Did a qualifying post-surgical tracheal suction system have to remain permanently attached to be exempt?

Plain-English summary

Board staff asked whether a closed-wound tracheal suction system used after surgery and changed every two or three days had to remain permanently attached to qualify under the historical artificial-opening rule.

Tax Counsel said no. Historical Regulation 1591(j) and Revenue and Taxation Code section 6369(g) contained no permanent-use requirement. Importing a permanent-attachment concept from a different subdivision would impermissibly narrow the statute.

The memorandum relied on staff's statement that the Legal Division had already classified this kind of system as medicine when used in the manner and for the purposes covered by Regulation 1591(j). It did not independently establish those other conditions or classify a completed sale. Its conclusion was limited to permanence.

Live annotation and source posture

The current live annotation preserves the no-permanent-attachment conclusion. It says subdivision (b)(2) carried the contrasting permanent-attachment requirement and records that Regulation 1591(j) was deleted and moved to Regulation 1591.1(b)(2), effective March 10, 2000.

The supporting memorandum is internally inconsistent about the contrasting subsection. Its first analysis paragraph says the permanent concept would have to come from subdivision (b) (1); its final sentence says Regulation 1591(b) (2). The source does not resolve which was intended. The live page uses (b)(2), but this page preserves both source statements.

The chronology is also impossible as printed. A January 4 memorandum and the March 10, 1994 response supposedly attached a taxpayer letter dated October 19, 1994. No supplied record resolves whether the taxpayer-letter date or another date is wrong.

The taxpayer originally suggested the systems might be exempt medical-oxygen delivery systems. The memorandum does not analyze or decide that theory. Instead, it relies on an absent December 14, 1981 Mary C. Armstrong letter for the artificial-opening classification. The taxpayer letter, product brochures and prior opinion said to be attached are not in the official one-page PDF.

The source also prints when used the systems were used and replaces the final word of the replacement-cycle quotation with [unreadable]. Those defects remain verbatim below.

The official one-page PDF has a complete native text layer and no raster images, so no OCR was required. Two fresh direct PDF downloads and two live-page downloads were byte-identical; duplicate default text extractions also matched.

CDTFA's Annotated Legal Opinions collection says these documents are summarized as annotations and statutory law controls over an inconsistent annotation.

What this means for you

Do not treat temporary replacement alone as disqualifying under this historical analysis. First prove the current exemption category, surgical procedure, artificial opening, necessity, product function, patient use, prescription or furnishing path, and every current statutory and regulatory condition.

Keep the underlying request, brochures and prior agency advice. Here, their absence prevents independent verification of the premise that the system otherwise qualified.

Common questions

Q: Did the memorandum decide whether the system met every exemption condition?

A: No. It relied on an earlier determination and answered only the permanence question.

Q: Could the system be changed every few days?

A: Yes, assuming it otherwise qualified under the historical rule.

Q: Did the memorandum decide the medical-oxygen theory?

A: No. It reports that theory but analyzes the artificial-opening provision instead.

Q: Which contrasting subsection did the source cite?

A: Both. One paragraph says (b)(1), and the conclusion says (b)(2). The source does not reconcile them.

Q: Is the October 19, 1994 attachment date reliable?

A: Not as printed. It postdates both the January 4 request and March 10 response, and no record resolves the conflict.

Missing evidence and references

• January 4, 1994 staff memorandum — absent
• Taxpayer letter printed as October 19, 1994 — absent and chronologically impossible as stated
• Product brochures, specifications and instructions — absent
• December 14, 1981 Mary C. Armstrong letter — cited and said to be attached but absent
• Taxpayer, patients, procedures and complete system identity — redacted or unidentified
• Prescriptions, orders, invoices, sales, tax records, audits and outcomes — not supplied

Verbatim support

From the official March 10, 1994 Tax Counsel memorandum:

You further indicated that the instant system "is used post-surgically and it does keep the patient alive, but it is used only two or three days at a time before it has to be changed and a new one [unreadable]."

There is no requirement that the device be permanently attached or implanted. We would have to import such a concept from sub-division (b) (1).

Section 6369(g), which Regulation 1591(j) interprets and implements, does not require that such devices be used on a permanent basis.

Thus, we conclude that, to qualify under Regulation 1591(j), the device need not be permanently attached as that term is understood under Regulation 1591(b) (2).

Citations and references

• California Revenue and Taxation Code § 6369(g) — historical artificial-opening appliance and related-supply rule applied in the memorandum
• Historical California Sales and Use Tax Regulation 1591(a) and (j) — dispensing and artificial-opening provisions; the live annotation records the later move to Regulation 1591.1(b)(2)
• California Sales and Use Tax Regulation 1591(b)(1) and (b)(2) — both printed as the contrasting permanent-attachment provision in different parts of the memorandum
• December 14, 1981 Mary C. Armstrong letter — relied on but not reproduced

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 425.0025.500
• Original supporting opinion: 425.0025.500 PDF

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Mr. Lynn E. Bjorklund

From:

John L. Waid
Tax Counsel

Subject:

Closed Wound Tracheal Suction System

425.0025.500

Date:

March 10, 1994

I am responding to your memorandum dated January 4, 1994, to the Legal Division regarding the application of sales tax to this taxpayer's sales of a closed wound tracheal suction system. You attached to your memorandum a copy of a letter to the District dated October 19, 1994, from the taxpayer's Purchasing Manager, X--------------------, requesting advice on its sales of such systems. X------------------- was of the opinion that the systems might be exempt as medical oxygen delivery systems. You attached copies of the brochures describing the system that X--------------------- attached to his letter. You indicated that the Legal Division has previously determined that such systems qualified as medicines under Regulation 1591(j) the sales of which were exempt when used the systems were used in the manner and for the purposes set forth in the regulation, attaching a copy of a letter dated December 14, 1981, from Senior Tax Counsel Mary C. Armstrong, stating to that effect. You further indicated that the instant system "is used postsurgically and it does keep the patient alive, but it is used only two or three days at a time before it has to be changed and a new one [unreadable]." You appear to be asking if such a system must remain with the system permanently in order to qualify for the 1591(j) exemption. OPINION Regulation 1591(j) declares that "any appliances and related supplies necessary as the result of any surgical procedures by which an artificial opening is created in the human body for the elimination of natural waste, shall be deemed dispensed on prescription within the meaning of [Regulation 1591(a)]." There is no requirement that the device be permanently attached or implanted. We would have to import such a concept from sub-division (b) (1). Section 6369(g), which Regulation 1591(j) interprets and implements, does not require that such devices be used on a permanent basis. To import such language into sub-division (j) would be to impermissibly limit the reach of the statute beyond the restrictions that the plain language of the statute implies. Thus, we conclude that, to qualify under Regulation 1591(j), the device need not be permanently attached as that term is understood under Regulation 1591(b) (2). JLW:es