Did the Branemark Bone Screw device qualify for California's prescription-medicine exemption?

Plain-English summary

California staff reiterated that the Branemark Bone Screw device did not qualify for the prescription-medicine exemption on the facts then understood. The reason given was that it was a necessary component of a dental prosthetic device and had no independent significance.

But this was not presented as a final fact-complete determination. The taxpayer was being audited, the opinion request had not gone through the auditing office, and the staff said taxability depended heavily on actual use. It offered to review the issue again if the audit developed different facts.

Common questions

Was the exemption issue finally closed?

No. The letter called an opinion premature while facts were still being gathered and left reconsideration open.

What fact drove the provisional denial?

The staff understood the screw to be only a necessary component of a dental prosthetic device, without independent significance.

Citations and references

• California Revenue and Taxation Code section 6369 — prescription-medicine exemption identified 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/425-0225.pdf

Original ruling text

425.0225

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

MEMBER
First District

1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 324-3828

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

February 18, 1993

GRAY DAVIS
Controller, Sacramento

BURTON W. OLIVER
Executive Director

Re:

I am responding to your letter to me of January 25, 1993. You were following up on my letter to you dated November 13, 1992, in which I expressed the opinion of the Legal Division that sales by your client, of the above product in California do not qualify for exemption from sales and use tax under the prescription medicine exemption found in Revenue and Taxation Code Section 6369. You indicated that you are still of the opinion that such sales do so qualify and offered additional arguments in support of your view. As I was reviewing your letter, I received your follow-up letter of February 4, 1993, and accompanying videotape describing the use of this product. Unfortunately, I must return the tape as we have no facilities for viewing or storing videotapes. At the same time I received your letter, I received information from our Chicago District auditing office that is subject to an audit at this time, and your request for an opinion did not go through them. I am most distressed that you did not tell me that your client was being audited. As you know from your involvement with this question, the availability of the medical exemption, as with so many others, depends heavily on how the product is being used. That being the case, it is premature for us to render an opinion as to taxability while the facts are still being gathered. Therefore, I must reiterate our position that, based on the facts as we understand them at this time, the Branemark Bone Screw device does not qualify for the prescription medicine

-2-

February 18, 1993
425.0225

exemption from tax because it is a necessary component of a dental prosthetic device and has no independent significance. We are, however, fully prepared to review this matter should different facts develop during the audit. Sincerely,

John L. Waid
Tax Counsel

JLW:es
bc: Mr. Tom Glab, OHA District Auditing