Did a blood bank make sales when it transferred blood for consideration, and did it need a seller's permit under the law discussed in 1971?

Plain-English summary

California treated a blood bank's transfer of blood for consideration as a sale of tangible personal property under Revenue and Taxation Code section 6006. Under the exemption then identified as section 33, however, the blood sale was exempt from tax for any purpose.

Because the blood bank sold only property whose retail receipts were not required in the sales-tax measure, the memorandum concluded it was not a statutory “seller” and did not need a seller's permit under sections 6014 and 6066. Anticoagulants integral to the blood received the same treatment.

Health and Safety Code section 1606 called blood distribution a service rather than a sale, but the Board said that provision addressed implied warranties and did not control the Sales and Use Tax Law's definition. The memorandum said an earlier contrary tax annotation would be deleted.

Common questions

Was transferring blood for consideration a sale?

Yes under the sales-tax definition applied in the memorandum.

Why was no tax due?

The sale was exempt under the then-current provision identified in the source as section 33.

How were anticoagulants treated?

As integral parts of the blood in the same exempt class.

Citations and references

• California Revenue and Taxation Code sections 6006, 6014, and 6066
• Former California Revenue and Taxation Code section 33, as identified in the source
• California Health and Safety Code section 1606
• Gottsdanker v. Cutter Laboratories, 182 Cal. App. 2d 602

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/495-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/495-0045.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Los Angeles Dist. – Dist. Prin. Aud. (JTQ)

From:

Assistant Chief Counsel (TPP) - Headquarters

Subject:

Containers Sold to Blood Banks

495.0045

Date:

September 29, 1971

In your letter of August 31, 1971, you raise the question whether blood banks should be regarded as service organizations which are not making sales of blood, with the result that sales of containers to them would be taxable. The blood banks are properly regarded as making “sales” within the meaning of section 6006 of the Revenue and Taxation Code, i.e., they are transferring tangible personal property, blood, for a consideration. The sales, however, are exempt under section 33 of the code, which exempts blood from taxation for any purpose. The blood banks are not required to hold seller’s permits because they are not selling property “of a kind the gross receipts from the retail sale of which are required to be included in the measure of the sales tax” and are therefore not “sellers” within the meaning of section 6014 of the code, or section 6066. The anticoagulants involved in the sales by blood banks are integral parts of the blood and fall in the same class with the blood. The only possible basis that I am aware of for treating the banks as service organizations which are not making sales of blood is section 1606 of the Health and Safety Code. That section provides, in part, that the “distribution” of blood is a service and not a sale. That section, however, should not be regarded as controlling the definition of a “sale” for sales and use tax purposes. The section is not a part of the Revenue and Taxation Code. Moreover, it was indicated in the case of Gottsdanker v. Cutter Laboratories, 182 Cal. App. 2d 602, that the purpose of the section was to bar the application of implied warranties to the furnishing of blood. California Tax Service annotation 355.0220 which indicates that the preceding section 1606 was controlling for sales and use tax purposes, will be deleted.

TPP:kc