Ezel / Tax Rulings / TX
TX 9605L1409E10 Sales and/or Use Tax (State,Local,MTA) 1996-05-08

Is a Cell Tech 'Super Sun Smoothie' blue-green algae drink mix exempt from Texas sales tax as a food product if it's used as a meal replacement?

Short answer: Yes, in this case. The Comptroller had previously told this seller that the Cell Tech Super 'Sun' Smoothie product was taxable, but after receiving additional information showing the product can be used as a meal replacement, the Comptroller reversed that determination and ruled the product exempt from sales tax as a food product. The letter notes the opinion is based on the facts presented and could change if the facts are different.

Apply this to your situation

This page answers the general question as of 1996. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1996
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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.

Subject

Blue — Green Algae Products/Cell Tech Products

Plain-English summary

This short follow-up letter reverses an earlier taxability call. In an earlier letter (dated December 1, 1995), the Comptroller had told this seller of Cell Tech blue-green algae products that its Super "Sun" Smoothie product was taxable. After the seller supplied additional information showing the product may be used as a meal replacement, the Comptroller changed its answer: the product is exempt from Texas sales tax as a food product.

The letter is brief and fact-specific -- it does not explain the general food-exemption rule in detail, but the reasoning is that once a product functions as a meal replacement, it qualifies for Texas's sales tax exemption for food products. The Comptroller also notes explicitly that this opinion is based on the facts presented and could change if the facts are different.

What this means for you

Sellers of nutritional or algae-based supplement products

If a product you sell could be marketed or used as a meal replacement rather than purely as a supplement, that fact matters for Texas sales tax purposes -- it can move the product from taxable to exempt as food. Documentation of how the product is actually used (e.g., as a smoothie/meal substitute) can support an exemption claim.

Accountants and tax professionals

This letter is a good reminder that taxability determinations on food/supplement borderline products are highly fact-dependent, and taxpayers can and do successfully seek reconsideration by supplying additional facts (here, evidence of meal-replacement use) after an initial adverse ruling.

Common questions

Q: Was the Super "Sun" Smoothie always exempt?
A: No. The Comptroller originally ruled it taxable in a December 1, 1995 letter, then reversed that conclusion in this May 8, 1996 letter after receiving more information about the product's use as a meal replacement.

Q: Does this mean all Cell Tech or blue-green algae products are exempt from Texas sales tax?
A: No. This letter addresses only the Super "Sun" Smoothie product and is expressly based on the specific facts presented; other Cell Tech products are not addressed here.

Q: What made the difference between taxable and exempt?
A: The additional information indicating the product may be used as a meal replacement, which brought it within the sales tax exemption for food products.

Citations and references

No specific statutes or administrative rules are cited in the body of this letter.

Source

Original ruling text

May 8, 1996

Dear ***:

On December 1, 1995, I sent a letter to you regarding the taxability of certain
Cell Tech products you sell.

In that letter I told you that the Super "Sun" Smoothie product was taxable.
I have just received additional information indicating that this product may
be used as a meal replacement. As such, this product is exempt from sales tax
as a food product.

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

If you have any questions, don't hesitate to call one of our tax specialists
at 463-4600. You may also write to Tax Policy Division, Comptroller of
Public Accounts.

Sincerely,

Joan Hale
Tax Policy Division

NOTE: Previous Accession Number 9605197L

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