Would an FDA decision to classify a biofeedback device as medicine make it exempt medicine for California sales tax?

Plain-English summary

The seller wrote the FDA asking whether that agency classified devices like the seller's biofeedback system as medicines. In a March 15 follow-up to the Board, the seller asked whether a positive FDA answer would cause California to treat the system as medicine for sales-and-use-tax purposes.

Tax Counsel said no. The Sales and Use Tax Law used its own objectives and definitions. A product meeting section 6369 and Regulation 1591 would be medicine for California tax purposes regardless of the FDA's terminology; conversely, a favorable FDA classification would not cure failure to meet the state test.

The Board had already concluded in earlier correspondence that this biofeedback system did not meet section 6369. The May letter said that conclusion would stand even if the FDA called the device medicine for its own purposes.

Live annotation and source posture

The current live annotation generalizes the letter's rule: FDA classification as medicine has no bearing on classification under California Sales and Use Tax Law, which turns on section 6369. The supporting letter presents that rule through a narrower, hypothetical question about one biofeedback system and a possible future FDA answer.

No favorable or unfavorable FDA determination appears in the source. The seller says only that it requested clarification. The FDA submission, product category, any response and federal reasoning are absent.

The letter also does not reproduce why the Board previously found the biofeedback system outside the California medicine definition. It says section 6369 and Regulation 1591 were discussed extensively in prior correspondence, but those records, the system's hardware, software, intended use, user, prescriber, furnishing method and promotional claims are missing. The May letter therefore supports the classification-source rule, not a fresh product-level analysis.

The source quotes King v. State Board of Equalization, 22 Cal.App.3d 1006, 1011, for self-contained tax-law concepts. Legal research resolved that reporter to the named 1972 decision. The official text also prints like may other tax laws; that apparent wording defect remains verbatim below.

No sale, lease, invoice, customer, assessment, refund, appeal, prior opinion date or final transaction outcome is supplied.

The official one-page PDF has a complete native text layer. Its only raster image is the California state seal in the letterhead, not scanned body text, 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

Regulatory labels answer questions under their own legal schemes. An FDA description, clearance or classification did not replace California's separate statutory and regulatory tax test in this source.

For a current product, preserve the actual FDA record but separately analyze its substance or preparation, function, intended application, prescription and furnishing path, customer and transaction under current California law. Do not infer this biofeedback system's missing facts from the one-page follow-up.

Common questions

Q: Did California say FDA classifications never matter for any purpose?

A: No. It said FDA terminology did not determine medicine status under California's Sales and Use Tax Law.

Q: Had the FDA actually classified this system as medicine?

A: Not in the supplied source. The seller had requested clarification and asked the Board a hypothetical question about a positive answer.

Q: Did the letter explain why the biofeedback system failed the California test?

A: No. It refers to extensive prior correspondence that is not included.

Q: Would an FDA rejection automatically make a product taxable?

A: The letter says California tax status turns on California's own definition, regardless of how the FDA defines the product.

Missing evidence and references

• March 15, 1995 seller letter — described but absent
• Earlier Board correspondence and complete California classification analysis — referenced but absent
• FDA clarification request, product submission, response and classification — not supplied
• Biofeedback-system design, components, instructions, function and promotional materials — not supplied
• Prescriber, patient, furnishing, sale, lease and customer facts — not supplied
• Invoice, price, tax amount, assessment, refund, appeal and outcome — not supplied

Verbatim support

From the official May 1, 1995 Tax Counsel letter:

You indicate that you have written to the FDA requesting clarification as to whether or not that agency classifies devices such as the one you sell as medicines. You ask that if the FDA gives a positive answer, would the Board of Equalization also consider the device as a medicine.

The Sales and Use Tax Law, like may other tax laws, "employs relatively artificial, relatively self-contained, concepts. If it utilizes popular meaning or concepts from other fields of law, it does so only by force of its own objectives and definitions."

That is, if the product meets the definition of a "medicine" as contained in Revenue and Taxation Code section 6369 and Regulation 1591, which we have discussed extensively in our previous correspondence, then it is considered a "medicine" for sales and use tax purposes no matter how it is defined by the FDA.

Therefore, even if the FDA declared the device you sell to be a medicine for its purposes, our opinion would stand, because we have concluded that the biofeedback system does not meet the definition of a "medicine" under section 6369.

Citations and references

• California Revenue and Taxation Code § 6369 and California Sales and Use Tax Regulation 1591 — state medicine definition and exemption framework cited in the letter
• King v. State Board of Equalization, 22 Cal.App.3d 1006, 1011 (1972) — self-contained tax-law concepts
• Earlier Board correspondence — relied on but not reproduced

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 425.0051
• Original supporting opinion: 425.0051 PDF

Original ruling text

425.0051

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

JOHAN KLEHS
First District, Hayward

LEGAL DIVISION – MIC: 82
450 N STREET, SACRAMENTO, CALIFORNIA
PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0082
TELEPHONE (916) 327-2291
FAX (916) 323-3387

DEAN F. ANDAL
Second District, Stockton
ERNEST J. DRONENBURG, JR.
Third District, San Diego
BRAD SHERMAN
Fourth District, Los Angeles
KATHLEEN CONNELL
Controller, Sacramento

May 1, 1995
BURTON W. OLIVER
Executive Director

X--------------------

Dear X------------------,
I am answering your letter to me dated March 15, 1995, following up on our previous correspondence. You indicate that you have written to the FDA requesting clarification as to whether or not that agency classifies devices such as the one you sell as medicines. You ask that if the FDA gives a positive answer, would the Board of Equalization also consider the device as a medicine. The Sales and Use Tax Law, like may other tax laws, "employs relatively artificial, relatively self-contained, concepts. If it utilizes popular meaning or concepts from other fields of law, it does so only by force of its own objectives and definitions." (King v. S.B.E. (1972) 22 Cal.App.3d 1006, 1011.) That is, if the product meets the definition of a "medicine" as contained in Revenue and Taxation Code section 6369 and Regulation 1591, which we have discussed extensively in our previous correspondence, then it is considered a "medicine" for sales and use tax purposes no matter how it is defined by the FDA. Therefore, even if the FDA declared the device you sell to be a medicine for its purposes, our opinion would stand, because we have concluded that the biofeedback system does not meet the definition of a "medicine" under section 6369. Sincerely,

John L. Waid
Tax Counsel
JLW:sr