Which treatment tubes, procedure trays, and related hospital products did California tax?

Plain-English summary

California taxed Penrose drains and nasogastric tubes unless they were used postoperatively because an artificial opening had been created to eliminate natural waste. It also taxed Cantor intestinal tubes, stomach tubes, feeding tubes, wound clips, heel and elbow protectors, oral screws, and the other temporary tubes described in the letter.

A tracheostomy speaking tube was exempt when used with a qualifying tracheostomy tube. Mixed procedure trays containing taxable and exempt items were taxable at the entire lump-sum price unless the price was allocated between the two categories.

Common questions

Were all drainage tubes taxable?

No. The opinion recognized an exception for qualifying postoperative waste-drainage use through an artificial opening.

Were feeding and stomach tubes exempt?

No. The listed intestinal, stomach, and feeding tubes were taxable.

How were mixed medical trays treated?

The entire lump-sum price was taxable unless the seller allocated the price between taxable and exempt contents.

Citations and references

• The opinion did not cite a numbered statute or regulation; it applied California's medicine rules to the described products and uses.

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/425-0887.pdf

Original ruling text

425.0887

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

916-445-3237

May 2, 1980

Dear X-------------------,
This is in response to your letter of April 17, 1980. You inquiry concerns the correct application of tax to the following products: 1. 2. 3. 4. 5.

Spinal Anesthesia Trays
Epidural Trays
Arthogram Trays
Myelogram Trays
Thoracentesis Trays

According to the information enclosed with your letter, the various trays listed above contain items such as needles, tubes, manometer, syringes, bandages, anesthetic (lidocaine) and catheters. While some of these items are medicines and thus exempt from tax, others are considered to be taxable non-medicines. We have previously determined that when trays containing taxable and nontaxable items are sold for a lump sum price, tax applies to the entire lump sum price of the tray unless the price of the tray is allocated between taxable (items such as syringes, medicine cups, towels, swaps, and bandages) and non-taxable (drugs and exempt containers including drug, bottles, sterilization indicators and disposable trays) items. You have also inquired about the following items: 1.

Penrose Drain – pre-cut tubes used to drain fluids from a wound. – TAXABLE (unless utilized post-surgically as a result of an artificial opening created in the human body for the elimination of natural waste)

2.

Cantor Intestinal Tube – a mercury weighted tube for intestinal intubation – TAXABLE

3.

Stomach Tube – a tube for feeding or washing stomach – TAXABLE

4.

Feeding Tube – a tube for introducing food into stomach – TAXABLE

5.

Naso-gastric Tube – a disposable stomach decompression evacuation tube with an x-ray tip, 2 lumens and a balloon which is inflated and positioned at esophago-gastric junction without tension – TAXABLE (unless utilized pos-surgically as a result of an artificial opening created in the human body for elimination of natural waste)

6.

Surature Wound Clips – TAXABLE

7.

Heel and Elbow Protectors – TAXABLE

8.

Oral Screw – used in conjunction with a mouth gag – TAXABLE

9.

Trach Speaking Tube – helps tracheostomy patient to speak – EXEMPT (when used in conjunction with tracheostomy tube which is necessary as a result of an artificial opening created in the human body for the elimination of natural waste)

We note that whenever tubes are necessary as a result of surgical procedure by which an artificial opening is created in the human body for the elimination of natural waste, tax will not apply to their sale. In determining the correct application of tax to the tubes listed above which are implanted in the human body, we have assumed that none of these tubes are permanently (i.e. for more than six months) implanted but rather are of a temporary nature. If you have further questions concerning these items, please write this office again. Very truly yours,

Mary C. Armstrong
Staff Counsel
MCA:ba