Are non-dairy milk-substitute drinks (soy and rice beverages) taxable or exempt under Texas sales tax?
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This page answers the general question as of 1995. Ezel answers yours, under current Texas tax law, with citations.
Plain-English summary
A taxpayer wrote to the Comptroller's Tax Policy Division asking for written clarification on the taxability of certain "milk substitutes" — non-dairy products marketed to people who cannot consume dairy products because of the side effects that "animal milk" has on their body. The taxpayer enclosed labels from nine specific products and asked for a taxability determination on each one:
- Westsoy All Natural Soy Drink — Nontaxable
- Edensoy Organic Soy Beverage — Nontaxable
- Vitasoy Non-Dairy Soy Drink — Nontaxable
- Rice Dream Non-Dairy Beverage — Nontaxable
- Rice Dream Enriched Non-Dairy Beverage — Nontaxable
- Westbrae Natural Lite Non-Dairy Beverage — Nontaxable
- Plus Non-Dairy Beverage — Nontaxable
- Vitasoy Natural Soy Drink — Nontaxable
- Westsoy All Natural Unsweetened Non-Dairy Beverage — Nontaxable
The Comptroller determined that all nine products are nontaxable because they qualify as, and are promoted as, milk substitutes or non-dairy creamers — a category of product the Comptroller's office states it had previously exempted. The letter notes that this opinion is based on the facts presented, and that other facts, though similar, may produce a different result.
What this means for you
Sellers of soy or rice-based beverages
If you sell a beverage that is marketed and labeled as a non-dairy milk substitute (such as a soy drink or rice drink aimed at people who cannot consume dairy), this letter indicates the Comptroller has treated that category of product as nontaxable, consistent with its treatment of milk substitutes and non-dairy creamers generally.
Retailers relying on product labeling
The determination in this letter turned on how each product was labeled and promoted — specifically, that the labels identified the products as milk substitutes or non-dairy beverages. Retailers and manufacturers should keep in mind that a product's marketing and label claims can matter to how it is taxed.
Accountants and tax professionals
This letter is a fact-specific, product-by-product determination limited to the nine named products and their labels as submitted. It does not itself state a general statute or rule; it simply confirms that these particular non-dairy soy and rice beverages fall within the Comptroller's existing nontaxable treatment of milk substitutes and non-dairy creamers.
Common questions
Q: Are soy milk and rice milk beverages taxable in Texas under this letter?
A: No. The Comptroller found all nine specific soy and rice non-dairy beverage products identified in the letter to be nontaxable.
Q: Why were these products treated as nontaxable?
A: Because they qualify as, and are promoted as, milk substitutes or non-dairy creamers, which the Comptroller's office states it had previously exempted.
Q: Does this letter apply to any non-dairy beverage, or just the ones listed?
A: The letter addresses the nine specific labeled products submitted by the taxpayer. The letter itself notes that this opinion is based on the facts presented and that other facts, though similar, may provide a different result.
Q: Can other taxpayers rely on this letter?
A: STAR letters generally may be relied on as the basis of a detrimental reliance claim only by the taxpayer to whom they were issued.
Citations and references
No specific statutes or administrative rules are cited in the text of this letter.
Source
- STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
- Opinion: https://star.comptroller.texas.gov/view/9502L1337A05
Original ruling text
February 13, 1995
Dear ***:
Thank you for your letter requesting written clarification as to the
taxability of certain "milk substitutes."
Your Facts
There are non-dairy milk substitutes on the market for people who cannot
consume dairy products because of the side effect 'animal milk" has on
their body. You enclosed labels from the following milk substitutes and
are asking for a response as to the taxability of each product:
Product: 1) Westsoy All Natural Soy Drink
Taxability: NT
Product: 2) Edensoy Organic Soy Beverage
Taxability: NT
Product: 3) Vitasoy Non-Dairy Soy Drink
Taxability: NT
Product: 4) Rice Dream Non-Dairy Beverage
Taxability: NT
Product: 5) Rice Dream Enriched Non-Dairy Beverage
Taxability: NT
Product: 6) Westbrae Natural Lite Non-Dairy Beverage
Taxability: NT
Product: 7) Plus Non-Dairy Beverage
Taxability: NT
Product: 8) Vitasoy Natural Soy Drink
Taxability: N
T
Product: 9) Westsoy All Natural Unsweetened Non-Dairy Beverage
Taxability: NT
(Note: T= Taxable; NT= Nontaxable)
The above products qualify as, and are promoted as, milk substitutes
or non-dairy creamers, which we have previously exempted.
This opinion is based on the facts presented. Other facts though
similar may provide a different result.
You may call me toll-free at 1-800-531-5441, extension 3-4502. The
direct line is 512/463-4502. You may also write to Tax Administration,
Comptroller of Public Accounts.
Sincerely,
Gilbert Zamora
Tax Administration Division
NOTE: Previous Accession Number 9502957L
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