Is glass-bottled spring water sold under a physician's prescription exempt from New York sales tax as a drug, medicine, or health-preservation product?

Plain-English summary

New York's Tax Department ruled that a water bottler's glass-bottled spring water is still taxable, even when a customer buys it because a physician prescribed it. The petitioner, Mountain Valley Water Company of WNY Inc., sold pricier glass-bottled spring water to chemically sensitive customers who wanted to avoid chemicals present in plastic bottles. A licensed environmental-medicine physician had written that such patients "must drink glass bottled spring water" to stay symptom-free.

New York generally taxes bottled water no matter what it's bottled in — the regulations say plainly that "water sold in bottles or by any means other than through mains or pipes is taxable." Only water delivered through mains or pipes escapes tax. Separately, the Tax Law exempts drugs, medicines, and products "consumed by humans for the preservation of health" in the same way a drug or medicine is. The Department held that spring water doesn't qualify: it isn't a drug or medicine used to cure or treat illness, and even bottled water prescribed for a documented medical reason isn't consumed for the "preservation of health" in the sense the exemption means. A prior 2002 opinion, Jandi's Nature Way, Inc., had already reached the same conclusion for a similar bottled-water product.

What this means for you

Bottled water sellers and beverage retailers

A physician's letter or prescription for your bottled water product does not make it tax-exempt. New York's bottled-water exemption is narrow (only water piped directly to the consumer, such as municipal tap water), and the drugs/medicines exemption doesn't stretch to cover ordinary consumables just because a doctor recommends them for a health condition.

Health-food, wellness, and specialty retailers

This is a useful cautionary example: even a strong, specific medical justification (chemical sensitivity, detox, symptom relief) doesn't automatically qualify a product for the drugs-and-medicines exemption. The exemption is reserved for products that function like a drug or medicine in curing, mitigating, treating, or preventing illness — not general wellness consumables recommended by a doctor.

Accountants and tax professionals

The Department's reasoning tracked two clean rules: (1) 20 NYCRR 528.3(b) taxes all bottled water regardless of container material, and (2) the § 1115(a)(3) exemption requires the product itself to function as a drug/medicine or a health-preservation product comparable to one — a prescription alone doesn't satisfy that test. Expect the same analysis to apply to other "prescribed" consumer products that aren't inherently medicinal.

Common questions

Q: Does a doctor's prescription make a product tax-exempt in New York?
A: Not by itself. The product still has to independently qualify as a drug, medicine, or product consumed for the preservation of health in the way a drug or medicine is. A prescription for an otherwise ordinary consumable, like bottled water, doesn't convert it into exempt medicine.

Q: Is any bottled water exempt from New York sales tax?
A: Generally no. Water delivered to consumers through mains or pipes is exempt, but water sold in bottles — glass, plastic, or otherwise — is taxable under 20 NYCRR 528.3(b).

Q: Can I rely on this ruling for my own bottled-water or wellness product?
A: Not directly. This Advisory Opinion binds the Department only as to Mountain Valley Water Company and the facts it presented. It's useful as an illustration of how the Department applies the drugs/medicines exemption, but your product's own facts control your own tax treatment.

Citations and references

Statutes and regulations:

• Tax Law § 1105(a) (imposition of sales tax on retail sales)
• Tax Law § 1115(a)(3) (drugs, medicines, and health-preservation products exemption)
• 20 NYCRR 528.3(b) (bottled water is taxable)
• 20 NYCRR 528.4 (drugs and medicines exemption)

Prior opinions cited:

• Jandi's Nature Way, Inc., Adv Op Comm T&F, July 11, 2002, TSB-A-02(25)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2008.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a08_4s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-08(4)S
Sales Tax
January 8, 2008

Office of Tax Policy Analysis
Taxpayer Guidance Division
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S070719A

On July 19, 2007, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Mountain Valley Water Company of WNY Inc., PO Box 95, 333
Delaware Avenue, Tonawanda, NY 14151.
The issue raised by Petitioner, Mountain Valley Water Company of WNY Inc., is
whether the sale of glass-bottled spring water purchased under a physician’s prescription is
exempt from sales tax under section 1115(a)(3) of the Tax Law.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner’s customers purchase glass-bottled water under a physician’s prescription to
avoid contact with chemicals that are present in plastic-bottled water. Petitioner’s glass-bottled
water is much more expensive than water bottled in plastic. Chemically sensitive people need
glass-bottled water to assist in the mitigation, treatment, or prevention of illness and may receive
prescriptions from their physicians for such glass-bottled water.
Petitioner provided a statement from a licensed physician practicing environmental
medicine that reads, in part, as follows:
I have a strong opinion that any and all chemically sensitive patients must drink glass
bottled spring water to remain symptom free and reduce their total toxic load in the body.
. . . These patients have suppressed immune and detoxification systems. . . . Avoidance
is the treatment of choice for these patients. It is a commonly accepted practice to avoid
chemicals from air, food and water. Special types of air purifiers are used by these
patients as well as use of organic food and glass bottled spring water. . . .Very often when
the patient practices these recommendations and modifies their environment they feel
better.
Applicable law and regulations
Section 1105(a) of the Tax Law imposes a tax on AThe receipts from every retail sale of
tangible personal property, except as otherwise provided in this article.@
Section 1115(a) of the Tax Law provides, in part:
Receipts from the following shall be exempt from the tax on retail sales imposed
under subdivision (a) of section eleven hundred five and the compensating use tax
imposed under section eleven hundred ten:

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TSB-A-08(4)S
Sales Tax
January 8, 2008

*

*

*

(2) Water, when delivered to the consumer through mains or pipes.
(3) Drugs and medicines intended for use, internally or externally, in the cure,
mitigation, treatment or prevention of illnesses or diseases in human beings, medical
equipment (including component parts thereof) and supplies required for such use or to
correct or alleviate physical incapacity, and products consumed by humans for the
preservation of health but not including cosmetics or toilet articles notwithstanding the
presence of medicinal ingredients therein . . . .
Section 528.3(b) of the Sales and Use Tax Regulations provides:
Water sold in bottles or by any means other than through mains or pipes is
taxable.
Section 528.4 of the Sales and Use Tax Regulations provides, in part:
(a) Exemption. (1) Drugs and medicines intended for the use, internally or
externally in the cure, mitigation, treatment or prevention of illnesses or diseases in
human beings, medical equipment (including component parts thereof) and supplies
required for such use or to correct or alleviate physical incapacity, and products
consumed by humans for the preservation of health are exempt.
Opinion
Petitioner sells spring water bottled in glass as well as plastic. Some of the spring water
bottled in glass is sold to customers pursuant to prescriptions from their physicians. Petitioner
states that physicians prescribe spring water bottled in glass containers for patients who need to
avoid contact with chemicals that are present in water bottled in plastic containers.
Water sold in bottles or by any means other than through mains or pipes is taxable under
section 1105(a) of the Tax Law. See section 528.3(b) of the Sales and Use Tax Regulations.
Section 1115(a)(3) of the Tax Law provides an exemption from the sales tax imposed by section
1105(a) of the Tax Law for purchases of drugs and medicines intended for use, internally or
externally, in the cure, mitigation, treatment, or prevention of illnesses or diseases in human
beings and products consumed by humans for the preservation of health. Spring water is
generally not considered to be a drug or medicine used and consumed in the treatment of illness
or disease. Further, spring water is not considered to be consumed for the preservation of health
in a manner similar to drugs or other medicines. Therefore, Petitioner’s receipts from the sale of
bottled spring water, whether sold in glass, plastic, or other containers, are not exempt under

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TSB-A-08(4)S
Sales Tax
January 8, 2008

section 1115(a)(3) of the Tax Law. See Jandi’s Nature Way, Inc., Adv Op Comm T&F, July 11,
2002, TSB-A-02(25)S.

DATED: January 8, 2008

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Taxpayer Guidance Division

An Advisory Opinion is issued at the request of a person or entity. It is
limited to the facts set forth therein and is binding on the Department only
with respect to the person or entity to whom it is issued and only if the
person or entity fully and accurately describes all relevant facts. An
Advisory Opinion is based on the law, regulations, and Department
policies in effect as of the date the Opinion is issued or for the specific
time period at issue in the Opinion.