Which fruit-juice and bottled-water products did Texas treat as exempt, and when did dilution or flavoring make them taxable?

Plain-English summary

One-hundred-percent fruit juice was exempt even when calcium-fortified. Juice labeled “from concentrate” also remained exempt when water was added only to restore the juice to its original single strength.

Juice diluted beyond single strength was taxable. Labels such as “juice drink” or “diluted juice beverage” indicated a taxable diluted product.

The unflavored water product described in the letter was exempt as water. A flavored version, including lemon or natural berry, was treated as a taxable carbonated soft drink.

Common questions

Did calcium fortification make 100% juice taxable? No.

Was juice from concentrate taxable? Not when restored only to original single strength.

Was diluted juice taxable? Yes.

Was flavored water taxable? Yes, under the stated treatment as a carbonated soft drink.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9008L1039A07

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

BOB BULLOCK
Comptroller

August 24, 1990

Dear ****:

Thank you for your letter concerning the taxability of * and
****. Your letter has been referred to my attention for a written
response.

Sales tax is not due on the sale of 100 percent fruit juice even
though it is calcium fortified. If the label indicates "from con-
centrate" it means the juice has been restored to original single-
strength condition by adding back the water it originally contained.
A juice that is marketed in this manner is still considered 100
percent pure juice.

A juice with water added or a reconstituted juice that is diluted
with water beyond single-strength is a diluted juice. Sometimes a
label may read "juice drink" or "diluted juice beverage"; this in-
dicates it is a diluted juice and is taxable.

* is exempt from sales tax because it is considered water.
However, ** water that has been flavored, such as lemon or
natural berry, is considered a carbonated soft drink and is taxable.

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

If you have any questions, please contact Tax Correspondence or you
may write to me at the above address. You may call toll free
1-800-252-5555, or our regular number is 512/463-4600. My extension
is 3-4278.

Sincerely,
Onofre Guerra
Tax Correspondence