Was a doctor-recommended hot tub exempt as prescription medicine?

Plain-English summary

A doctor recommended that an individual obtain a hot tub or similar hydrotherapy device for arthritis discomfort. California nevertheless held the purchase taxable.

The hot tub was not one of the specific items included in the medicine exemption and did not qualify as an orthotic device worn as a brace or support or as a prosthetic device worn on or in the body.

Common questions

Did the doctor's recommendation itself create an exemption?

No.

Did evidence that hydrotherapy could improve the person's motion change the classification?

No. The opinion said the hot tub still was not within the listed statutory categories.

Citations and references

• Revenue and Taxation Code §§ 6369 and 6369.2 — historical prescription-medicine and medical-device provisions
• 18 Cal. Code Regs. § 1591(b)(4), (b)(5), and (c)(2) — orthotic and prosthetic devices and excluded equipment

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/425-0131.pdf

Original ruling text

425.0131

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

JOHAN KLEHS
First District, Hayward

LEGAL DIVISION – MIC: 85
450 N STREET, SACRAMENTO, CALIFORNIA
PO BOX 942879, SACRAMENTO, CALIFORNIA 94279-0082
TELEPHONE (916) 324-2653
FAX (916) 324-2618

DEAN ANDAL
Second District, Stockton
ERNEST J. DRONENBURG, JR.
Third District, San Diego
KATHLEEN CONNELL
Controller, Sacramento

January 31, 1997
JOHN CHIANG
Acting Member
Fourth District, Los Angeles

REDACTED TEXT
Re: [No Permit Number]
Hot Tubs as
Medical Devices

E. L. SORENSEN, JR
Executive Director

Dear REDACTED TEXT,
I am responding to your letter dated December 4, 1996 to the Chief Counsel. You ask if sales or use tax applies to the sale to you of a hydrotherapy unit. You attached to your letter a copy of a letter "To Whom it May Concern," dated September 10, 1996, by REDACTED TEXT recommending that you procure a "hot tub or similar hydrotherapy device" to treat the discomfort resulting from your arthritis. OPINION A.

Sales and Use Tax Generally.

In California, except where specifically exempted by statute, Revenue and Taxation Code section 6051 imposes a sales, 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 P.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].) B.

Prescription Medicines.

Section 6369, interpreted and implemented by Title 18, California Code of Regulations, section 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.6r 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. When the medicine exemption was originally enacted in 1961, the only items considered to be "medicines" are those defined now in Regulation 1591(b) (1). Durable medical equipment (DME) was totally excluded. Gradually, beginning in 1970, some items of DME were defined as being "medicines." The statutes are very specific as to the items included, the only general classes of items being prosthetic and "orthotic devices." Regulation 1591(b) (4) includes orthotic devices, or their replacements, designed to be worn on the person of the user as a brace, support, or other correction for the body structure. Regulation 1591(b) (5) includes prosthetic devices and their replacement parts designed to be worn on or in the person of the user to replace or assist in the functioning of a natural part of the human body. You liken a hot tub to a cane, etc., because it will "produce a substantial improvement in
[your] motion." While use of the tub may produce the desired result, it is not one of the items listed in section 6369.2. A hot tub is not one of the specific items listed nor does it qualify under Regulation 1591 (b) (4) or (b) (5) as an orthotic or prosthetic device for sales and use tax purposes. As a result, the sale to you of such a device is subject to tax. 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 Senior Tax Counsel JLW:sr Enclosure: Reg. 1591 Cc:

REDACTED TEXT District Administrator