Was a supplier's sale of a fully worn cervical collar to a chiropractor a taxable retail sale under a 1994 California letter?

Plain-English summary

The redacted company sold neck-traction devices to chiropractors for patient use, but did not describe the devices. The letter therefore could not determine that every product was a cervical collar or orthotic device.

Under section 6018.4, the letter treated a chiropractor as the consumer of an orthotic device used or furnished while providing professional services. It applied section 6369(c)(3)'s meaning of an orthotic device: a support or brace for the body structure fully worn on the patient's body.

If the seller's neck device met that description—such as a cervical collar rather than a traction device attached to a bed or table—the seller's transfer to the chiropractor was taxable. The chiropractor's later furnishing of the collar to a patient during professional treatment was not a taxable retail sale.

If the device was not fully worn, or the chiropractor sold it over the counter rather than during professional services, that consumer rule did not apply. The supplier could instead make a sale for resale only by timely accepting a valid resale certificate.

Live annotation and source posture

The current live annotation accurately states the fully-worn orthotic definition, chiropractor-consumer treatment, tax on acquisition, nontaxable treatment-related furnishing, and taxable over-the-counter branch.

The live summary speaks directly of a neck brace or cervical collar. The supporting letter says only that the undescribed products may be capable of being fully worn such as a cervical collar rather than attached to a bed or table. This page preserves that conditional product classification rather than reporting that the redacted devices were proven collars.

The letter also states that chiropractors and doctors of chiropractic are not physicians, then applies the limited section 6018.4 consumer rule. It says qualifying treatment-use purchases cannot be supported by a resale certificate, while other resale transactions require timely certificates containing Regulation 1668(a)'s elements. The promised Regulation 1668 copy is not in the official PDF.

The source prints Market St. Ry. as a 1953 case at 137 Cal.App.2d 87 [290 pO.2d 201.]. Independent legal research found that the reporter resolves to the named case decided in 1955, and 39 Cal. App. 3d 765 resolves to the named Standard Oil case. The erroneous year and malformed parallel cite remain unchanged below.

The September 7, 1994 inquiry, company and chiropractor identities, device descriptions, photographs, labels, patient-use records, professional-service bills, over-the-counter sales, resale certificates, invoices, returns, audit, assessment, refund and applied outcome are absent.

CDTFA's Annotated Legal Opinions collection says these documents are summarized as annotations and statutory law controls over an inconsistent annotation. The official two-page PDF has native text and one page-one letterhead 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

Document both product design and transaction setting. A neck device must satisfy the fully-worn support-or-brace definition, and the chiropractor must use or furnish it during professional services, for the supplier's taxable-consumer treatment described here. Over-the-counter resale is different and needs timely documentation.

Common questions

Q: Was every neck-traction unit an orthotic device?

A: No. The opinion gave a conditional answer because the seller did not describe the products; a device attached to a bed or table would not be fully worn.

Q: Could the supplier accept a resale certificate for a qualifying collar used in treatment?

A: No. The opinion said the chiropractor was the consumer in that transaction.

Q: What happened when the chiropractor sold an item over the counter?

A: The section 6018.4 consumer rule did not apply; the transaction was a taxable sale, and the supplier's resale treatment required a timely valid certificate.

Q: Did the source prove the redacted products were cervical collars?

A: No. It said only that the description indicated they might be fully worn, such as a cervical collar.

Missing evidence and references

• September 7, 1994 inquiry — described but absent
• Company, chiropractor and patient identities — redacted or absent
• Device descriptions, photographs, labels and attachment method — absent
• Treatment bills, patient transfers and over-the-counter sales — absent
• Resale certificates, invoices, returns, audits and outcomes — absent
• Regulation 1668 enclosure — identified but not included

Verbatim support

From the official November 3, 1994 Tax Counsel letter:

We have previously determined that the words "orthotic devices" have the same meaning in Section 6018.4 as they do in Section 6369(c) (3) - i.e., a support or brace for the body structure fully worn on the body of the patient.

In transactions which qualify under this statute, tax is due when the chiropractor purchases such items but not on his subsequent sales to patients when the sale is made in the course of rendering professional services.

This description indicates that your company's products may be capable of being fully worn on the patient- such as a cervical collar- rather than being attached to a bed or table as traction devices usually are.

Please note that if the customer is buying an item for use on a patient during the course of treatment, and the item qualifies as an orthotic device under the above definition, REDACTED TEXT cannot accept a resale certificate on the sale.

Citations and references

• California Revenue and Taxation Code §§ 6051 and 6091 — general taxable-sales rule and presumption
• California Revenue and Taxation Code § 6018.4 — chiropractor consumer rule for specified products used or furnished in professional services
• California Revenue and Taxation Code § 6369(c)(3) — orthotic-device meaning applied by the opinion
• California Sales and Use Tax Regulation 1668(a) — elements of a timely resale certificate
• Market Street Railway Co. v. State Board of Equalization, 137 Cal. App. 2d 87 — source prints the wrong year and malformed parallel cite
• Standard Oil Co. v. State Board of Equalization, 39 Cal. App. 3d 765 — reporter resolves to the named case

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 425.0014
• Original supporting opinion: 425.0014 PDF

Original ruling text

425.0014

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

MEMBER
First District

1020 N STREET, SACRAMENTO, CALIFORNIA
PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001
TELEPHONE (916) 920 - 7445

BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR.
Third District, San Diego

November 3, 1994

MATTHEW K. FONG
Fourth District, Los Angeles
GRAY DAVIS
Controller, Sacramento

REDACTED TEXT
RE:

REDACTED TEXT
Neck Traction Units

BURTON W. OLIVER
Executive Director

Dear REDACTED TEXT,
I am responding to your letter to the Legal Division which we received on September 7, 1994. You ask about the application of sales tax to your company's sales of neck traction devices to doctors of chiropractic for their use in treating their patients. You do not describe the neck traction devices about which you inquire. OPINION A.

Sales and Use Tax Generally.

In California, except where specifically exempted by statute, Revenue and Taxation Code Section 6051 imposes an excise tax, computed as a percentage of gross receipts, upon all retailers for the privilege of selling tangible personal property at retail in this state. (Unless otherwise stated, all statutory references are to the Revenue and Taxation Code.) “[I]t shall be presumed that all gross receipts are subject to tax until the contrary is established. The burden of proving that a sale of tangible personal property is not a sale at retail is upon the person who makes the sale ...” (§ 6091.) “Exemptions from taxation must be found in the statute.” (Market St. Ry. Co. v. Cal. St. Bd. of Equal. (1953) 137 Cal.App.2d 87, 96 [290 pO.2d 201.]) "The taxpayer has the burden of showing that he clearly comes within the exemption." (Standard Oil Co. v. St. Bd. of Equalization (1974) 39 Cal.App.3d 765, 769 [114 Cal.Rptr. 571J.) Chiropractors and Doctors of Chiropractic are not physicians. As a result, sales to them may be subject to tax. Section 6018.4 provides, however a limited exemption from tax for chiropractors by declaring such person to be consumers of vitamins, minerals, dietary supplements, and orthotic devices used or furnished by them in the performance of their professional services. We have previously determined that the words "orthotic devices" have the same meaning in Section 6018.4 as they do in Section 6369(c) (3) - i.e., a support or brace for the body structure fully worn on the body of the patient. In transactions which qualify under this statute, tax is due when the chiropractor purchases such items but not on his subsequent sales to patients when the sale is made in the course of rendering professional services. Retail sales to non-patients or to patients but not in the course of rendering professional services are subject to tax.

You state that the neck traction devices which your company makes are sold to doctors of chiropractic "for use on their patients when prescribed by the doctor for correction of body (neck) structure." This description indicates that your company's products may be capable of being fully worn on the patient- such as a cervical collar- rather than being attached to a bed or table as traction devices usually are. If so, then your sales to them are subject to tax. If they are not fully worn, or your customers also sell these items over the counter, Section 6018.4 does not apply, but you may sell them free of tax by timely accepting resale certificates containing the elements set forth in Regulation 1668(a). Please note that if the customer is buying an item for use on a patient during the course of treatment, and the item qualifies as an orthotic device under the above definition, REDACTED TEXT cannot accept a resale certificate on the sale. For your information, I have included a copy of Regulation 1668. I hope the above discussion has answered your question. If you need anything further, please do not hesitate to write again. Sincerely, John. L. Waid Tax Counsel JLW:cl Enclosure: Cc:

Reg. 1668

REDACTED TEXT District Administrator