Were intravenous and irrigation solutions exempt medicines?

Plain-English summary

California classified intravenous and irrigation solutions as medicines. Their sales were exempt when furnished through one of the prescription-medicine channels in historical Ruling 22(a).

General administration equipment was not included in that exemption. Hospital sales were analyzed as sales for resale, supported by resale certificates, because hospitals acted as retailers of prescription medicines under the historical rule.

Common questions

Did the solutions themselves qualify as medicine?

Yes.

Did general administration equipment qualify with them?

No as a general rule.

How were sales to hospitals documented?

The letter recommended resale certificates under its then-current hospital-retailer analysis.

Citations and references

• Historical California Board of Equalization Ruling 22(a) — qualifying medicine-furnishing channels applied to the solutions
• Historical California Board of Equalization Ruling 22(f) — hospital retailer treatment cited 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/425-0480.pdf

Original ruling text

425.0480

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