Were fully wearable FM assistive listening systems treated as hearing aids for California sales tax?

Plain-English summary

The described system paired a body-worn FM receiver and earbud used by the hearing-impaired person with a body-worn microphone and transmitter used by the speaker. The transmitter sent speech by FM signal to the receiver, which delivered it through the earbud.

California law treated a licensed hearing-aid dispenser as the consumer rather than the retailer of hearing aids, including necessary accessories and components. The Business and Professions Code defined a hearing aid as a wearable device designed or offered to aid impaired hearing.

Because the entire described assistive system was wearable and designed to compensate for impaired hearing—and the hearing-aid examining committee had reached the same classification—counsel treated it as a hearing aid. The dispenser's gross receipts from customer sales were therefore not subject to tax.

Source and live-annotation limits

The letter does not reproduce the December 10, 1987 request, product brochures, or Hearing Aid Dispensers Examining Committee opinion. It does not identify the requester, customers, manufacturer, product models, prices, sales dates, receipts, invoices, licenses, tax reporting, audit, assessment, completed transactions, or later outcome. Its scope assumption leaves sound-enhancement systems and hearing amplifiers unresolved unless the requester supplied further descriptions.

The live annotation preserves the two-part FM configuration, fully worn characteristic, hearing-aid classification under section 6018.7, and dispenser-consumer result. It omits the December 10 request, absent brochures, unresolved products, earbud detail, signal path, section 6051 baseline, Regulation 1506(e) component rule, Business and Professions Code definition, committee opinion, missing records, and later-outcome gap.

What this means for you

Hearing-aid dispensers, device sellers, and tax professionals

Document the license, each component and its function, whether every part is fully worn on the body, the device's designed or offered purpose, and the customer sale. Do not extend this result to a sound-enhancement product, amplifier, or partly nonwearable system without separately testing the current definitions.

Common questions

Did the opinion cover all amplification products sold by the requester?

No. It did not decide the sound-enhancement systems or hearing amplifiers because their brochures and descriptions were not supplied.

Was only the earbud treated as the hearing aid?

No. The opinion analyzed the described fully wearable two-part FM system as the hearing aid.

Citations and references

• California Revenue and Taxation Code section 6018.7 (licensed dispenser as consumer of hearing aids, as cited)
• California Sales and Use Tax Regulation 1506(e) (hearing-aid accessories and components, as cited)
• California Business and Professions Code section 3305 (wearable hearing-aid definition, as cited)
• California Revenue and Taxation Code section 6051 (general retail sales tax, as cited)
• Board of Medical Quality Assurance, Hearing Aid Dispensers Examining Committee opinion (supplied to counsel but not reproduced)
• December 10, 1987 request and product brochures — described but not included

Verbatim support

From the official February 25, 1988 letter:

We note that the above described devices are fully worn on the body of the user and are designed to compensate for impaired human hearing.

Accordingly, you are the consumer of the described listening devices sold by you and the gross receipts from your sales of these items are not subject to tax.

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/360-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/360-0110.pdf

Original ruling text

360.0110

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 322-3684

February 25, 1988

--- --- ----- --- ----- --- --Dear Mr. ---:
Your letter of December 10, 1987 has been referred to me for a response. You request an opinion concerning the correct application of tax to you sales of assistive listening devices, sound enhancement systems and hearing amplifiers. However, enclosed with your letter were brochures that only describe the assistive listening devices. Therefore, we assume for purposes of this opinion that you are requesting our opinion for the correct application of tax to your sales of the described assistive listening devices only since the sound enhancement systems and hearing amplifiers are not described. If you provide us with information describing the sound enhancement systems and hearing amplifiers, we will provide you with our opinion concerning the correct application of tax to the sale of each of these items. As I understand the facts, you are a licensed hearing aid dispenser. The described assistive listening devices are FM systems which consist of two pieces of equipment. The first piece is a FM receiver with an attached listening device (earbud) fully worn on the body of the hearing impaired person. The second piece is a microphone connected to a FM transmitter. Both the microphone and FM transmitter are fully worn on the body of the person speaking to the hearing impaired person. The speaker talks into the microphone and the sound is sent by the transmitter, by way of an FM signal, to the receiver, which delivers the signal directly to the hearing impaired person via a listening device (earbud) placed in the ear. California Sales and Use Tax Law imposes a tax on the gross receipts of retailers from all retail sales of tangible personal property in this state except where such sales are otherwise specifically excluded or exempted from tax by statute (Rev. & Tax. Code § 6051). Revenue and Taxation Code Section 6018.7 provides that “[a] licensed hearing aid dispenser is a consumer of, and shall not be considered a retailer within the provisions of this part with respect to hearing aids sold or furnished by him or her.” Sales and Use Tax Regulation 1506(e), which interprets and applies Revenue and Taxation Code Section 6018.7, provides, in pertinent part, that “[t]he term ‘hearing aid’ includes any necessary accessory or component part of the hearing aid….”

Mr. ---

-2-

February 25, 1988
360.0110

The term “hearing aid” is defined in Business and Professions Code Section 3305 as “any wearable instrument or device designed for, or offered for the purpose of, aiding or compensating for impaired human hearing.” Enclosed with your letter was a copy of an opinion from the Board of Medical Quality Assurance, Hearing Aid Dispensers Examining Committee, which concluded that fully wearable assistive listening devices, such as those described above, are hearing aids pursuant to Business and Professions Code Section 3305. We note that the above described devices are fully worn on the body of the user and are designed to compensate for impaired human hearing. Therefore, it is our opinion that the described assistive listening devices are hearing aids for purposes of Revenue and Taxation Code Section 6018.7 and Sales and Use Tax Regulation 1506(e). Accordingly, you are the consumer of the described listening devices sold by you and the gross receipts from your sales of these items are not subject to tax. I hope the above information is helpful. If you have any further questions concerning this topic, please do not hesitate to write this office. Very truly yours,

Robert J. Stipe
Tax Counsel

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