Did the historical interstate-food ice exemption cover dry ice refrigerating meals served aboard aircraft?

Plain-English summary

California Tax Counsel said dry ice used to refrigerate food served as meals aboard aircraft did not qualify under the historical interstate-food ice exemption. The meals were intended for consumption on the planes, not shipped as cargo in the usual sense to an out-of-state destination point.

Dry ice used to refrigerate food at a buyer's place of business also fell outside the quoted statutory use. The Board planned to assess one buyer directly because it had issued resale certificates and was contending in court that it sold rather than consumed at least some ice. The source supplies no notice, amount, court case, petition or outcome.

Audit report, two uses, direct buyer assessment, and open petition right

The April 18 letter responds to a redacted seller's March 25 letter after Tax Counsel E. H. Stetson received the Los Angeles portion of an audit. The request, audit period, other audit segments, report and workpapers are absent.

Stetson was extremely doubtful that any dry-ice sales to redacted X or Y qualified under section 6359.5 as amended April 20, 1954 and Ruling 60. The source quotes the statute as covering ice or dry ice used in packing, shipping or transporting human-consumption food between California and outside points. It does not reproduce the amendment or ruling.

The auditor reported that most dry ice bought by one redacted purchaser refrigerated food at the purchaser's place of business. Stetson said that use fell outside the exemption. The source supplies no buyer, premises, food, ice quantity, refrigeration duration, sale, invoice or percentage beyond most.

Other dry ice sold to X and Y refrigerated food accompanying aircraft meals. Stetson said the food was not shipped or transported as cargo in the usual sense and had no out-of-state destination point; it was for consumption aboard the planes. No airline, caterer, flight, route, meal, food, dry ice or delivery evidence is included.

The audit did not propose a seller determination measured by receipts from sales to one X. Instead, the Board proposed assessing that company directly because it furnished resale certificates and was contending in court that it sold rather than consumed at least part of the dry ice. The certificates, buyer audit, proposed measure, pleadings, court, case number and outcome are absent.

After a Notice of Determination, the seller could petition within 30 days, object to tax on sales to X and Y and request an oral hearing. The source supplies no notice mailing, petition, hearing, final assessment, payment, claim, appeal or outcome.

The live 400.0240 annotation states that aircraft-meal dry ice is outside section 6359.7 because the exemption covers food cargo shipped to an out-of-state destination. The supporting letter cites former section 6359.5 and Ruling 60, not section 6359.7, and phrases the aircraft answer as we do not believe. The live entry also omits premises refrigeration, resale certificates, buyer court contention, proposed direct assessment, petition right and missing outcome.

The official two-page PDF has a clean rendered text layer and only a small seal image. Two fresh downloads and extractions matched exactly, and the preserved source tail remains byte-identical after removal of only pdftotext's terminal newline and form feed. No case citation appears; the buyer's court matter is unidentified.

What this means for you

Airline caterers and dry-ice sellers

Interstate aircraft movement did not make onboard meal food into cargo under this historical view. Document where the food is used, whether it has a delivery destination, and who buys, uses or resells the dry ice.

Accountants and tax professionals

Reconcile seller and purchaser determinations when resale certificates are involved. Preserve the audit period, receipts, certificate, buyer use, flight and cargo records, notice and petition deadline; none is supplied here.

Common questions

Were aircraft meals treated as food cargo?

No. Stetson treated them as food for onboard consumption rather than cargo.

Did the flight's interstate movement itself establish the exemption?

No. The source focused on onboard consumption rather than delivery as cargo to an out-of-state point.

Was dry ice used at the buyer's premises covered?

No. The quoted statutory use required packing or transporting food between in-state and out-of-state points.

Did resale certificates finally resolve the tax issue?

No. The Board proposed a direct determination against one buyer, but no notice, petition or outcome is supplied.

Did the source apply section 6359.7?

No. The live annotation names section 6359.7; the 1955 letter applies former section 6359.5 and Ruling 60.

What was the buyer arguing in court?

That it sold rather than consumed at least some dry ice. The court, pleadings, case and result are absent.

Could the seller challenge the determination?

Yes, within 30 days after notice and with an optional oral hearing. No later proceeding is provided.

Citations and references

• Former California Revenue and Taxation Code section 6359.5 — historical ice and dry-ice exemption applied
• Former California Sales and Use Tax Ruling 60 — historical administrative rule cited
• California Revenue and Taxation Code section 6359.7 — named by the live annotation, not the 1955 letter
• March 25 request and Los Angeles audit report — referenced but not included
• Seller and buyers; dry ice, food and premises; aircraft, meals and routes; purchases, invoices and resale certificates; receipts, tax measure and rate; Notice of Determination; buyer court case; petition; hearing; payment; claim; appeal; and outcome — described or implicated but not included

Verbatim support

From the official April 18, 1955 letter:

Any ice so used would not be covered by the exemption, which applies under Section 6359.5 only to ice or dry ice “used or employed in packing and shipping or transporting food products for human consumption between a point or points within and a point or points without this State”.

Rather they are for consumption on the planes.

We propose to determine the applicable tax directly against that company which furnished resale certificates to you and is contending in Court that it is the seller rather than the consumer of at least a portion of the dry ice it purchases.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 400.0240
• Original supporting opinion: 400.0240 PDF

Original ruling text

400.0240

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

April 18, 1955

Attention:

[X]

Gentlemen:

The Los Angeles portion of the audit of your records mentioned in your letter of March 25, has just been received. We are extremely doubtful that any portion of your sales of dry ice to [X], or to [Y], are exempted from the sales tax by Section 6359.5 of the Sales and Use Tax Law as amended April 20, 1954, and Ruling 60. Our auditor reports that with respect to [X], “most of the dry ice purchased was used for refrigeration of food at vendee’s place of business”. Any ice so used would not be covered by the exemption, which applies under Section 6359.5 only to ice or dry ice “used or employed in packing and shipping or transporting food products for human consumption between a point or points within and a point or points without this State”. As to the ice sold to [X], and sold to [Y], and used in refrigerating food which went along with the meals to be served on the planes, we do not believe that the food products are being “shipped” or “transported” in the sense intended by the statute, as they are not being shipped or transported as cargo in the usual sense, nor do they have a destination outside the State as a “point” to which they are being shipped or transported. Rather they are for consumption on the planes. The audit does not propose any determination against you measured by receipts from sales to [X]. We propose to determine the applicable tax directly against that company which furnished resale certificates to you and is contending in Court that it is the seller rather than the consumer of at least a portion of the dry ice it purchases.

[X]

-2-

April 18, 1955
400.0240

Upon receipt of notice of determination and within thirty days from the mailing thereof you may petition for a redetermination and present any objections you may have to the applicability of the tax to your sales of dry ice to [X] and [Y], requesting, if desired, an oral hearing before a hearing officer of the Board. Very truly yours,

E.H. Stetson
Tax Counsel
EHS:ph
cc:

Los Angeles (LJB)
New York (SS)