Ezel / Tax Rulings / TX
TX 9003L0992D01 Sales and/or Use Tax (State,Local,MTA) 1990-03-06

Were Active 8 Beverage Crystals, Acerola Cherry Drink Mix, and Active 8 Fruit Squeeze exempt Texas food products?

Short answer: No. The products were taxable packaged soft drinks or diluted juices rather than exempt food products. The collection agent had to collect tax from distributors based on the suggested retail selling price.

Apply this to your situation

This page answers the general question as of 1990. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1990
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The company acted as Texas's collection agent for Amway products sold by Texas distributors and collected tax on taxable products based on their suggested retail selling price.

Active 8 Beverage Crystals, Acerola Cherry Drink Mix, and Active 8 Fruit Squeeze were taxable. The Comptroller treated them as carbonated or noncarbonated packaged soft drinks or diluted juices rather than exempt food products under Rule 3.293.

Common questions

Were the three named products exempt food? No.

What price did the collection agent use? The suggested retail selling price.

Source

Original ruling text

March 6, 1990

Dear ****:

In your letter of February 21, you requested information regarding the
taxability of various products that you sell.

You indicate that your company has an agreement with this state to act as the
collection agent on all sales of Amway products sold by Texas distributors.
Therefore, you must collect tax on sales of taxable items to your distributors
based on the suggested retail selling price.

You state that you believe that Active 8 Beverage Crystals, Acerola Cherry
Drink Mix, and Active 8 Fruit Squeeze are exempt from sales tax in Texas. You
enclosed copies of labels from these products.

The Active 8 Beverage Crystals, Acerola Cherry Drink Mix, and Active 8 Fruit
Squeeze are taxable because they aren't "food products" as defined in
subsection (a)(6)(A) of the enclosed Comptroller's Rule 3.293 (Food; Food
Products; Meals; Food Service). Although "food products" are exempt from sales
tax, carbonated and non-carbonated packaged soft drinks and diluted juices are
not "food products" (Rule 3.293[a][6][B][i]).

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions, please contact Tax Correspondence. You may call
toll free 1-800-252-5555, or our regular number is 512/463-4600. My extension
is 3-4662. You may write me at Tax Correspondence, Comptroller of Public
Accounts.

Sincerely,

Bob Jeffcoat
Tax Correspondence

Get today's answer for your situation

You just read a 1990 ruling on this question. Ezel checks current Texas tax law and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.