Sales Tax Articles
Sales Tax State Activity Update - April 2007
Progesterone Cream: No Cure â€" No Exemption â€" No Exception
The New York State Department of Taxation and Finance has issued an Advisory Opinion to address the taxability of progesterone skin creams. These products are intended to supplement the circulating levels of progesterone in women in an attempt to curb a range of distressing experiences. The claims made by these products have not been evaluated by the Food and Drug Administration. Also, the manufacturer states that these products are not intended to diagnose, treat, cure or prevent disease.
Section 1115(a)(3) of the Tax Law provides an exemption for drugs and medicines for use, internally or externally, in the cure, mitigation, treatment or prevention of illnesses or diseases in human beings; medical equipment and supplies to be used for such purposes or to correct or alleviate physical incapacity; and products consumed by humans for the preservation of health. However, it is specifically noted that cosmetics and toilet articles, regardless of medicinal ingredients, are not eligible for this exemption.
Section 528.4(b)(2) of the Sales Tax Regulations define medicines as articles, whether or not a prescription is required for purchase, which are recognized as drugs or medicines in the United States Pharmacopeia, Homeopathic Pharmacopeia of the United States, or National Formulary, and intended for use in the diagnosis, cure, mitigation, treatment or prevention of disease in humans; or articles (other than food) intended to affect the structure or any function of the human body. In this same Regulation, cosmetics are defined as articles intended to be rubbed, poured, sprinkled or sprayed on, introduced into, or otherwise applied to the human body for cleansing, beautifying, promoting attractiveness, or altering the appearance.
Although containing progesterone, the products at issue do not claim to be a drug or medicine intended diagnose, treat, cure or prevent disease or illness. In fact, the manufacturer's own statement grants that the opposite is true. "These products are not intended to diagnose, treat, cure or prevent disease." Therefore, these products do not qualify for the exemption outlined in Section 1115(a)(3) of the Tax Law.
The full text may be accessed on the New York State Department of Taxation and Finance website. (PDF)
(New York State Department of Taxation and Finance, TSB-A-07(7)S, 3/16/2007)
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