Are herbal dietary supplements taken for weight loss or other medicinal purposes treated as exempt "drugs or medicines" for Texas sales tax, independent of how they're classified under federal dietary supplement law?

Plain-English summary

This is a follow-up letter answering a taxpayer's fax that pressed further on the newly effective (April 1, 2000) Texas sales tax exemption for over-the-counter drugs and medicines. The Comptroller reaffirmed and clarified the position from an earlier letter to the same taxpayer:

• Over-the-counter drugs and medicines, vitamins and minerals, and nutritional supplements are exempt from Texas sales tax.
• Herbal dietary supplements taken for weight loss or for other medicinal purposes are exempt.
• For state and local sales and use tax purposes, these items are treated as "drugs or medicines" — and this tax classification is independent of how the same products are separately regulated under the federal Dietary Supplement Health and Education Act. In other words, federal dietary-supplement labeling/regulatory status doesn't control the Texas sales tax exemption question.
• Qualifying items do not require an NDC (National Drug Code) number to be exempt.

STAR's published version of this letter carries an added editorial alert not part of the original 2000 letter: effective September 1, 2007, under HB 3319, over-the-counter sales are required to have a drug fact panel to qualify for the exemption — a later statutory requirement layered on top of the rule stated in this letter.

What this means for you

Retailers of herbal and nutritional supplements

As of this letter's issuance (April 2000), herbal dietary supplements marketed for weight loss or other medicinal use qualify as exempt "drugs or medicines" for Texas sales tax, with no NDC number needed and independent of federal dietary-supplement classification. But be aware of the later 2007 drug-fact-panel requirement (HB 3319) flagged on the published letter — confirm current product labeling meets that requirement before relying on this 2000-era guidance for present-day sales.

Accountants and tax professionals

This letter is useful for the general principle that Texas sales tax classification of a product as a "drug or medicine" doesn't depend on its federal regulatory status under dietary supplement law — but always check the STAR alert banner for later statutory changes (like the 2007 drug-fact-panel requirement) before applying an older letter's holding to a current transaction.

Common questions

Q: Are herbal weight-loss supplements exempt from Texas sales tax?
A: Yes, as "drugs or medicines" under the April 1, 2000 exemption, independent of their classification under federal dietary supplement law.

Q: Do these supplements need an NDC number to qualify?
A: No.

Q: Has anything changed since this 2000 letter?
A: Yes — per an editorial alert on the published letter, effective September 1, 2007 (HB 3319), over-the-counter sales are required to have a drug fact panel to qualify for the exemption.

Q: Can I rely on this letter for my own products today?
A: No. This opinion is based on the facts presented as of April 2000; additional or different facts, and later law changes like the 2007 drug-fact-panel requirement, may yield different results.

Citations and references

No Texas Tax Code section or administrative rule is cited by number in the original 2000 letter. The published version carries a later editorial reference to HB 3319 (effective 9/1/2007, drug fact panel requirement).

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200004202L

Original ruling text

ALERT: Over the Counter (OTC) sales are now required to have a drug fact panel to qualify for exemption effective 09/01/2007-HB 3319.

April 14, 2000

Dear **:

Thank you for your follow-up fax regarding Texas sales tax exemptions on
over-the-counter drugs and medicines effective April 1, 2000.

As stated in my previous letter, over-the-counter drugs and medicines, vitamins
and minerals, and nutritional supplements are exempt from Texas sales tax.
Herbal dietary supplements taken for weight loss or for other medicinal
purposes are exempt. For the administration of state and local sales and use
taxes, the above items are considered "drugs or medicines." This
interpretation is independent of how such products are regulated pursuant to
the Dietary Supplement Health and Education Act.

Qualifying items do not require an NDC number to be exempt from Texas sales
tax.

This opinion is based on the facts presented. Additional or different facts
may yield different results.

You may call me toll free 1-800-531-5441, extension 5-9787, if you have any
questions or need more information. The direct line is 512/305-9787. You may
also write to Tax Policy Division, Comptroller of Public Accounts.

Sincerely,

Philip Knisely
Tax Policy Division