Did an allergist make a taxable sale when furnishing pollen extract to a patient?

Plain-English summary

California treated an allergist as consuming pollen or similar extract when the allergist personally administered it in the office and included it in an undivided charge for medical services. The service element predominated, so the charge was not subject to sales tax.

When distance made office treatment inconvenient and the allergist sent extract to the patient for administration by another physician, the allergist made a taxable sale. Free follow-up advice did not make the service element predominant, and the letter directed the allergist to obtain a seller's permit.

Common questions

Was extract administered by the allergist taxable?

No under the described bundled-service arrangement.

What if the allergist mailed it for another doctor to administer?

The charge was taxable.

Did free advice about administration change that result?

No.

Citations and references

• The supporting letter states no statutory or regulatory citation for its service-versus-sale analysis.

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/425-0720.pdf

Original ruling text

425.0720

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

November 5, 1953
X------------------

Dear Dr. X---------------,
You state that you are an allergist and that you make up bottles of pollen extract as well as house dust and other substances for administration to patients. If the patient comes to your office for treatment, no separate charge is made for the extract. It is included in the charge for the medical services. Occasionally, because of distance, it will be inconvenient for the patient to come to your office. In this case, you send the extract to him for administration by the physician of his choice. In addition to receiving the extract the patient may also communicate with you at no extra charge for advice concerning the administration of the extract or his reactions to it. It is our opinion that when you administer the extract to the patient, the service element is predominant and your charges are not subject to the sales tax. But when the extract is not administered by you, it is our opinion that the other medical services you render are not sufficient to render the service element predominant. Accordingly, your charges are subject to the sales tax when you furnish extracts but do not administer them. You should visit our San Bernardino office, 215 Central Building, telephone 8-2911, to file an~plication for a seller's permit (fee $1.00). A representative of that office will explain in more detail the procedure for paying the tax and the records to be kept. Yours very truly,

Bill Holden
Junior Counsel
BH:ja
Cc:
San Bernardino – Compliance