Could a blood-plasma unit remain wholly exempt when it included a small taxable administration set?

Plain-English summary

The 1962 letter originally treated a blood-plasma unit as fully exempt even when it included an administration set worth less than 2 percent of the total price. It separately said administration equipment generally was not part of the prescription-medicine exemption.

An attached June 15, 1998 note changed the mixed-kit treatment: when a kit includes exempt medicine and taxable other items, the price must be prorated. This page therefore does not present the earlier under-2-percent approach as current annotation guidance.

Common questions

Was blood plasma itself treated as exempt?

Yes.

Was administration equipment generally exempt?

No.

Could the whole kit remain exempt because the taxable set was less than 2 percent?

Not under the attached 1998 instruction; allocation was required.

Citations and references

• Historical California Board of Equalization Ruling 22(a) — qualifying prescription-medicine channels applied in the letter
• Historical California Board of Equalization Ruling 22(f) — hospital-resale treatment discussed in the letter

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/425-0220.pdf

Original ruling text

425.0220

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

September 13, 1962

H--- L--P. O. Box XXX
--- ---, California
Attention:

J-XXXXX

Mr. A. R. H---

Gentlemen:
In answer to your letter of August 28, we advise that Intravenous and Irrigation Solutions constitute, in our opinion, medicine as defined in Sales and Use Tax Ruling 22. Accordingly, when furnished as described under part (a) of that ruling, their sale is subject to the exemption applicable to prescription medicines. We have held that a sale of a unit of Blood Plasma is exempt even though the unit includes an administration set constituting under 2% of the total price of the unit*. In general, administration equipment will not be regarded as included within the prescription medicine exemption. If you wish a ruling on any specific equipment, we suggest you supply us with full information. The prescription medicine exemption applies in a proper case to sales to patients by druggists, hospitals, and doctors. The real basis for your claiming exemption with respect to sales to hospitals is that your sales are sales for resale. You will note from Ruling 22, part (f), that hospitals are retailers of prescription medicines furnished as indicated in part (a) whether or not a charge is made for such medicines. You should, accordingly, support your deductions of sales to hospitals by taking resale certificates from the hospitals. Very truly yours,

E. H. Stetson
Tax Counsel

EHS:fb
cc:

--- --- – District Administrator

*Must prorate when kit includes
exempt sale of medicine and
taxable sale of other items.
DHL 6/15/98