California Taxation Just Got a Little Less Personal - But Not Less Complicated

Taxation can be a touchy subject, especially when it comes to personal items. Consumers in California currently pay over $20 million each year in taxes on tampons and sanitary napkins alone, which some lawmakers say are necessary health items for women. The state Assembly approved a bill this week that would make these products exempt from sales and use tax in California, arguing that the taxation of such items creates a penalty to women.

The current rules governing state sales and use tax are not intuitive. Non-prescription health items such as disposable gloves, hypodermic needles, and condoms are taxable, while apparently similar items like swabsticks, contraceptive creams, foams, jellies, suppositories, and lubricating jelly are exempt from tax. Other items include both taxable and non-taxable components. For example, diabetic test supplies are exempt if they are glucose test strips and skin puncture lancets. But diabetic supplies such as tablets and tape are taxable. Certain incontinence supplies are similarly taxable, with a subset of related supplies that are exempt from tax.

With such unclear boundaries between taxable and tax-exempt items, it is understandable why groups of consumers could feel that taxation of certain items, such as a personal hygiene item, is an unfair penalty. Retailers are also burdened with the obligation of correctly identifying taxable items so that they may collect tax from the consumers, and report and pay the tax to the Board of Equalization. If a retailer makes an error, he or she may be responsible for the sales tax on the untaxed items, even if the tax was never collected.

The issue is interesting, sometimes confusing, and ever evolving.

To review the Board of Equalization's Sales and Use Tax Annotation 425., Prescription Medicines - Regulation 1591, click here: http://www.boe.ca.gov/lawguides/business/current/btlg/vol2/suta/425-0522.html

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