When did California treat an impregnated dressing as exempt medicine?

Plain-English summary

California said a dressing impregnated with medicine was treated as medicine. Petroleum jelly and petrolatum were treated as the same medicinal substance, so a petroleum-jelly dressing could qualify when sold under the statutory conditions.

The specific dressing under review contained unidentified “hydroactive particles.” Because the source did not know what that substance was, it could not decide whether that product qualified.

Common questions

Did every impregnated dressing qualify?

No. The impregnating substance itself had to be medicine.

Did the dressing's separate physical function matter?

The memorandum said the classification question was whether the impregnating substance was medicine, not the dressing's function.

Was the hydroactive-particle dressing approved as exempt?

No. The source lacked enough information about the particles.

Citations and references

• Revenue and Taxation Code § 6369 — prescription medicines and qualifying sale conditions

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/425-0132.pdf

Original ruling text

State of California

Memorandum

To :

Mr. Donald Herrmann
Senior Tax Auditor
Audit Refund Section - MIC:39

From :

Gary J. Jugum
Assistant Chief Counsel

Subject:

Impregnated Dressings,
Bubble/Silent Humidifiers

Board of Equalization
Legal Division-MIC: 82
Telephone: 445-3723

425.0132

Date: July 11, 1996

This is in response to your memorandum of May 30, 1996, addressed to John Waid. You have raised questions with respect to the application of Revenue and Taxation Code section 6369, which exempts from tax sales of “medicines,” under certain circumstances. While medicines may be exempt, the term “medicines” does not include “dressings.” Your first question has to do with impregnated dressings. Our understanding of this matter is as follows. Medicines are exempt. If a dressing has been impregnated with a medicine, we treat the dressing as a medicine. Petroleum jelly is a medicine. Petrolatum and petroleum jelly are the same thing. One of the dressings which is of concern to you is manufactured by C--- and described as a D---® dressing. These dressings have a skin contact adhesive “containing hydroactive particles.” The question then is, what are the hydroactive particles? If this substance otherwise qualifies as a medicine, then the dressing is a medicine, because the dressing and thus the medicine is applied to the skin. I don’t know that there is a need to make metaphycial distinctions. There is no need to worry about the function performed by the dressing. The question is whether the impregnated substance is a medicine, and we don’t know the answer to that question in this case.

Mr. Donald Herrman

-2-

July 11, 1996
425.0132

The second question you raise has to do with humidifier prefilled sterile water. Our understanding is that distilled water is not a medicine, but we have treated (rightly or wrongly) sterile water as a medicine. The sale of sterile water in bulk or in unitized containers would be nontaxable, if sold under the conditions prescribed by the statute. The sterile water is used to aid the administration to patients of oxygen and other medical gasses by means of humidification. The sterile water is thus applied to lung tissue and qualifies for exemption.

GJJ:sr
cc:

Mr. John L. Waid