How did California treat intravenous supplies, infusion pumps, and catheters under the medicine exemption?

Plain-English summary

The seller asked for tax advice on several medical items but supplied only a list, not their functions. Tax Counsel therefore limited the response to general rules.

The opinion treated IV tubing, IV-pole rentals, blood-glucose monitors and test strips, non-diabetic needles and syringes, and medication-compounding containers such as IV solution bags as taxable appliances or devices. It separately noted that insulin syringes were deemed medicines under historical Regulation 1591(h); the generic syringe conclusion did not erase that specific rule.

A programmable infusion pump qualified only if fully worn on or implanted in the body and if it automatically infused measured quantities of medicine. A gravity-feed pump did not qualify even when its rate could be set, and a pump not fully worn or implanted was taxable. The source said the classification was the same whether the pump was sold or rented.

Catheters generally did not qualify, but the opinion recognized possible exemptions for permanent implantation, drainage through a natural or artificial body opening, or necessary integration with another exempt item. Foley and urinary catheters could qualify depending on use; temporary surgical use was taxable.

Other products in the source

The live annotation does not show two other categories addressed in the opinion:

• Enteral formulas. Counsel said prior determinations treated Ensure and Isocal as medicines, making their sales exempt when sold or furnished under Regulation 1591(a). Counsel declined to classify Advera without its label or package.
• Topical creams and ointments. Counsel said prior determinations treated them as medicines when sold or furnished under Regulation 1591(a). No brand, ingredients, intended use or prior opinion is reproduced.

These are references to absent prior determinations, not fresh product analyses based on records supplied with this PDF.

Live annotation and source posture

The current live annotation accurately summarizes the general taxable-device rule and the programmable-pump exception. Its list includes catheters among items generally taxable but omits the supporting opinion's use-specific catheter exceptions, including possible permanent-implant, drainage and integral-part treatment. The page also omits the insulin-syringe distinction, enteral formulas and topical products.

Because the seller supplied no functional descriptions, the source does not identify any manufacturer, model, programming method, wear or implantation configuration, infusion mechanism, medicine, glucose-testing setup, catheter placement, drainage purpose, integrated exempt item, cream, ointment or formula label. No product-specific conclusion can be carried beyond the conditions stated.

The source prints Title 28, California Code of Regulations when introducing Regulation 1591 and includes wording such as measures quantities and a missing opening quotation mark before medicine. It also prints a defective Market Street Railway year and parallel reporter. Legal research resolved 137 Cal.App.2d 87 to the named case filed in 1955; 290 P.2d 201 does not resolve, while 290 P.2d 20 resolves to the named case. Standard Oil, 39 Cal.App.3d 765 with 114 Cal.Rptr. 571, resolved to the named 1974 decision. The original remains unchanged.

The October 22 request, prior agency determinations and Regulation 1591 enclosure are absent. The source supplies no purchase, sale, lease, patient, invoice, tax amount, audit, assessment, refund, appeal or final outcome.

The official three-page PDF has a complete native text layer. Its sole 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

A broad label such as IV device, pump, syringe or catheter did not decide the historical result. The exemption depended on exact design and use, including programmability, automatic measured infusion, full wearing or implantation, drainage path, permanence, integration and qualifying furnishing.

For current equipment, preserve model specifications, programming and flow method, wearing or implantation instructions, catheter placement and purpose, paired medicine or exempt item, prescription and furnishing records, and the sale or rental agreement. Apply current law product by product.

Common questions

Q: Were all infusion pumps exempt?

A: No. The historical rule required programmability, full wearing or implantation, and automatic measured infusion. Gravity-feed and externally situated pumps did not qualify.

Q: Were all needles and syringes taxable?

A: The listed non-diabetic needles and syringes were taxable, while the opinion separately identified insulin syringes as deemed medicines.

Q: Were all catheters taxable?

A: No. The result depended on permanent implantation, drainage through a natural or artificial opening, integration with another exempt item and actual use. Temporary surgical use was taxable.

Q: Did the opinion classify Advera?

A: No. Counsel declined without seeing its label or package.

Q: Did the opinion newly prove that every cream or ointment was exempt?

A: No. It invoked an absent prior determination and still required sale or furnishing under historical Regulation 1591(a).

Missing evidence and references

• October 22, 1994 request letter and complete item list — described but absent
• Manufacturer, model, label, package, specifications and instructions for every listed item — not supplied
• Pump programming, infusion, wearing, implantation, sale and rental facts — not supplied
• Catheter type, placement, duration, drainage, surgery, integration and actual use — not supplied
• Formula, cream, ointment, glucose product, syringe and compounding-container details — not supplied
• Prior agency determinations concerning named product categories — invoked but absent
• Regulation 1591 enclosure — listed but absent
• Purchases, sales, leases, invoices, patients, tax amounts and final outcomes — not supplied

Verbatim support

From the official November 23, 1994 Tax Counsel opinion:

You just list the items and do not describe their function, so I can only give you a general answer.

Infusion pumps that are programmable and fully worn on or implanted in the human body and which automatically cause the infusion of measures quantities of a medicine into the body of the wearer of the device are specifically defined as "medicines" by Regulation 1591(b)(7).

Generally, catheters do not qualify as medicines except those that are permanently implanted, used for drainage through a natural or artificial opening in the body, or are a necessary and integral part of another exempt item.

I should not like to give an opinion on Advera without seeing the label or package (preferably both).

Citations and references

• California Revenue and Taxation Code §§ 6051, 6091, and 6369 — tax, presumption and prescription-medicine provisions discussed in the opinion
• Historical California Sales and Use Tax Regulation 1591(a), (b)(1), (b)(5), (b)(7), (c)(2), (h), and (j) — medicine, pump, device, syringe and catheter provisions applied in the opinion
• Market Street Railway Co. v. California State Board of Equalization, 137 Cal.App.2d 87, 96 — defective year and parallel reporter disclosed above
• Standard Oil Co. v. State Board of Equalization, 39 Cal.App.3d 765, 769, 114 Cal.Rptr. 571 (1974)
• Prior agency determinations concerning Ensure, Isocal, creams, ointments, Foley catheters and urinary catheters — invoked but not reproduced

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 425.0054
• Original supporting opinion: 425.0054 PDF

Original ruling text

425.0054

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
LEGAL DIVISION (MIC:82)

MEMBER
First District

450 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
TELEPHONE (916) 324-3828
FAX (916) 323-3387

BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR.
Third District, San Diego
MATTHEW K. FONG
Fourth District, Los Angeles
GRAY DAVIS
Controller, Sacramento

November 23, 1994

BURTON W. OLIVER
Executive Director

Ms. L--- D---s
XXXX --- Court
--- ---, CA XXXXX
RE:

[No Permit Number]
Medical Supplies

Dear Ms. D---:
I am responding to your letter to the Legal Division dated October 22, 1994. You ask for advice regarding the application of sales or use tax to the sales of several medical items. You just list the items and do not describe their function, so I can only give you a general answer.

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. 571].)

Ms. L--- D---

-2-

November 23, 1994
425.0054

B. Prescription Medicines.
Section 6369, interpreted and implemented by Title 28, California Code of Regulations, Regulation 1591, provides that sales of medicine, when prescribed and sold or furnished under certain conditions for the treatment of a human being, are exempt from sales or use tax. (Reg. 1591(a).) Subdivision(b)(1) defines "medicine" to "mean and include any 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 and which is commonly recognized as a substance or preparation intended for such use." However, Regulation 1591(c)(2) adds that "medicines" do not include "articles which are in the nature of splints, bandages, pads, compresses, supports, dressings, instruments, apparatus, contrivances, appliances, devices, or other mechanical, electronic, optical or physical equipment or article or the component parts and accessories thereof." (Sales and Use Tax Regulations are Board promulgations which have the force and effect of law.) As a rule, then, items used to diagnose a condition or to apply medicine or treatment to the patient are not considered to be medicines. C. Tax Consequences.

1. Intravenous Tubing, IV Pole Rental, Blood Glucose Monitors, Blood Glucose Test
   Strips, Needles/Syringes (not used by diabetics), Containers Used in Compounding Medications (Such as IV Solution Bags). The exemption for sales of prescription medicines was originally very narrow and covered only things ingested by or placed on the patient. Durable medical items were excluded under Regulation 1591(c)(2). Over the years the Legislature has included some durable items, but, with an exception discussed below, items such as these that administer medicine to the person are considered appliances, devices, etc., excluded from the term medicine" by that subdivision. Sales of these items are subject to tax. Insulin syringes are deemed to be medicines under sub-division (h).
2. Infusion Pump Rental. Whether the transfer is made by sale or rental, the rules as to
   taxability are the same. Infusion pumps that are programmable and fully worn on or implanted in the human body and which automatically cause the infusion of measures quantities of a medicine into the body of the wearer of the device are specifically defined as "medicines" by Regulation 1591(b)(7). Sales of these pumps are exempt from tax. Pumps that gravity feed (even though rate can be set), or are not fully worn on or implanted in the body of the patient, do not qualify. All other infusion pumps are excluded from the term "medicines" under subdivision (c)(2), and their sales are taxable.
3. Enteral Formulae (Ensure, Isocal, Advera, etc.). We have previously determined that
   Ensure and Isocal qualify as medicines with the result that their sales are exempt when they are sold or furnished pursuant to Regulation 1591(a). I should not like to give an opinion on Advera without seeing the label or package (preferably both).

Ms. L--- D---

-3-

November 23, 1994
425.0054

4. Topical Creams/Ointments (with MD prescription/order). We have previously
   determined that topical creams or ointments qualify as medicines and, when sold or furnished pursuant to Regulation 1591(a), their sales are exempt from tax.
5. Catheters (Intravenous, Foley/Urinary). Generally, catheters do not qualify as
   medicines except those that are permanently implanted, used for drainage through a natural or artificial opening in the body, or are a necessary and integral part of another exempt item. We have previously determined that Foley catheters may qualify under Regulation 1591(b)(5), and that urinary catheters may qualify under either that sub-division or sub-division (j) as medicines; their sales may be exempt from tax depending on their use. If they are sold for temporary use during surgery, they do not qualify at all, and their sales are taxable. For your information, I have included a copy of Regulation 1591. 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:te

Enclosure: Reg. 1591