Section 1503 - Hospitals and Other Medical Service Facilities, Institutions and Homes for the Care of Persons(a) Meals. (1) There are exempt from sales and use tax the sale of meals and food products to and the use of meals and food products by the following institutions when furnished or served to and consumed by their residents or patients:(A) A health facility as defined in section 1250 of the Health and Safety Code, which holds the license required pursuant to section 1253, or is exempt from the license requirement pursuant to subdivision (a) of section 1270, or is operated by the United States.(B) A community care facility as defined in section 1502 of the Health and Safety Code, which holds the license required by section 1508, or is a residential facility selected by a licensee pursuant to section 1506 and exclusively used for the reception and care of persons placed by such licensee, or is exempt from the license requirement pursuant to subdivision (f) of section 1505, or is operated by the United States.(C) A residential care facility for the elderly, as defined in section 1569.2 of the Health and Safety Code, that holds the license required by section 1569.10 of the Health and Safety Code or is exempt from the license requirements pursuant to section 1569.145 of the Health and Safety Code, or is operated by the United States.(D) Any house, retirement home or similar establishment supplying board and room for a flat monthly rate and serving as a principal residence exclusively for persons 62 years of age or older, and any housing that primarily serves older persons and that is financed by state or federal programs. For purposes of this regulation, the term "exclusively" is defined to mean that no more than four persons under 62 years of age are in residence during any calendar quarter.(E) An alcoholism or drug abuse recovery or treatment facility, as defined in section 11834.02 of the Health and Safety Code, which holds the license required by section 11834.30 of the Health and Safety Code.(2) "Meals," for purpose of this subdivision, include any of the following: (A) Carbonated beverages furnished or served as part of the meals.(B) Food provided to the patient or resident by way of enteral feeding, Total Parenteral Nutrition (also called TPN), and Intradialytic Parenteral Nutrition (also called IDPN), as each is defined in Regulation 1591, provided these forms of nutrition are furnished or served to and consumed by a resident or patient of an institution specified in this subdivision (a).(C) Nonreusable items that become components of the meals. These include straws, paper napkins, and plastic eating utensils. These also include bags and tubing, as well as filters, locks, tape, clamps, and connectors which are integral to the tubing, each of which is used to dispense enteral feeding as meals to the patient or resident including: gastrostomy tubes (also called G tubes) which are used to deliver the nutrition directly into the stomach; jejunostomy tubes (also called J tubes) which are used to deliver the nutrition directly into the intestinal tract; and nasogastric tubes (also called NG tubes) which are used to deliver the nutrition directly through the nasal passage to the stomach. Needles, syringes, cannulas, bags, and tubing, as well as filters, locks, tape, clamps, and connectors which are integral to the tubing, used to dispense TPN or IDPN as meals to the patient or resident are also regarded as components of those meals provided each of these items is used primarily to dispense the TPN or IDPN.(b) General.(1) Sales to Medical Service Facilities. "Medical service facilities" for purposes of this subdivision are those institutions specified in subdivision (a) of this regulation as well as surgery centers and similar medical service facilities whether patients are accepted for periods of less than or more than twenty-four hours. For example, dialysis centers, AIDS centers, and cancer centers are medical service facilities. Operative April 1, 2001, except as provided in subdivisions (b)(2) of this regulation, medical service facilities are service providers to their patients and residents, including patients and residents insured pursuant to Part A of the Medicare Act, and are the consumers of tangible personal property furnished in connection with those services, and sales of that tangible personal property to the medical service facilities are taxable retail sales unless specifically exempted.(2) Sales by Medical Service Facilities. When a medical service facility is the retailer of property furnished, tax applies to its charge for that property unless the sale is exempt from tax.(A) A medical service facility is the retailer of property furnished to persons other than residents and patients for a charge.(B) A medical service facility is the retailer of tangible personal property for which it makes a separately itemized charge if the property is furnished to a patient or resident with the intent that the patient or resident remove the property from the premises of the medical service facility for use by the patient or resident. Examples of such items include crutches or a wheelchair provided upon release from the medical service facility and discharge kits for new mothers (which might include formula, diapers, etc.).(C) Prior to January 1, 2019, a medical service facility is the retailer of any property furnished in connection with its medical services if its contract with the medical service facility's resident or patient or other customer specifically provides that title to the subject tangible personal property passes to the resident or patient or other customer. When the contract has a provision passing title to the subject tangible personal property to the resident or patient or other customer, the medical services facility may purchase such property for resale, and tax applies to the charge by the medical services facility unless its sale is otherwise exempt from tax.(D) On and after January 1, 2019, a medical service facility is the retailer of tangible personal property furnished in connection with its medical services, but not furnished to a patient or resident with the intent that the patient or resident remove the property from the premises of the medical service facility for use by the patient or resident as provided in subdivision (b)(2)(B), only if it makes a separately itemized charge for the property, possession of the property passes to the resident or patient, and its contract with the resident or patient specifically provides that title to the property passes to the resident or patient. When a medical service facility sells tangible personal property to the resident or patient, the medical service facility may purchase such property for resale, and tax applies to the charge by the medical service facility unless its sale is otherwise exempt from tax. A medical service facility is the consumer of tangible personal property furnished in connection with its medical services if possession of the property does not pass to the resident or patient. Property the possession of which does not pass to the resident or patient includes, but is not limited to: blades, drill bits, forceps, scissors, and other surgical instruments; electrodes, batteries, strips and other testing supplies and equipment used by the medical service facility employees or other medical personnel; needles, unfilled syringes, and other property used for injections or other internal applications by the medical service facility employees or other medical personnel; gowns, gloves, and other items worn by the medical service facility employees or other medical personnel; surgical drapes, scrub brushes, sponges, and other items used to maintain a sterile environment by the medical service facility employees or other medical personnel; devices, equipment, drapes, covers, labels, and other items that do not come into contact with the body of the resident or patient.
(3) Laboratory Charges. Laboratory charges, such as charges for blood-counts, are not taxable. Tax does not apply with respect to purchases, sales or donations of human whole blood or blood plasma for use in transfusions.Cal. Code Regs. Tit. 18, § 1503
1. Amendment of subsection (a)(3) filed 5-19-72; effective thirtieth day thereafter (Register 72, No. 21). For prior history, see Register 72, No. 9.
2. Amendment of subsection (b)(1) filed 2-26-74; effective thirtieth day thereafter (Register 74, No. 9).
3. Amendment of subsection (a) and new Appendix filed 10-10-74 as an emergency; effective upon filing (Register 74, No. 41).
4. Certificate of Compliance filed 12-26-74 (Register 74, No. 52).
5. Amendment of subsection (b)(2) and Appendix sections 1250, 1502 and 1505 filed 1-19-79; effective thirtieth day thereafter (Register 79, No. 3).
6. Amendment filed 12-6-79; effective thirtieth day thereafter (Register 79, No. 49).
7. Amendment of Appendix filed 12-14-79; effective thirtieth day thereafter (Register 79, No. 49).
8. Repealer of Appendix filed 7-20-81; effective thirtieth day thereafter (Register 81, No. 30).
9. Amendment of subsection (a) filed 7-15-88; operative 8-14-88 (Register 88, No. 30).
10. Amendment of subsections (a)(3) and (b)(2) filed 9-15-89; operative 10-15-89 (Register 89, No. 38).
11. Amendment of subsection (a) and reference citation filed 6-13-90; operative 7-13-90 (Register 90, No. 31).
12. Amendment of subsection (b) and NOTE filed 8-30-91 as an emergency; operative 8-30-91 (Register 91, No. 51). A Certificate of Compliance must be transmitted to OAL by 12-30-91 or emergency language will be repealed by operation of law on the following day.
13. Certificate of Compliance as to 8-30-91 order transmitted to OAL 12-12-91 and filed 1-7-92 (Register 92, No. 11).
14. Amendment of subsection (b)(1) filed 10-4-93; operative 11-3-93 (Register 93, No. 41).
15. Change without regulatory effect adding new subsection (a)(3), subsection renumbering and amendment of newly designated subsection (a)(4) filed 6-20-95 pursuant to section 100, title 1, California Code of Regulations (Register 95, No. 25).
16. Amendment of section heading and section filed 5-2-2001; operative 6-1-2001 (Register 2001, No. 18).
17. Amendment of subsections (a)(1)(C) and (b)(1)-(2), new subsections (b)(2)(A)-(D), amendment of subsection (a)(3) and amendment of NOTE filed 3-17-2021; operative 3-17-2021. Submitted to OAL for filing and printing only pursuant to Government Code section 15570.40(b) (Register 2021, No. 12). Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Sections 33, 6006, 6007, 6015, 6016, 6051, 6359 and 6363.6, Revenue and Taxation Code.
1. Amendment of subsection (a)(3) filed 5-19-72; effective thirtieth day thereafter (Register 72, No. 21). For prior history, see Register 72, No. 9.
2. Amendment of subsection (b)(1) filed 2-26-74; effective thirtieth day thereafter (Register 74, No. 9).
3. Amendment of subsection (a) and new Appendix filed 10-10-74 as an emergency; effective upon filing (Register 74, No. 41).
4. Certificate of Compliance filed 12-26-74 (Register 74, No. 52).
5. Amendment of subsection (b)(2) and Appendix sections 1250, 1502 and 1505 filed 1-19-79; effective thirtieth day thereafter (Register 79, No. 3).
6. Amendment filed 12-6-79; effective thirtieth day thereafter (Register 79, No. 49).
7. Amendment of Appendix filed 12-14-79; effective thirtieth day thereafter (Register 79, No. 49).
8. Repealer of Appendix filed 7-20-81; effective thirtieth day thereafter (Register 81, No. 30).
9. Amendment of subsection (a) filed 7-15-88; operative 8-14-88 (Register 88, No. 30).
10. Amendment of subsections (a)(3) and (b)(2) filed 9-15-89; operative 10-15-89 (Register 89, No. 38).
11. Amendment of subsection (a) and reference citation filed 6-13-90; operative 7-13-90 (Register 90, No. 31).
12. Amendment of subsection (b) and Note filed 8-30-91 as an emergency; operative 8-30-91 (Register 91, No. 51). A Certificate of Compliance must be transmitted to OAL by 12-30-91 or emergency language will be repealed by operation of law on the following day.
13. Certificate of Compliance as to 8-30-91 order transmitted to OAL 12-12-91 and filed 1-7-92 (Register 92, No. 11).
14. Amendment of subsection (b)(1) filed 10-4-93; operative 11-3-93 (Register 93, No. 41).
15. Change without regulatory effect adding new subsection (a)(3), subsection renumbering and amendment of newly designated subsection (a)(4) filed 6-20-95 pursuant to section 100, title 1, California Code of Regulations (Register 95, No. 25).
16. Amendment of section heading and section filed 5-2-2001; operative 6-1-2001 (Register 2001, No. 18).
17. Amendment of subsections (a)(1)(C) and (b)(1)-(2), new subsections (b)(2)(A)-(D), amendment of subsection (a)(3) and amendment of Note filed 3-17-2021; operative 3/17/2021. Submitted to OAL for filing and printing only pursuant to Government Code section 15570.40(b) (Register 2021, No. 12).