How did California tax artificial eyes before and after October 1, 1977, and did the ocularist need a seller's permit?

Plain-English summary

A licensed dispensing optician's company had one stated function: manufacturing and fitting artificial eyes for patients referred by ophthalmologists. Every fitting followed an ophthalmologist's written order or prescription. The opinion followed a Sacramento meeting, but the source gives no meeting date, notes, company records, prescriptions, patient transactions or tax amounts.

The first question concerned periods before October 1, 1977. Staff Counsel Mary C. Armstrong treated artificial eyes, eye forms and the source's “scelera lenses” as ophthalmic materials under section 6018 and Regulation 1592. Artificial eyes replaced removed eyes and helped prevent socket sagging; eye forms maintained socket sizing during growth; scleral lenses covered the eye including the white portion. The company was the consumer, so tax applied to sales of those materials to the company rather than to a retail furnishing by it.

The second question concerned permit duties after October 1, 1977. Although ophthalmic or ocular devices generally remained excluded from “medicines,” the amendment added artificial eyes and their replacement parts. New section 6369(f), as described by counsel, treated prosthetic devices and replacement parts furnished under a physician's written order as dispensed on prescription. Prescribed artificial eyes and replacement parts furnished to patients were therefore exempt.

The conclusion says that, to the extent the company furnished only artificial eyes, “eye markers” and “scelera lenses” under ophthalmologist orders or prescriptions, it made no tangible-property sales whose gross receipts were taxable and did not need seller registration. Earlier, the source called the second item “eye forms,” not “eye markers,” and the exemption analysis expressly names artificial eyes and replacement parts rather than classifying each other item. This page preserves that terminology and does not assume every related item was itself an exempt replacement part.

The source supplies no historical purchase invoices, prescription files, charges, returns, permit action, refund, audit or later outcome. It also does not establish current treatment.

Source posture

The live 410.0246 annotation retains the artificial-eye-only company, ophthalmologist referrals and orders, October 1, 1977 amendment, prescribed artificial-eye and replacement-part exemption, final list of artificial eyes, eye markers and sclera lenses, no-taxable-gross-receipts conclusion and no-registration result.

The live annotation omits the pre-1977 question and consumer treatment, definitions and functions of the three described items, section 6018 and Regulation 1592 analysis, general ocular-device exclusion from medicines, section 6369(f), source's eye forms/eye markers and scelera/sclera terminology shifts, missing records and absence of an applied outcome. It presents the final list under section 6018 but does not resolve the source's replacement-part classification gap.

The official two-page PDF has a clean native text layer and one small page-1 stencil, so no OCR was required. It also prints Section 6369{f), “written order or a physician,” and “artificial eyes on their replacement parts”; those apparent source errors remain verbatim below. Both fresh direct PDF downloads and both live-annotation downloads were byte-identical, and the duplicate default PDF text extractions matched. The original-text section remains byte-identical to its committed version and matches the fresh official extraction after removing only the extractor's terminal newline and form feed.

What this means for you

Ocularists, prosthetic providers, and tax professionals

Track the service date, exact device or part, written prescription, purchase tax and whether any product falls outside the narrow described practice. Consumer treatment means tax can fall on the provider's purchase, while an exemption means the specified furnishing itself is exempt; do not collapse those mechanisms or assume the 1977 categories are current.

Common questions

Q: How were the items treated before October 1, 1977?

A: The company was the consumer of the artificial eyes, eye forms and scleral lenses, so tax applied to the sale of those materials to it.

Q: What changed on October 1, 1977?

A: Section 6369 added prescribed artificial eyes and their replacement parts to the medicine exemption, according to the opinion.

Q: Did the described company need a seller's permit afterward?

A: Counsel said no to the extent it furnished only the final listed prescribed items and made no taxable gross receipts. The source gives no registration action or later audit.

Q: Were all related ocular items expressly classified as exempt replacement parts?

A: No. The analysis expressly exempts artificial eyes and replacement parts; the final conclusion also names eye markers and scleral lenses without explaining their replacement-part status.

Q: Are “eye forms” and “eye markers” the same item?

A: The source does not say. It uses “eye forms” in its facts and pre-1977 analysis, then “eye markers” in the final conclusion.

Citations and references

• California Revenue and Taxation Code §§ 6018, 6066, and 6369
• California Sales and Use Tax Regulations 1591 and 1592
• Sacramento meeting; company and licensing records; ophthalmologist orders and prescriptions; item classifications; purchase invoices; patient charges; tax periods and amounts; returns; permit action; audit; refund; and later outcome — described or implicated but not included

Verbatim support

From the official Staff Counsel opinion:

for the period prior to October 1, 1977, X------------ was the consumer of such ophthalmic materials and tax applied with respect to the sale of such materials to X--------------------.

As a result of this amendment, artificial eyes on their replacement parts which are furnished pursuant to a written order of a physician shall be deemed to be dispensed on prescription and are exempt from tax when furnished to patients by companies such as X-------------------.

To the extent X--------------- only furnishes artificial eyes, eye markers and scelera lenses pursuant to the written order or prescription of ophthalmologists it will not be considered to be making any sales of tangible personal property, the gross receipts of which are subject to tax.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 410.0246
• Original supporting opinion: 410.0246 PDF

Original ruling text

410.0246

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
(916) 445-3237

April 21, 1981

Dear Mr. X-----------,
As a result of the meeting held in Sacramento with you, Mr. X---------and Mr. Jugum, we have studied the question of the correct application of tax to the sale of artificial eyes. We understand that Mr. X---------------- is a licensed dispensing optician. The sole function of his company, X--------------------, is to manufacture and fit artificial eyes on patients referred by ophthalmologists. All fittings are done pursuant to the order or prescription of an ophthalmologist. The purpose of our meeting was twofold. First, you wished to discuss whether or not the sale of artificial eyes and related supplies prior to October 1, 1977 qualified as a sale of ophthalmological materials under Revenue and Taxation Code Section 6018 and Sales and Use Tax regulation 1592. Secondly, you questioned whether X--------------- is required to register as a seller and hold a sellers permit in light of the October 1, 1977 amendments to Revenue and Taxation Code Section 6369 and Sales and Use Tax Regulation 1591 exempting artificial eyes and their replacement parts. With regard to the first question of whether artificial eyes, eye forms and scelera lenses would be considered ophthalmological materials under Revenue and Taxation Code section 6018 and regulation 1592, we have concluded that these items would be considered to be ophthalmic materials as that term is used in Section 6018. The term ophthalmic is defined in Webster's “New Collegiate Dictionary” as objects which are “of, relating to or situated near the eye.” We are of the opinion that all of the items furnished by X------------- come within this definition of ophthalmic materials. Artificial eyes are replacements for eyes removed by accident or disease, which are situated in the eye and which prevent sagging and drooping of the eye socket. Eye forms are used alone or in conjunction with an artificial eye to maintain sizing in the socket during growth of the head. Scelera lenses are large contact lenses which cover the entire eye including the white portion. All of these items are furnished to patients by X------------------ pursuant to the written prescription of an ophthalmologist. We are therefore of the opinion that for the period prior to October 1, 1977, X------------ was the consumer of such ophthalmic materials and tax applied with respect to the sale of such materials to X--------------------.

The second question involves the responsibility of X------------ to register as a seller and hold a Seller's Permit as required by Revenue and Taxation Code Section 6066. Prior to and after October 1, 1977, ophthalmic or ocular devices or appliances were specifically excluded from the definition of the term “medicines.” As you are aware, effective October 1, 1977, Section 6369 of the Revenue and Taxation Code was amended to add artificial eyes or their replacement parts to the term “medicines.” Section 6369{f) was added to provide that prosthetic devices, and replacement parts for such devices, furnished pursuant to the written order or a physician, shall be deemed to be dispensed on prescription. As a result of this amendment, artificial eyes on their replacement parts which are furnished pursuant to a written order of a physician shall be deemed to be dispensed on prescription and are exempt from tax when furnished to patients by companies such as X-------------------. To the extent X--------------- only furnishes artificial eyes, eye markers and scelera lenses pursuant to the written order or prescription of ophthalmologists it will not be considered to be making any sales of tangible personal property, the gross receipts of which are subject to tax. As such, it will not be required to register with this board as a seller. If you have further questions concerning this matter, please write this office again. Very truly yours,

Mary C. Armstrong
Staff Counsel

MCA/tlw
bc:

Mr. Don Hennessy
Hollywood Auditing – Maywood Wong
San Francisco Auditing