My distributors told me nutritional supplements are no longer taxable in Texas — is that correct?

Plain-English summary

A company whose distributors told it that nutritional supplements had become nontaxable in Texas asked the Comptroller to confirm this was accurate. The Comptroller confirmed: yes, the distributors were correct. Effective April 1, 2000, sales of over-the-counter drugs and medicines are exempt from Texas sales tax. A qualifying product must be a "drug or medicine" — an article or substance intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease or suffering.

Retailers, including direct sales organizations, are no longer required to collect sales tax on sales of vitamins, minerals, and dietary food supplements. As a specific example, the letter notes that herbal dietary supplements taken for weight loss or other medicinal purposes are exempt. The Comptroller pointed the taxpayer to a published bulletin and FAQ on the state's Window on State Government website for further detail.

What this means for you

Direct sales organizations and their distributors

If your distributor network is asking whether nutritional supplements are taxable, this letter confirms they aren't — as of April 1, 2000, vitamins, minerals, and dietary food supplements qualify as exempt over-the-counter drugs and medicines, and you don't need to collect sales tax on them.

Retailers of supplements generally

The same rule applies broadly, not just to direct sales companies: any retailer selling qualifying vitamins/minerals/supplements no longer needs to collect sales tax on them as of the April 1, 2000 effective date.

Accountants and tax professionals

A short, confirmatory letter useful mainly as a quick citation that the April 2000 OTC/dietary-supplement exemption applies across the retail channel, including direct sales/MLM distribution models — not a novel legal point beyond what's covered in the Comptroller's published bulletin and FAQ on the exemption.

Common questions

Q: Are nutritional supplements taxable in Texas?
A: No, as of April 1, 2000, sales of over-the-counter drugs and medicines — including vitamins, minerals, and dietary food supplements — are exempt.

Q: Does this apply to direct sales/MLM companies too?
A: Yes. Retailers, including direct sales organizations, are no longer required to collect sales tax on these items.

Q: Where can I find more detail on this exemption?
A: The Comptroller pointed to a bulletin and FAQ available on the Window on State Government website (www.window.state.tx.us) as of this letter's issuance.

Q: Can I rely on this letter for my own business?
A: No. This opinion is based on the facts submitted, and other facts, though similar, may yield different results.

Citations and references

No Texas Tax Code section or administrative rule is cited by number in the original letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200004189L

Original ruling text

April 12, 2000

To: **

Subject: Tax on Nutritional Supplements

Dear **:

Thank you for your e-mail concerning the exemption of over-the-counter drugs
and medicines.

Your distributors are correct that nutritional supplements are no longer
taxable in Texas. Effective April 1, 2000, sales of over-the-counter drugs and
medicines are exempt. To qualify for this exemption, a product must be a drug
or medicine, which is an article or substance intended for use in the
diagnosis, cure, mitigation, treatment, or prevention of disease or suffering.

Retailers (including direct sales organizations such as COMPANY A) are no
longer required to collect sales tax on sales of vitamins, minerals, and
dietary food supplements. As an example, herbal dietary supplements taken for
weight loss or for other medicinal purposes are exempt. We have a bulletin
(click on Texas Taxes and then on Tax Publications) and a FAQ (click on The
Sales Tax underneath the Quick Links) explaining the exemption of
over-the-counter drugs and medicines. Both are available on the Window on
State Government web site at www.window.state.tx.us.

This opinion is based on the facts you submitted. Other facts, though similar,
may yield different results.

I hope this information helps. You may call me toll free at 1-800-531-5441,
ext. 5-0030. The direct line is 512/475-0030. You may also write to Tax
Policy, Comptroller of Public Accounts.

Sincerely,

David Somerville
Tax Policy Division