Did the historical ice exemption cover liquid nitrogen sold to cool food products shipped out of state?

Plain-English summary

California said liquid nitrogen was not “ice” or “dry ice” within the specific wording of the historical exemption for coolant used in packing, shipping, or transporting food for human consumption to out-of-state points.

The in-state sale to truckers was therefore not exempt under former section 6359.5. A later editorial note in the official source says that section was repealed and the exemption later appeared in section 6359.7.

The letter gives no actual sale, quantity, price, route, tax measure, assessment or administrative outcome.

Request, statutory wording, and conclusion

The August 24 letter confirms a telephone conversation six days earlier. The redacted addressee sold liquid nitrogen to truckers for use as coolant on food products being shipped to out-of-state points. The source names no seller, trucker, carrier, customer, food product or destination and includes no call record, request, contract, invoice or shipping record.

Assistant Counsel Phillip R. Dougherty described former section 6359.5 as exempting ice and dry ice used to ship or transport human-consumption food between points inside and outside California. Because the statute specifically said ice and dry ice, he concluded that liquid nitrogen could not be classified as either term for that exemption.

The stated result is correspondingly narrow: an in-state liquid-nitrogen sale to a person using it to pack, ship or transport human-consumption food outside California was not exempted by former section 6359.5. The source gives no alternative exclusion or exemption, taxable measure, rate, return, audit, determination, payment or refund result.

Editorial history and live annotation

The official PDF appends a note marked March 30, 1989 and initialed DJH. It says former section 6359.5 was repealed effective July 1, 1980 and that the exemption was then in section 6359.7, effective January 1, 1986. The note does not reproduce either statutory text or explain the gap between those dates.

The live 400.0280 annotation accurately retains the product-classification conclusion and August 24, 1965 date. It identifies section 6359.7 as the current successor and adds (Am. 2003-1), a notation not present in the supporting PDF. The live summary omits the August 18 call, California-sale premise, trucker, purchaser-use wording, Assistant Counsel, source editorial note and every absent transaction and tax-outcome item.

The current official section 6359.7 page is linked for checking current text; its later law must not be read backward into this 1965 letter.

What this means for you

Food shippers and coolant sellers

A coolant's function does not necessarily place it inside a product-specific exemption. Identify the material and match it to the exact current statutory terms before accepting an exemption claim.

Accountants and tax professionals

Preserve product specifications, purchaser-use statements, food status, contracts, invoices, carrier records, origin and destination evidence, and the operative statute for the transaction date. This letter does not establish current liquid-nitrogen treatment.

Common questions

Was liquid nitrogen treated as ice or dry ice?

No.

Did use on food shipped out of state change that classification?

No. The opinion relied on the exemption's specific product words.

Is section 6359.5 current?

No. The source says it was repealed effective July 1, 1980.

What replacement did the official source identify?

Section 6359.7, effective January 1, 1986.

Did the letter decide an actual tax amount?

No. It provides no quantity, price, measure, rate, return, assessment, payment or refund outcome.

What does the live amendment marker prove?

Only that the current annotation carries (Am. 2003-1). The supporting PDF does not reproduce that amendment or explain its effect.

Citations and references

• Former California Revenue and Taxation Code section 6359.5 — historical ice and dry-ice exemption applied
• California Revenue and Taxation Code section 6359.7 — successor section identified by the source's March 30, 1989 editorial note
• August 18, 1965 telephone conversation — confirmed but not reproduced
• (Am. 2003-1) — appears on the live annotation but not in the supporting PDF
• Seller, truckers, carriers and customers; food products; nitrogen quantities and composition; purchases and sales; prices; origin, destination and routes; contracts, invoices and exemption records; tax period, measure and rate; return, audit, assessment, payment, claim, appeal and outcome — described or implicated but not included

Verbatim support

From the official August 24, 1965 letter:

This exemption, contained in Section 6359.5 of the Sales and Use Tax Law, is specific in its wording and refers directly to “ice” and “dry ice”. In our opinion, liquid nitrogen cannot be classified as ice or dry ice for the purposes of this exemption.

Therefore, a sale in this state of liquid nitrogen to a person who will use it in packing and shipping or transporting food products for human consumption outside this state is not exempted from taxation by Section 6359.5.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 400.0280
• Original supporting opinion: 400.0280 PDF

Original ruling text

400.0280

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

August 24, 1965

Gentlemen:

This is to confirm our telephone conversation of August 18, 1965 concerning the taxability of your sales of liquid nitrogen to truckers for use as a coolant of food products being shipped to out-of-state points. As you know, ice and dry ice used in shipping or transporting food products for human consumption between points in this state and points outside this state are exempt from the sales and use taxes. This exemption, contained in Section 6359.5 of the Sales and Use Tax Law, is specific in its wording and refers directly to “ice” and “dry ice”. In our opinion, liquid nitrogen cannot be classified as ice or dry ice for the purposes of this exemption. Therefore, a sale in this state of liquid nitrogen to a person who will use it in packing and shipping or transporting food products for human consumption outside this state is not exempted from taxation by Section 6359.5. Very truly yours,

Phillip R. Dougherty
Assistant Counsel
PRD:ls

[lb]

3/30/89
1/1/86.

Section 6359.5 was repealed effective 7/1/80. The exemption is now in Section 6359.7, effective
-DJH