Are sales of aloe vera leaves subject to NY sales tax?

Plain-English summary

The petitioner buys aloe vera leaves at grocery stores to eat, considering them a nutritious source of proteins, vitamins, minerals, and enzymes. The leaves are cut from the plant before display and sold in the produce section. The question: are they taxable?

The Office of Counsel concluded the leaves are exempt. Aloe vera is commonly used for health-related purposes -- its dried juice is consumed as a laxative, the gel treats burns and cuts, and the FDA references aloe vera as a dietary supplement and has approved it as a natural food flavoring. Because of that common health use, selling aloe vera leaves as described is exempt under Tax Law 1115(a)(3) as the sale of a product consumed for the preservation of health. The regulation (20 NYCRR 528.4(b)(3)) treats "products consumed for the preservation of health" as including substances used internally or externally that aren't ordinarily considered drugs or medicines.

But potted aloe vera plants are different. Sales of potted aloe vera plants are taxable under Tax Law 1105(a) as sales of tangible personal property -- the health-preservation exemption doesn't reach the living plant.

What this means for you

Grocers and health-food sellers

Cut aloe vera leaves sold for consumption ride the 1115(a)(3) health-product exemption -- no tax. A potted aloe plant is ordinary taxable tangible personal property. The line is the product's character (a health item consumed vs. a houseplant), not where in the store it sits.

Shoppers

You shouldn't be charged tax on aloe vera leaves bought to eat or use for health; expect tax on a potted aloe plant.

Common questions

Q: Why are aloe leaves exempt but the plant isn't?
A: The leaves are a product consumed for the preservation of health (1115(a)(3)); a potted plant is just taxable tangible personal property (1105(a)).

Q: Does this make every plant in the produce aisle exempt?
A: No -- the exemption turns on the item being consumed for health, not on its location in the store.

Citations and references

• Tax Law section 1115(a)(3) (exemption for products consumed for preservation of health)
• Tax Law section 1105(a) (sales tax on tangible personal property)
• 20 NYCRR section 528.4(b)(3) (products consumed for preservation of health)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2010.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a10_13s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Counsel
Advisory Opinion Unit

TSB-A-10(13)S
Sales Tax
April 7, 2010

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S100204A

Petitioner, name and address redacted, requested an advisory opinion as to whether sales of aloe vera leaves
are subject to sales tax.
We conclude that sales of aloe vera leaves, as described below, are exempt from sales tax.
Facts
Petitioner purchases aloe vera leaves at grocery stores for consumption. The leaves are cut from the plant
prior to being displayed for sale, and are sold in the produce section of grocery stores. Petitioner eats aloe vera
leaves regularly, and considers them to be a nutritious source of proteins, vitamins, minerals, enzymes, and
polysaccharides.
Analysis
Aloe vera is a type of aloe plant. “Aloe” is defined in Webster’s Collegiate Dictionary as “any of a large
genus of succulent chiefly southern African plants of the lily family with basal leaves and spicate [spiky] flowers.”
The dried juice of aloe vera leaves may be consumed as a laxative. The gel that may be obtained by cutting open
an aloe vera leaf is often used to treat burns or cuts. The Food and Drug Administration (FDA) website contains a
number of references to aloe vera as a dietary supplement. The FDA has approved aloe vera as a natural food
flavoring. See http://nccam.nih.gov/health/aloevera/
In view of the common use of aloe vera leaves for health related purposes, the sale of aloe vera leaves as
described above is exempt from sales tax under Tax Law §1115(a)(3) as the sale of a product consumed for the
preservation of health. (See 20 NYCRR 528.4(b)(3), which states that “[p]roducts consumed by humans for the
preservation of health include other substances used internally or externally, which are not ordinarily considered
drugs or medicines.”)
It should be noted that sales of potted aloe vera plants are not exempt from sales tax. These sales are
subject to tax under Tax Law §1105(a) as sales of tangible personal property.
DATED: April 7, 2010

NOTE:

/S/
Jonathan Pessen
Director of Advisory Opinions
Office of Counsel
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.