Were ear putty and molded plugs used after eardrum surgery exempt prescription medicines?

Plain-English summary

During a recently completed audit, Santa Barbara district staff asked whether Ear Putty and Medco-Mold qualified as medicine. The products were sold to doctors, who furnished them after surgery to insert an otological ventilation tube in the eardrum. The products temporarily sealed the ear to keep foreign matter, primarily water, out of the middle ear.

The district memorandum thought the products might fit the historical medicine definition because staff viewed them as used in the cure, mitigation or treatment of a medical problem, but it also compared them with excluded devices. The Principal Tax Auditor concluded that they were devices excluded by historical Regulation 1591(c)(3), not commonly recognized medicinal substances or preparations applied to diagnose, cure, mitigate, treat or prevent disease.

A later Legal review said it agreed with that conclusion. The products therefore did not qualify for the prescription-medicine exemption on the described facts.

Live annotation and source posture

The current live annotation matches the source's conclusion and lists both 8/23/85 and 5/29/96. The PDF explains why there are two dates and three records:

• An August 7, 1985 Santa Barbara District Principal Auditor memorandum requested a ruling while the recently completed audit was in 79-A status and referred to attached product literature.
• An August 23, 1985 Principal Tax Auditor memorandum, after discussion with a legal staff member, classified the products as excluded devices.
• A Gary Jugum memorandum to Glenn Bystrom under Non-Attorney Opinions reviewed the August 23 response and agreed. Its printed body has no formal date field; the PDF extraction records a handwritten May 29, 1996 and 8/23/85 notation.

The frontmatter uses May 29, 1996 as the date of the later approving legal review, not as the date of the original audit response. Neither the live page nor the supplied PDF collapses the 1985 and 1996 events into a single undifferentiated date.

The product identity is also layered. The district request names Ear Putty and Medco-Mold. The August 23 response redacts the second product name, while the later approval uses the generic wording products such as ear putty or medco-mold. The attached product literature is absent, so composition, manufacturer, fitting, duration and instructions cannot be independently verified.

No supplied document shows the completed audit's adjustment, the meaning or resolution of its 79-A status, a taxpayer response, appeal, payment, refund or other final disposition.

The official three-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 the opinion letters are summarized as annotations and statutory law controls when a statute and annotation conflict.

What this means for you

Post-surgical use alone did not control the historical classification. The agency focused on what the products did: they temporarily blocked foreign material rather than operating as medicinal substances or preparations.

For another ear product, preserve its composition, instructions, intended duration, physical operation, medical purpose, provider order and furnishing records. Compare those facts with current statutes and regulations; do not assume that every molded ear product shares this source's classification.

Common questions

Q: Did use after surgery make the products medicine?

A: No. The response classified their function as protective rather than medicinal.

Q: What function controlled the classification?

A: On the stated facts, the products temporarily sealed the ear against water or other foreign material.

Q: Why does the page use a 1996 issue date when the audit ruling was from 1985?

A: May 29, 1996 is the handwritten date attached to the later legal approval. The underlying request and response are dated August 7 and August 23, 1985, and the live annotation publishes the 1985 and 1996 dates together.

Q: Did the source decide the final audit result?

A: No. It says the audit was recently completed and in 79-A status, but supplies no completed adjustment or disposition.

Missing evidence and references

• Attached Ear Putty and Medco-Mold product literature — referenced but absent
• Product composition, manufacturer, fitting, duration and instructions — not supplied
• Taxpayer identity and transaction records — redacted or absent
• Audit workpapers, adjustments and explanation of 79-A status — not supplied
• Taxpayer response, appeal, assessment, refund and final audit disposition — not supplied
• Formal dated original of the May 29, 1996 handwritten review notation — not supplied

Verbatim support

From the official combined 1985 and 1996 source:

Products such as ear putty or medco-mold which are used to temporarily seal ears to protect the middle ear from the entry of foreign material after eardrum surgery, do not qualify as exempt prescription medicines. 8/23/85

The products are sold to doctors who furnish them to their patients after surgery of the eardrum and are used as a protection device to prevent foreign matter from entering the middle ear.

We have discussed these products with a member of the legal staff and have concluded that "Ear Putty" and REDACTED TEXT are devices excluded from the definition of a medicine under Regulation 1591(c)(3).

We are attempting to resolve an audit that is currently in 79-A status, so we would appreciate a reply as soon as possible.

Citations and references

• Historical California Sales and Use Tax Regulation 1591(b)(1) — medicine definition invoked in the August 7, 1985 request
• Historical California Sales and Use Tax Regulation 1591(c)(3) — excluded-device provision applied in the August 23, 1985 response

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 425.0038
• Original combined source: 425.0038 PDF

Original ruling text

State of California

Board of Equalization

425.0038
To

Mr. Glenn Bystrom

From

Gary Jugum

Subject

Non-Attorney Opinions

(handwritten “May 29, 1996 and 8/23/85”)

I have reviewed Principal Tax Auditor’s memorandum of August 23, 1985 to Santa Barbara – District Principal Auditor. We are in agreement with his conclusion as follows: Ear Protection. Products such as ear putty or medco-mold which are used to temporarily seal ears to protect the middle ear from the entry of foreign material after eardrum surgery, do not qualify as exempt prescription medicines. 8/23/85

State of California

Board of Equalization

425.0038
Memorandum
To:

Santa Barbara District Principal Auditor

From:

Principal Tax Auditor

Subject:

REDACTED TEXT

Date:

August 23, 1985

Your memorandum of August 7, 1985, asked for a ruling on the application of tax to two products: "Ear Putty" and REDACTED TEXT. The products are sold to doctors who furnish them to their patients after surgery of the eardrum and are used as a protection device to prevent foreign matter from entering the middle ear. We have discussed these products with a member of the legal staff and have concluded that "Ear Putty" and REDACTED TEXT are devices excluded from the definition of a medicine under Regulation 1591(c)(3). These products are not commonly recognized as a substance or preparation intended for use by external or internal application to the human body in the diagnosis, cure, mitigation, treatment or prevention of disease. Therefore, they do not qualify for the prescription medicine exemption. GAB:nc

State of California

Board of Equalization

425.0038
Memorandum
To:

Headquarters
Principal Tax Auditor

From:

Santa Barbara District Principal Auditor

Subject:

REDACTED TEXT

Date:

August 7, 1985

In a recently completed audit of this taxpayer, we encountered two products that may or may not be classified as a medicine. They are Ear Putty and Medco-Mold (see the attached literature) The sales of these products are to doctors who furnish them to their patients after they have had a surgical procedure performed to insert a otological ventilation tube in their patients ear drum. It is used as a protection device to prevent foreign matter (primarily water) from entering the middle ear. As such, it appears to meet the definition of a medicine as set forth in Regulation 1591(b)(1) because it is used in the cure, mitigation or treatment of a medical problem. However, it could still be thought of as something like a bandage or other items described as being excluded from the definition of a medicine in (c)(3) of the Regulation. We are attempting to resolve an audit that is currently in 79-A status, so we would appreciate a reply as soon as possible. EMR:aw enclosure