Background: A wide variety of products are sold in supermarkets and health stores that are marketed and sold as dietary supplements, herbal dietary supplements, edible oils or food oils. These products are sold in capsule, granular and liquid form. The products include refined herbal oils, cod liver oil and wheat germ oil. The products are generally described as dietary supplements, herbal dietary supplements, edible oils or food oils, rich in fatty acids or polyunsaturated oils or as sources of different vitamins.
Issue: Are products marketed and labeled as dietary supplements, herbal dietary supplements, and/or edible oils or food oils subject to the sales/use tax?
Directive: Products, whether in capsule, granular or liquid form, labeled and marketed as edible oils or food oils are exempt from the sales tax as food products or food substitutes regardless of whether they contain the terms "dietary supplement" or "herbal dietary supplement" on their labels. Products labeled and marketed only as herbal dietary supplements or dietary supplements are subject to the sales tax as dietary supplements or adjuncts. Vendors should determine the tax status of these products and, accordingly, whether to collect tax.
Discussion of Law:
Massachusetts imposes an excise upon the retail sales of tangible personal property and telecommunications services, unless otherwise exempt. Where applicable, the excise is imposed at the rate of five percent of the sales price of the property or services sold. G.L. c. 64H, §§ 1, 2.
Massachusetts exempts from sales tax the sale of food products for human consumption. "Food products" includes cereals and cereal products, fish and fish products, vegetables and vegetable products, fruit and fruit products, herbs, spices and salt but excludes from the definition of food products "medicines, tonics and preparations in liquid, powdered, granular, tablet, capsule, lozenge and pill form sold as dietary supplements or adjuncts." See G.L. c.64H, § 6(h) and 830 CMR 64H.6.5(4). The Department has included within the definition of exempt food products, food substitutes. See 830 CMR 64H.6.5(4).
While the distinction between "food products" and "dietary supplements" is not precise, the Department has discussed the differences in several letter rulings and has concluded that particular products are food products or food substitutes. For example, the Department ruled food substitutes sold in connection with a weight reduction program are exempt in LR 82‑78, dietary aids are exempt in LR 85‑17 and a high calorie liquid food frequently used for geriatric and cancer patients and labeled as a food is exempt in LR 93‑5. The Department has also ruled that an "instant protein energy bar" is an exempt food product in LR 81‑22. Flaxseed Oil was previously ruled exempt in LR 96-3 as an herb and food substitute. Similar products, when labeled, marketed and sold as edible oils or food oils are food products or food substitutes and are exempt from the sales tax under G.L. c. 64H, § 6(h) and 830 CMR 64H.6.5(4). It does not matter that they additionally contain the terms "dietary supplement" or "herbal dietary supplement" on the labels.
In contrast, the Department has ruled that a supplement made from flower pollen concentrates is a taxable dietary supplement in Letter Ruling 84‑54; vitamin tablets, protein powder and fiber wafers are taxable as dietary supplements in LR 84‑63; and Brewer's Yeast is a taxable dietary supplement in LR 85‑44. Similar products, when labeled and marketed only as herbal dietary supplements or dietary supplements, are subject to the sales tax under G.L. c. 64H, § 6(h) and 830 CMR 64H.6.5(4) as dietary supplements or adjuncts.
/s/Frederick A. Laskey
Frederick A. Laskey
Commissioner of Revenue
July 31, 2000