Did the described postoperative silicone drains and reservoir qualify for California's surgical-opening supply exemption?

Plain-English summary

California treated the described silicone drains and CWT reservoir as exempt surgical-opening appliances and related supplies when sold or furnished under the required conditions. The products were used after surgery to drain an incision site and were later removed.

The result was conditional for the reservoir. Its brochure did not describe its function, so staff expressly assumed that bodily fluids drained into it. The 1992 letter applied Regulation 1591(j) and the sale conditions in Regulation 1591(a); the official annotation later marked the entry amended and cites Regulation 1591.1(b)(2).

Common questions

Did staff verify how the reservoir worked?

No. The opinion stated its fluid-drainage assumption because the submitted brochure did not describe the reservoir.

Was every sale of the products automatically exempt?

No. The source tied exemption to qualifying function and the applicable sale or furnishing conditions.

Citations and references

• California Sales and Use Tax Regulation 1591(j) and (a) — surgical-opening appliance rule and sale conditions applied in the 1992 supporting opinion
• California Sales and Use Tax Regulation 1591.1(b)(2) — reference shown in the official annotation after its 2005 amendment
• California Revenue and Taxation Code section 6904 — written, specific-ground requirement for the requested refund claim

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/425-0822.pdf

Original ruling text

425.0822

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-6450

April 23, 1992

Ms. F--- A--- S--Director of Operations
H--- S---, Inc.
XXXX --- Lane
---, California, XXXXX
Re:

(SR -- XX-XXXXXX)
Ostomy Supplies and Surgical Fabrics

Dear Ms. S---:
I am writing this in response to your letter to the Legal Division dated March 13, 1992. You are requesting a refund of sales tax on your company’s sales of certain products. You described the products at issue as follows: “Cat#

Description

260:3626 AT
260:3611
260:3626
200:019214

Silicone Flat Drain 10mm
CWT Reservoir 15 cc
Silicone Flat Drain
Cooley Lo-Por Fabric 4x4

“The first three items are used for post operative drainage of an incision site and is subsequently removed. The fabric is used as a patch or reconstructive material that is left permanently in the body….” You also enclosed brochures describing each of the above products.

Ms. F--- A--- S---

-2-

April 23, 1992
425.0822

OPINION
I explained generally the operation of the prescription medicine exemption in my letter to you on different medical items dated November 20, 1991. For the sake of brevity I will not repeat that discussion here. You indicate that the first three listed items are used post-operatively to drain the incision site and are subsequently removed. None of the brochures describe the CWT Reservoir, but we assume that bodily fluids are drained into it. We are thus of the opinion that these items qualify as “appliances and related supplies necessary as a result of any surgical procedure by which an artificial opening is created in the human body for the elimination of natural waste” under Regulation 1591(j), the sales of which are exempt from tax when sold or furnished pursuant to Regulation 1591(a). One of the brochures which you attached to your letter, entitled “Meadox Cardiovascular Fabrics,” describes various knits, felts, meshes, pledgets, and fabrics and indicates that they are used to repair an opening or reinforce a closure in the heart or in blood vessels. They appear to assist and strengthen the heart and blood vessels. Such items when in fact permanently implanted in the human body to assist the function of, the heart and blood vessels qualify as prosthetic devices under Regulation 1591(b)(5) with the result that their sales are exempt from tax when sold or furnished under the conditions set forth in Regulation 1591(a). Regarding filing a claim for refund, Revenue and Taxation Code Section 6904 provides: “Every claim shall be in writing and shall state the specific grounds upon which the claim is grounded.” Claims for refund for tax previously paid on sales of medical devices should be addressed to the Board of Equalization, Attention Audit Review and Refund Unit, P.O. Box 942879, Sacramento, California, 94279-0001. I hope the above discussion has answered your question. If you need anything further, please do not hesitate to write again. Sincerely,

John L. Waid
Tax Counsel
RLW:es