Ezel / Tax Rulings / CA

Could a multi-component prosthetic system qualify if only some components were worn by the patient?

Short answer No under this memorandum. California treated the interdependent system as one item and required the entire system to be worn by the patient.
State
CA
Ruling
Annotation 425.0744
Tax type
Sales and Use Tax
Issued
1991-03-06
Issued by
California State Board of Equalization
Requested by
Oakland District auditing staff
Topics
worn on body medical devices
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 1991. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1991
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: The official source is a short March 6, 1991 internal memorandum. It states the interdependent-component rule and says the described N--- system did not meet it, but the referenced enclosed artificial-heart opinion and details of the N--- system are not included. No further product facts should be inferred; current law controls.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

California's staff treated a prosthesis made of several interdependent components as a single item for the historical Regulation 1591(b)(5) analysis. To qualify under that rule, the entire system—not merely one component—had to be worn on the patient's person.

The memorandum said the redacted N--- system, as it had been described to audit staff, did not meet that definition. The official PDF does not include the underlying system description or the enclosed opinion referenced by the memorandum.

Common questions

Could separately located components be tested one by one?

Not when they formed one interdependent prosthetic system. The memorandum treated the system as one item.

Does the source explain which N--- components were not worn?

No. It gives the conclusion but omits the product description, so the reason cannot be narrowed further from this source.

Citations and references

  • California Sales and Use Tax Regulation 1591(b)(5) — historical prosthetic-device provision cited in the memorandum

Source

Original ruling text

State of California

Board of Equalization
Legal Division (MIC:82)

Memorandum
425.0744

To:

Mr. Stan Rose – Oakland District (Auditing)

From:

John L. Waid
Tax Counsel

Subject:

B--- H--- C--- Corp. (N--- Div.)

Date:

March 6, 1991

Enclosed is a copy of the opinion letter regarding artificial heart systems which we discussed during our telephone conversation on March 5, 1991. It appears to stand for the proposition that where a prosthesis consists of several inter-dependent components, the system must be considered as one item and that entire item must be worn on the person of the patient, in order for the sale of the system to be exempt from sales and use tax under Regulation 1591(b)(5). The N--- system, as you described it, does not appear to meet that definition.

JLW:es
3769I
Enc.

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