Are a multilevel marketer's dietary supplement capsules, powders, and bars exempt from New York sales tax, and what about its antiseptic gel and its skin-care lotions?

Plain-English summary

Mannatech is a multilevel marketer of dietary supplements based in Texas, selling roughly two dozen products spanning capsules, bulk powders, tablets, caplets, chewables, gummies, and breakfast bars — items like Ambrotose™, Mannatonin, GlycoLean weight-management products, Manna Bars, and multivitamin blends for children. It asked New York to classify its entire product catalog for sales tax purposes.

New York exempts "food, food products, beverages, dietary foods and health supplements" sold for human consumption, and separately exempts drugs, medicines, and other products consumed for the preservation of health. State regulations define a "dietary food" as one that substitutes for, or supplements, the ordinary diet — including liquid diet products, artificial sweeteners, and vitamins.

The Department sorted the catalog into three groups:

The great majority of the products — the vitamins, supplements, protein bars, meal-replacement shakes, and similar items — scientifically address nutritional support as diet substitutes or supplements, and qualify for the dietary-food/health-supplement exemption. These are exempt whether sold as capsules, powders, tablets, or bars.

An antiseptic gel and a fiber product are treated differently, but reach the same exempt result through a separate exemption: the antiseptic gel treats minor burns, scratches, cuts, and insect bites to prevent infection, and the fiber product improves colon health — both function as medicines or health-preservation products rather than as food, and both are exempt for that reason.

Two skin-care lotions, by contrast, are taxable. Even though they contain some of the same herbal/nutritional ingredients as the exempt products, they're designed to be rubbed on the skin for toning and general skin care — that is, to beautify or alter appearance, not to cure or treat an illness. New York's tax code specifically taxes cosmetics "notwithstanding the presence of medicinal ingredients," so having beneficial ingredients doesn't rescue a genuine cosmetic product from tax.

What this means for you

Dietary supplement and nutraceutical companies

Products genuinely marketed and formulated as diet substitutes or supplements for human consumption — vitamins, protein powders, meal bars, meal-replacement shakes — are generally exempt in New York, regardless of delivery format (capsule, powder, tablet, bar).

Companies selling topical or skin-care products alongside supplements

The line between an exempt health product and a taxable cosmetic turns on function, not ingredients: a product applied to the skin to beautify, tone, or alter appearance is a taxable cosmetic even if it contains vitamins, herbs, or other "healthy" ingredients that would be exempt in a supplement.

Accountants and tax professionals

This opinion is a useful product-by-product template: check whether each item is (1) consumed as food/dietary supplement, (2) a medicine or health-preservation product used to treat/prevent illness, or (3) a cosmetic applied to alter appearance — since (1) and (2) are exempt but (3) is taxable regardless of ingredients.

Common questions

Q: Are all vitamins and supplements automatically exempt from New York sales tax?
A: Products genuinely functioning as dietary substitutes or supplements for human consumption are exempt. The format (capsule, powder, tablet) doesn't matter — the nutritional function does.

Q: Can a lotion or cream ever be exempt if it has medicinal ingredients?
A: Not if its primary function is cosmetic (beautifying, toning, altering appearance) — New York taxes cosmetics regardless of medicinal ingredients they contain. A product intended to cure, treat, or prevent illness (like an antiseptic gel) can be exempt as a medicine even though it's applied externally.

Q: What made the antiseptic gel exempt when the lotions weren't?
A: The gel treats specific medical conditions (burns, cuts, insect bites) to prevent infection — a genuine medicinal function — while the lotions are marketed for skin toning and appearance, a cosmetic function.

Citations and references

Statutes and regulations:

• Tax Law § 1105(a) (retail sales tax)
• Tax Law § 1115(a)(1) (food, dietary foods, and health supplements exemption); § 1115(a)(3) (drugs, medicines, and health-preservation products exemption; cosmetics excluded)
• 20 NYCRR § 528.2(c) (dietary foods and health supplements); § 528.4 (drugs, medicines, and cosmetics)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2002.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a02_36s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-02(36)S
Sales Tax
July 25, 2002

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S011002A

On October 2, 2001, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Mannatech Incorporated, 600 S. Royal Lane, Suite 200, Coppell, Texas
75019.
The issue raised by Petitioner, Mannatech Incorporated, is whether, various products which
they produce are subject to New York State sales and use tax.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner is a multilevel marketer of dietary supplements based in Coppell,Texas.
Petitioner’s products are designed to use nutrients working through normal physiology to maintain
optimal health through improved nutrition.
Petitioner markets dietary supplements that scientifically address nutritional support from
two distinct approaches. The first is the need for a general diet plan that addresses an individual’s
need for recommended amounts of proteins, fats, and carbohydrates, and the appropriate
supplements to support those genetic requirements. This is accomplished through Petitioner’s
proprietary program of Metabolic Profiling. The second approach centers around plant-synthesized
molecules that are not found in our diets, but have been shown to have dynamic impact on our
ability to achieve optimal health. Petitioner has provided descriptions of the specific products in
question including the benefits of the products. Petitioner’s specific products in question are briefly
described as follows:
A.
B.
C.
D.
E.
F.
G.
H.
I.

Ambrotose™ - Dietary supplement in capsule form.
Ambrotose™ Powder - Dietary supplement in bulk powdered form designed to be mixed
with juice or water before human consumption.
AmbroStart - Dietary supplement with Ambrotose™ complex in bulk powdered form to
be mixed with water or juice before human consumption.
Ambrotose™ with Lecithin - Blend of Ambrotose™ complex and soy lecithin in capsule
form, a dietary supplement of monosaccharides.
Mannatonin - Dietary supplement with melatonin in tablet form.
PLUS - Dietary supplement combination of dioscorea, Ambrotose™, and beta sitosterol in
caplet form.
MVP - Dietary supplement, same combination found in PLUS caplets with a blend of herbs.
Profile 1 - Dietary supplement in tablet form.
Profile 2 - Dietary supplement in tablet form.

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TSB-A-02(36)S
Sales Tax
July 25, 2002

J.
K.
L.
M.
N.
O.
P.
Q.
R.
S.
T.
U.

V.
W.
X.
Y.
Z.
AA.
BB.
CC.
DD.
EE.

Profile 3 - Dietary supplement in tablet form.
GlycoBears - Chewable childrens multivitamin.
EM -PACT™ Powder - Bulk powder designed to be mixed with water to form a nutritious
drink that supports athletic performance during a workout.
SPORT - Dietary supplement in capsule form.
Manna Cleanse™ - Dietary supplement in caplet form.
Manna-C - Dietary supplement with Ambrotose™ complex.
Phyt-Aloe® - Dietary supplement in capsule form.
Phyt-Aloe® Powder - Dietary supplement in bulk form.
Phyto-Bears® - Dietary supplement in gummi-bear form.
Optimal Health Pack - Packets of three dietary supplements(Ambrotose™, Phyt-Aloe®,
and PLUS) in caplet form.
ImmunoStart - Dietary supplement in chewable tablet form.
Emprizone Antiseptic Gel - An antiseptic hydrogel for treatments of minor burns,
scratches, cuts, insect bites, and other minor skin conditions to help prevent against
infection.
FIRM Lotion - Transdermal formula with other herbal body-toning ingredients.
Ambroderm Lotion - Natural skin care product.
GlycoLean Accelerator - Blend of thermogenic (fat burning) agents along with special
nutrients for increased energy.
GlycoLean Manager - Blend of Thermogenic (fat burning) agents with nutrients for energy.
GlycoLean Catalyst - Multiple vitamin optimized specifically for fat loss.
GylcoLean FiberFull - Fiber product to improve colon health.
GlycoSlim Drink Mix (Chocolate)- A meal replacement shake.
GlycoSlim Drink Mix (Vanilla) - A meal replacement shake.
Manna Bar Protein Formula - Dietary supplement in breakfast bar form.
Manna Bar Vanilla Yogurt Coated Apple Crunch - Dietary supplement in breakfast bar
form.

Applicable Law and Regulations
Section 1105(a) of the Tax Law imposes a tax on “[t]he receipts from every retail sale of
tangible personal property, except as otherwise provided in this article.”
Section 1115(a) of the Tax Law provides, in part:
Receipts from the following shall be exempt from the tax on retail sales
imposed under subdivision (a) of section eleven hundred five and the compensating
use tax imposed under section eleven hundred ten:
(1) Food, food products, beverages, dietary foods and health supplements,
sold for human consumption . . . whether or not the item is sold in liquid form. . . .

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TSB-A-02(36)S
Sales Tax
July 25, 2002

*

*

*

(3) Drugs and medicines intended for use, internally or externally, in the cure,
mitigation, treatment or prevention of illnesses or diseases in human beings, medical
equipment (including component parts thereof) and supplies required for such use
or to correct or alleviate physical incapacity, and products consumed by humans for
the preservation of health but not including cosmetics or toilet articles
notwithstanding the presence of medicinal ingredients therein . . . .
Section 528.2(c) of the Sales and Use Tax Regulations provides:
Dietary foods and health supplements. (1) A dietary food is a food for a
special dietary use for humans and which bears on the label a statement of the dietary
properties upon which its use is based in whole or in part.
(2) Products which are intended to substitute for the ordinary diet, or
supplement the ordinary diet, or substitute for natural foods are exempt, when sold
for human consumption. Among these are liquid diet products, artificial sweeteners
and vitamins.
Section 528.4 of the Sales and Use Tax Regulations provides, in part:
(a) Exemption. (1) Drugs and medicines intended for the use, internally or
externally in the cure, mitigation, treatment or prevention of illnesses or diseases in
human beings, medical equipment (including component parts thereof) and supplies
required for such use or to correct or alleviate physical incapacity, and products
consumed by humans for the preservation of health are exempt.
*

*

*

(b)(3) Products consumed by humans for the preservation of health include
other substances used internally or externally, which are not ordinarily considered
drugs or medicines.
Example 1:

*

Analgesics, antiseptics, antacids, cough and cold
remedies, laxatives, aspirin, boric acid ointment, cod
liver oil and castor oil are exempt.
*

*

(c) Cosmetics. Articles intended to be rubbed, poured, sprinkled or sprayed
on, introduced into, or otherwise applied to the human body for cleansing,

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TSB-A-02(36)S
Sales Tax
July 25, 2002

beautifying, promoting attractiveness, or altering the appearance, and articles
intended for use as a component of any such articles are subject to tax.
Opinion
Petitioner’s products designated in the facts above as A-T, X-Z, and BB-EE as described are
products which scientifically address nutritional support as a substitute for the ordinary diet,
supplement the ordinary diet, or substitute for natural foods and are exempt, when sold for human
consumption. See Section 528.2(c) of the Sales and Use Tax Regulations. Accordingly, as provided
in Section 1115(a)(1) of the Tax Law, the sale of these products for human consumption are exempt
from State and local sales and use taxes.
The product designated as U, Emprizone Antiseptic Gel is described as an antiseptic for the
treatment of minor burns, scratches, cuts, insect bites, and other minor skin conditions to help
prevent against infection. The product designated as AA, GlycoLean FiberFull is described as a
fiber product that improves colon health and improves elimination. Emprizone Antiseptic Gel
and GlycoLean FiberFull are considered to be exempt medicines intended for use, internally or
externally, in the cure, mitigation, treatment or prevention of illnesses or products consumed by
humans for the preservation of health as provided for in Section 1115(a)(3) of the Tax Law.
Therefore, the sale of Emprizone Antiseptic Gel and GlycoLean FiberFull are exempt from State
and local sales and use taxes.
The products designated above as V and W, FIRM Lotion and Ambroderm Lotion, are
products which are intended to be rubbed, poured, sprinkled or sprayed on the human body for
beautifying, promoting attractiveness, or altering appearance and are deemed to be cosmetics as
defined in Section 528.4(c) of the Sales and Use Tax Regulations. Under Section 1115(a)(3),
cosmetics are subject to sales and use tax notwithstanding the presence of medicinal ingredients
in such cosmetics. Accordingly, the sale of FIRM Lotion and Ambroderm Lotion are subject to
State and local sales and use taxes.

DATED: July 25, 2002

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.