for this product indicates that Waist-Away Control is designed to aid in weight reduction by decreasing the user’s caloric intake and by increasing the user’s intake of vitamins and proteins. It appears to us that Vantage Plus is a product which is identical in all respects to Waist-Away Control, except for the different product labels. The label from Vantage Plus states that the product is “A Complete Meal Replacement,” and that it can be used as a “nutrition enhancer” or “nutritious alternative,” i.e., it is a powder which can be mixed with other foods and beverages. The principal ingredients of Vantage Plus are isolated soy protein, fructose, soy bran, natural flavors and various minerals and vitamins. Unlike the label from Waist-Away Control, the label from Vantage Plus does not indicate that the product is designed to increase or decrease the user’s vitamin, protein, or caloric intake. Furthermore, the Vantage Plus label does not describe the product as a dietary or food supplement. Notwithstanding the fact that both Vantage Plus and Waist-Away Control are essentially the same product, it is our opinion that Vantage Plus is not sold as a dietary supplement or adjunct. Therefore, Vantage Plus qualifies as a tax-exempt food product for human consumption under Regulation 1602. Since Waist-Away Control is sold as a dietary or food supplement, however, we remain of the opinion that the product sold under the Waist-Away Control label is not a tax-exempt food product.

CJG:ba