How did a 2003 California memorandum classify single- and multiple-lumen central-line catheters for TPN delivery?

Plain-English summary

The memorandum quotes an auditor's narrative describing central lines as intravenous lines generally inserted through the chest into large veins near the heart. Tunneled catheters and PICC lines could have one lumen or multiple noncommunicating lumens in a single catheter body. External access ports were color-coded, and each lumen could have a distinct use.

Those described uses included blood sampling, drug infusion, pain-management infusion, central-venous-pressure monitoring, chemotherapy and TPN. The narrative said an assigned lumen generally was not reused for another purpose because of infection or drug-incompatibility concerns.

California treated a single-lumen catheter used solely to deliver TPN as an exempt medicine because its primary purpose was TPN delivery.

Multiple-lumen catheters were taxable under the memorandum because they served many purposes and might never deliver TPN. A later decision to use one lumen for TPN could not retroactively change the product's tax status; the retailer had to know the classification when filing for the sale period.

The memorandum then said that because multiple-lumen lines had no primary use, they appear[ed] to be appliances or devices for all purposes. It immediately declined to opine whether another possible use could give rise to an exemption.

Live annotation and source posture

The current live annotation preserves the anatomy, lumen types, representative uses, Regulation 1591(b)(5), single-lumen TPN exemption, and multiple-lumen taxable conclusion. It marks the annotation (2004–2).

The live page states without qualification that multiple-lumen central lines would be classified as appliances and devices for all purposes. The source uses it appears and expressly says it gives no opinion on whether another possible use could create an exemption. This page retains that material reservation.

The live page also prints multiple line catheters once where the source and surrounding text say multiple-lumen. The source itself spells the internal auditor's surname Junkeit in the introduction and Jungkeit in the opinion. These textual differences remain disclosed rather than silently harmonized into separate factual claims.

The June 9 request, June 13 Program Planning memorandum, May 20 auditor memorandum, full attached narrative, particular catheter records, purchaser instructions, sale-date intent, invoices, returns and refund file are absent. No taxpayer, manufacturer, retailer, hospital, patient, catheter model, clinical order, price, tax amount, assessment, refund or final disposition is supplied.

CDTFA's Annotated Legal Opinions collection says these documents are summarized as annotations and statutory law controls over an inconsistent annotation. The official three-page PDF has native text and no raster image, so no OCR was required. Two fresh direct PDF downloads and two live-page downloads were byte-identical; duplicate default text extractions also matched.

What this means for you

Classify the device at the time of sale from its supported primary purpose. A later clinical choice to use one lumen for TPN did not change the memorandum's result. But do not extend its multiple-lumen conclusion to every possible exemption; the author expressly left other uses undecided.

Common questions

Q: Was a single-lumen TPN catheter exempt?

A: Yes, when its sole purpose was TPN delivery.

Q: Were multiple-lumen catheters exempt if one lumen later delivered TPN?

A: No under this memorandum's TPN analysis.

Q: Why did later use not control?

A: The retailer had to determine and report tax status for the period when the catheter was sold.

Q: Did the memorandum reject every other possible exemption for multiple-lumen catheters?

A: No. It expressly declined to give that opinion.

Missing evidence and references

• May 20, June 9 and June 13, 2003 internal memoranda — described but absent
• Full auditor narrative and Refund Section file — partly quoted or absent
• Taxpayer, manufacturer, retailer, hospital and patient identities — absent
• Catheter models, lumen configurations and sale-time use records — absent
• Clinical orders, sales, invoices, returns, assessments and tax amounts — absent
• Refund claim and final disposition — not supplied

Verbatim support

From the official October 28, 2003 Senior Tax Counsel memorandum:

There has always been a primary-purpose test in evaluating whether or not certain medical devices that are capable of multiple uses qualify as medicines.

The status of the item cannot be made to turn on events that may happen some time after the sale.

We concur with the auditor that single-lumen catheters used to deliver TPN are included as medicines under Regulation 1591(b)(5). The sole purpose of the catheter in that case is to deliver TPN.

Since, as Mr. Jungkeit relates, multiple-lumen central line catheters have no primary use, it appears that they would be classified as appliances and devices for all purposes.

We do not, however, give an opinion herein on whether or not there is any other possible use to which such catheters may be put that might give rise to an exemption.

Citations and references

• 18 Cal. Code Regs. § 1591(b)(5) — devices used primarily to dispense TPN or IDPN
• 18 Cal. Code Regs. § 1591(c)(2) — taxable instruments and appliances
• Annotation 425.0399 dated November 22, 1994 — cited primary-purpose example

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 425.0011.100
• Original supporting opinion: 425.0011.100 PDF

Original ruling text

State of California

Board of Equalization
Legal Department-MIC: 82

425.0011.100
Memorandum
To:

Mr. Brian Manuel
Supervising Tax Auditor
Refund Section (MIC:39)

Date: October 28, 2003

From:

John L. Waid
Senior Tax Counsel (MIC:82)

Telephone: (916) 324-3828

Subject:

[No Permit Number]
Multi-Use Central Line Catheters
I am responding to Program Planning Manager Charlotte Paliani’s memorandum to Assistant Chief Counsel Janice L. Thurston dated June 13, 2003. I apologize for the delay. Ms. Paliani asked the Legal Department to respond directly to your memorandum to her dated June 9, 2003. You asked for advice regarding the applicability of tax to sales of central line catheters use for many purposes, including TPN. You attached a memo to Refund Section Supervisor Robert Buntjer, dated May 20, 2003, from Santa Ana District Supervising Tax Auditor II Paul G. Junkeit. Mr. Junkeit poses several different questions: “Are single-lumen central line catheters used by hospitals for TPN subject to tax? “Are multiple lumen central line catheters used by hospitals for many purposes including TPN subject to tax? “Are multiple-lumen central line catheters used by hospital for many purposes, Not including TPN subject to tax? “Are multiple-lumen central line catheters used by hospital for many purposes, Not including TPN, then at a later date the line is used for TPN subject to tax?” Mr. Junkeit attached to his memorandum a narrative discussing the issues involved. “A central line is a special intravenous (IV) line that, generally, is surgically inserted through the chest and threaded into one of the large veins that lie close to the heart. ... Central lines, including tunneled catheters and PICC lines, can consist of one or more noncommunicating vascular access lumens with a singular catheter body. The lumen(s) remain outside of the body and the end of the lumens’ access ports are

Mr. Brian Manuel
October 28, 2003
Page 2
color-coded. Each lumen is used for a separate purpose such as blood sampling, drug infusion, pain management infusion, monitoring of central venous pressure, chemotherapy, TPN infusion, etc. A lumen that is assigned a specific use is, generally, never used for another purpose due to the possibility of infection or drug incompatibility….
[¶¶]
“The motive for central line insertion varies by patient. Central lines are often placed in patients who never receive TPN. Conversely, central lines are often placed specifically because the patient needs TPN. In these cases, it is normal for the hospital staff to insert a multiple-lumen catheter for convenient access for numerous purposes. Further, a central line is often inserted for other purposes and at a later date TPN is prescribed for the patient…. “The auditor has concluded that single lumen central line catheters used for TPN are exempt from tax, since they are used “primarily to dispense the TPN”, as required per … Regulation 1591(b)(5). … A single-lumen catheter used for another purpose, such as pain management, chemotherapy, or drug infusion, would remain subject to tax.” “Multiple-lumen central line catheters are used for many purposes, such as infusion of drugs, pain management therapies, blood draws, infusion of drugs via needle injection, and TPN. Multiple-lumen catheters are not used primarily to dispense nutrition….” (Italics in original.) OPINION Under Regulation 1591(c)(2), instruments and other appliances are generally not included in the term “medicines,” with the result that their sales are subject to tax. Regulation 1591(b)(5), in part, discusses the application of tax to sales of devices used to deliver TPN to patients as follows: “For purposes of this regulation only, prosthetic devices include bags and tubing, as well as filters, locks, tape, clamps, and connectors which are integral to the tubing, each of which is used to dispense enteral feeding to the patient, including: gastrostomy tubes (also called G tubes) which are used to deliver the nutrition directly into the stomach; jejunostomy tubes (also called J tubes) which are used to deliver the nutrition directly into the intestinal tract; and nasogastric tubes (also called NG tubes) which are used to deliver the nutrition directly through the nasal passage to the stomach. For purposes of this regulation only, prosthetic devices also include needles, syringes, cannulas, bags, and tubing, as well as filters, locks, tape, clamps, and connectors which are

Mr. Brian Manuel
October 28, 2003
Page 3
integral to the tubing, each of which is used to dispense TPN or IDPN to the patient, provided each of these items is used primarily to dispense the TPN or IDPN.” (Emphasis added.) Mr. Jungkeit reports that the auditor has concluded that multiple-lumen central line catheters do not qualify as medicines under the regulation, because they are not used primarily for the delivery of TPN, as the regulation requires. There has always been a primary-purpose test in evaluating whether or not certain medical devices that are capable of multiple uses qualify as medicines. The retailer has to know the status of the item at the time of sale in order to accomplish his tax return. The status of the item cannot be made to turn on events that may happen some time after the sale. (See, e.g., Annot. 425.0399 (11/22/94).) We concur with the auditor that single-lumen catheters used to deliver TPN are included as medicines under Regulation 1591(b)(5). The sole purpose of the catheter in that case is to deliver TPN. As a result, sales of single-lumen catheters used to delivery TPN are not subject to tax. We also concur with the auditor that sales of multiple-lumen catheters are subject to tax under the regulation. Such catheters are not used primarily for the delivery of TPN. Indeed, they may never be used to deliver TPN at all, or, if they are, such use may not occur until a long time after the catheter is sold. The retailer’s reporting cannot be made dependent on the business choice of the purchaser, especially when that choice may not come until well after the sale. Clearly, if the catheter is never used for delivering TPN, no issue as to exemption could arise. Its sales are subject to tax. Since, as Mr. Jungkeit relates, multiple-lumen central line catheters have no primary use, it appears that they would be classified as appliances and devices for all purposes. We do not, however, give an opinion herein on whether or not there is any other possible use to which such catheters may be put that might give rise to an exemption. JLW/ef cc:

Ms. Jeanine Candelaria - District Auditing (EH)
Ms. Charlotte Paliani (MIC:92)
Ms. Laura Jonoubei (MIC:50)
Ms. Rosie Escobar (MIC:92)