Is a dietary supplement subject to Kansas sales tax, or is it exempt?

Plain-English summary

A seller asked whether its product — a dietary supplement formulated to help control blood sugar levels — is subject to Kansas retailers' sales tax.

The Department pointed to K.S.A. 79-3606(jjj), which exempts dietary supplements dispensed pursuant to a prescription order. The exemption has two conditions:

1. the product must meet the statutory definition of a "dietary supplement" (broadly, a non-tobacco product intended to supplement the diet, containing a dietary ingredient such as a vitamin, mineral, herb, amino acid, etc.; intended for ingestion in tablet/capsule/powder/softgel/gelcap/liquid form (or, if not for ingestion, not represented as conventional food or a sole meal item); and labeled as a dietary supplement with the "Supplement Facts" box required by 21 C.F.R. § 101.36); and
2. it must be dispensed pursuant to a prescription order by a licensed practitioner or mid-level practitioner (as defined by K.S.A. 65-1626).

Bottom line: if the product both qualifies as a dietary supplement and is dispensed on a prescription order, the sale is exempt from sales and compensating use tax. Otherwise the sale is taxable.

What this means for you

Sellers of dietary supplements

An over-the-counter dietary supplement sold without a prescription is taxable. The exemption applies only when the supplement is dispensed pursuant to a prescription order by a licensed or mid-level practitioner and otherwise meets the statutory definition.

Practitioners and pharmacies dispensing supplements

A qualifying dietary supplement dispensed on a prescription order can be sold exempt from Kansas sales and use tax under K.S.A. 79-3606(jjj).

Common questions

Q: Is a blood-sugar dietary supplement exempt from Kansas sales tax?
A: Only if it meets the statutory definition of a dietary supplement and is dispensed pursuant to a prescription order. Sold without a prescription, it is taxable.

Q: What makes a product a "dietary supplement" for this exemption?
A: Broadly, a non-tobacco product intended to supplement the diet that contains a dietary ingredient (vitamin, mineral, herb, amino acid, etc.), is in an ingestible form, and carries the "Supplement Facts" label required by 21 C.F.R. § 101.36.

Citations and references

• K.S.A. 79-3606(jjj) — exempts all sales of dietary supplements dispensed pursuant to a prescription order by a licensed or mid-level practitioner, and defines "dietary supplement."
• K.S.A. 65-1626 — supplies the definitions of "licensed practitioner" and "mid-level practitioner" referenced by the exemption.
• 21 C.F.R. § 101.36 — the federal "Supplement Facts" labeling requirement incorporated into the statutory definition.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2008-006

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

October 16, 2008

XXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXX

Dear Sirs:

The purpose of this letter is to respond to your request dated September 12, 2008. In it you asked if the sale of your product “XXXXXXX” is subject to Kansas retailers’ sales tax. XXXXXXXXXX is a dietary supplement formulated to help control blood sugar levels.

K.S.A. 79-3606(jjj) exempts from Kansas retailers’ sales tax dietary supplements sold pursuant to a prescription order.

If you your product meets the definition of a dietary supplement and is dispensed pursuant to prescription order, then the sale is exempt for sales or compensating taxes, otherwise the sale would be taxed.

For you convenience I have copied the statute.

K.S.A. 79-3606 (jjj) . . . exempts from sales tax. . . all sales of dietary supplements dispensed pursuant to a prescription order by a licensed practitioner or a mid-level practitioner as defined by K.S.A. 65-1626, and amendments thereto. As used in this subsection, "dietary supplement" means any product, other than tobacco, intended to supplement the diet that: (1) Contains one or more of the following dietary ingredients: A vitamin, a mineral, an herb or other botanical, an amino acid, a dietary substance for use by humans to supplement the diet by increasing the total dietary intake or a concentrate, metabolite, constituent, extract or combination of any such ingredient; (2) is intended for ingestion in tablet, capsule, powder, softgel, gelcap or liquid form, or if not intended for ingestion, in such a form, is not represented as conventional food and is not represented for use as a sole item of a meal or of the diet; and (3) is required to be labeled as a dietary supplement, identifiable by the supplemental facts box found on the label and as required pursuant to 21 C.F.R. § 101.36;

This is a private letter ruling pursuant to K.A.R. 92-19-59, based on the representations you have made. To the extent those representations are incomplete or inaccurate, this ruling is void. This ruling will be revoked by operation of law without further department action if there is a change in the controlling statutes, administrative regulations, revenue rulings or case law that materially effects this determination.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

MDC

Date Composed: 10/17/2008 Date Modified: 10/17/2008

Table 1

Table 2