Tax Type
Retail Sales and Use Tax
Description
Nutraceutical products do not qualify for the retail sales and use tax exemption
Topic
Exemptions
Medicine and Drugs
Date Issued
12-08-2006
December 8, 2006
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****:
This will reply to your letter in which you request a ruling on the application of the retail sales and use tax to the sale of nutraceuticals by ***** (the "Taxpayer").
FACTS
The Taxpayer is a pharmacist and doctor of naturopathic medicine with a private practice in Virginia. The Taxpayer sells nutraceuticals to her clients. No walk-in retail sales occur at the Taxpayer's location. The nutraceuticals are not available to the general public by any means other than through a qualified health care practitioner. You request a ruling on the application of the retail sales and use tax to the sale of nutraceuticals.
RULING
Virginia Code § 58.1-609.10 14 provides an exemption from sales and use tax for nonprescription drugs and proprietary medicines. Virginia Tax Bulletin 98-4 (5/15/98) defines nonprescription drugs as any substances or mixtures of substances containing medicines or drugs for which no prescription is required and which are generally sold for internal or topical use in the cure, mitigation, treatment, or prevention of disease in human beings. In addition, Virginia Tax Bulletin 98-4 states that the exemption in Va. Code § 58.1-609.10 14 does not apply to food products and supplements, or vitamins and mineral concentrates sold as dietary supplements. These products are exempt only when sold pursuant to a written prescription by a licensed physician.
Under the U.S. Food and Drug Administration's guidelines, vitamins, minerals and nutritional items are generally classified as food or dietary supplements. As noted above, the exemption outlined in Va. Code § 58.1-609.10 14 does not apply to food products and supplements, or vitamins and mineral concentrates sold as dietary supplements. Based on the information provided, the nutraceutical products sold by the Taxpayer do not qualify for the retail sales and use tax exemption in Va. Code § 58.1-609.10 14 because they are food products and contain no medicines or drugs.
Depending on the nature of the nutraceutical, it may qualify for the reduced state sales tax rate on food for home consumption. See Va. Code § 58.1-611.1 and Tax Bulletin 99-11 (10/1/99). If a nutraceutical is represented as a conventional food or as the sole item of meal or diet, it may qualify for the reduced sales tax rate. On the other hand if the nutraceutical is a dietary supplement, it does not qualify as a food for home consumption and is taxable at the full sales tax rate of 5.0% (4.0% state and 1.0% local). You have not provided sufficient information to determine if the reduced sales tax rate applies to the specific products sold by the Taxpayer.
This response is based on the facts presented in your letter as summarized above. Any change in the facts or the introduction of new facts may lead to a different result.
The Code of Virginia sections and Tax Bulletins cited, along with other reference documents, are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions about this response, you may contact ***** in the Department's Office of Policy and Administration, Appeals and Rulings, at *****.
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- Sincerely,
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- Janie E. Bowen
Tax Commissioner
- Janie E. Bowen
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AR/1-948504499.i
Rulings of the Tax Commissioner