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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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F
245.0000 Food Products—Regulation 1602
Annotation 245.0724
(a) In General
245.0724 Medicinal Claims. The Sales and Use Tax Law provides an exemption from sales and use taxes for sales of food products for human consumption under certain circumstances. "Food products" do not include medicines and preparations in liquid, powdered, granular, tablet, capsule, lozenge, and pill form sold as dietary supplement or adjuncts. A product is either a food, medicine, or a supplement or adjunct; these classifications are mutually exclusive. For purposes of this exemption, "medicine" has the same meaning as defined in Regulation 1591. A product that does not meet the definition of a medicine in Regulation 1591 is not a medicine for purposes of this exemption Regulation 1602. A product cannot be classified as a medicine solely on the basis of medicinal claims on the product's label or in its brochures.
Except where taxable for all uses as provided in subdivision (c) of Regulation 1591, when determining if a product is a medicine, it must first be determined if the product is approved for use by the U.S. Food and Drug Administration to diagnose, cure, mitigate, treat or prevent any disease, illness or medical condition. If a product is so approved, it is a medicine under Regulation 1591, subdivision (a)(9)(A) and is not a food product.
To determine whether a product qualifies as a medicine under Regulation 1591, subdivision (a)(9)(B), we look to whether it is "commonly recognized" as a substance or preparation for use in the mitigation, treatment, or prevention of disease. "Commonly recognized" as a medicine means general acceptance indicated by either: (1) the greater weight of opinion in the medical community, as reflected, for example, by refereed medical journals or similarly authoritative scientific publications or pronouncements from authoritative regulatory institutions; or (2) constitutional, statutory, or controlling case law authorities establishing that the substance or preparation in question is a medicine as a matter of law. (11/17/08).