Was intravenous tubing exempt because federal law restricted it to physician-ordered hospital use?

Plain-English summary

California treated intravenous tubing as a taxable device rather than medicine. The result did not change merely because federal labeling restricted the tubing to physician-ordered use, hospitals furnished it, or the institution charged it to the patient.

The intravenous solution itself could qualify as medicine because it was a substance intended for internal application in diagnosing, curing, mitigating, treating, or preventing disease.

Common questions

Did a physician-order restriction make the tubing exempt?

No.

Did hospital-only use make the tubing medicine?

No.

Was the IV solution treated the same as the tubing?

No. The letter distinguished the qualifying solution from the taxable delivery tubing.

Citations and references

• California Revenue and Taxation Code section 6369(b) — historical medicine definition and device exclusion quoted 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/425-0483.pdf

Original ruling text

425.0483
STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)

May 1, 1978

Mr. L--- T---, Director
Pharmaceutical Operations
P--- V--- P--- Corporation
XXXX E. --- Boulevard
---, California XXXXX

Re:

SR -- XX XXXXXX

Dear Mr. T---:
Your letter of February 14, 1978 to our West Los Angeles office has been referred to the undersigned for reply. Your inquiry concerns whether tax applies to I.V. tubing. You state that it has come to your attention that the major manufacturers of intravenous therapy solutions and related equipment have been charging sales/use tax to hospitals for I.V. tubing. You do not understand why tax applies as this equipment bears the Federal Caution restricting use to physician orders and is furnished only in hospitals and is charged to the patient by the institution. Revenue and Taxation Code Section 6369(b) defines the term “Medicine” to mean and include “any substance or preparation 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; provided that ‘medicines’ do not include . . . (2) articles which are in the nature of splints, bandages, pads, compresses, supports, dressings, instruments, apparatus, contrivances, appliances, devices . . .” Intravenous tubing is not considered to be a “medicine” as the term is defined in Section 6369. Accordingly, tax would apply to the sale of tubing. The intravenous solution, however, is considered to be a “medicine” because it is a substance intended for internal application in the diagnosis, cure, mitigation, treatment or prevention of disease. The fact the I.V. tubing is restricted to use on

Mr. L--- T---

-2-

May 1, 1978
425.0483

physician’s orders and furnished only in hospitals does not automatically qualify an item as a “medicine” under the Revenue and Taxation Code. If you have further questions concerning this matter, please write this office. Very truly yours,

Mary C. Armstrong
Legal Counsel
MCA:pp
bc:

--- County (ML)