Could an ocean liner's staffed onboard medical facility qualify as a hospital for the medicine exemption?

Plain-English summary

California treated the described ocean liners' onboard medical facilities as hospitals. Federal law required a licensed physician and surgeon on each voyage, and each vessel maintained hospital beds, equipment, and two registered nurses for passengers and crew.

Although no registered pharmacist was aboard, the carriers could claim an exemption for medicines used or dispensed without charge through those shipboard hospital facilities.

Common questions

Did the absence of an onboard pharmacist defeat hospital status?

No under the described facts.

What staffing and facilities were present?

A licensed physician and surgeon, two registered nurses, hospital beds, and equipment.

Were the medicines separately charged to passengers?

No. The memorandum said they were furnished without charge.

Citations and references

• California Revenue and Taxation Code section 6369 — historical hospital medicine exemption applied in the memorandum

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/425-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/425-0100.pdf

Original ruling text

State of California

Board of Equalization

425.0100

Memorandum
To:

REDACTED TEXT – Aud.(LC/REP)

From:

Tax Counsel (PM)

Subject:

“M”, “C”

Date:

May 11, 1964

In memorandum dated April 2 you ask whether tax applies to the sale or use of medicines under the following circumstances: "M" and "O" operate the "L", "M", and "X" in foreign commerce. The vessels carry approximately 360 to 700 passengers and a crew of approximately 270. Under federal law, the vessels must have a licensed physician and surgeon on each voyage. In addition, a hospital with beds, equipment and two registered nurses is maintained for the passengers and crew, where medicines are furnished without charge. There are no registered pharmacists on board. It is our opinion that the described facilities qualify as "hospitals" under Section 6369, as amended September 20, 1963. Accordingly, the carriers are entitled to claim a tax exemption for any medicines which they use or dispense at their hospital facilities aboard ship. PM:md [lb]