1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 MAY 23, 2017 10 11 12 13 14 ITEM F 15 PUBLIC HEARING 16 F1 PROPOSED AMENDMENTS TO SALES AND USE TAX 17 REGULATION 1591, MEDICINES AND MEDICAL DEVICES 18 19 20 21 22 23 24 25 26 27 REPORTED BY: Kathleen Skidgel 28 CSR NO. 9039 1 1 P R E S E N T 2 3 For the Board of Equalization: Diane L. Harkey 4 Chairwoman 5 Sen. George Runner (Ret.) Vice Chair 6 Fiona Ma, CPA 7 Member 8 Jerome E. Horton Member 9 Yvette Stowers 10 Appearing for Betty T. Yee, State Controller 11 (per Government Code Section 7.9) 12 Joann Richmond 13 Chief Board Proceedings 14 Division 15 For Board of Equalization Staff: Bradley Heller 16 Tax Counsel IV Legal Department 17 18 ---oOo--- 19 20 21 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 MAY 23, 2017 4 ---oOo--- 5 MS. HARKEY: Okay, Ms. Richmond, our next 6 item, please. 7 MS. RICHMOND: Our next item is Item F, 8 Public Hearing; Item F1 is Proposed Amendments to 9 Sales and Use Tax Regulation 1591, medicines and 10 medical devices. 11 And we do not have any public speakers. 12 MS. HARKEY: Mr. Heller, please introduce 13 yourself for the record, and thank you. 14 MR. HELLER: Thank you. Good morning, 15 Chairwoman Harkey and Members of the Board. I'm 16 Bradley Heller from the Board's Legal Department. 17 I'm here to request that the Board vote to 18 adopt proposed amendments to Sales and Use Tax 19 Regulation 1591, medicines and medical devices. 20 Excuse me. 21 The amendments clarify that articles 22 permanently implanted in the human body to monitor a 23 medical condition qualify as medicines. 24 MS. MA: Therefore not subject to tax, 25 right? 26 MR. HELLER: Yes. And therefore, under a 27 specific -- under certain circumstances are not 28 subject to tax. 3 1 MS. MA: What's the circumstances? 2 MR. HELLER: Oh. 3 MS. HARKEY: I think it's six months or 4 more. 5 MR. HELLER: Basically -- hold on. 6 And tax does not apply to the sale or use 7 of these articles when they're permanently implanted 8 in the human body to monitor a medical condition and 9 they remain or dissolve in the body. And when they 10 are sold or furnished under the conditions in 11 sec- -- in Regulation 1591, which is normally when 12 they're prescribed by a doctor. 13 MS. HARKEY: If I might, Members. The 14 difference in this is they used to have to be to 15 cure or to fix a problem. Now they can monitor as 16 well, which we all know as we get older we kind of 17 like the monitoring. And many of us have to have 18 permanent monitoring. Not me, yet. 19 But, you know, I think that it prevents -- 20 it prevents a more drastic occurrence. 21 Thank you. 22 MS. STOWERS: Madam Chair. I do support 23 it, but I just wanted to get clarification. 24 This is similar to the -- or this is just 25 adding on to the existing regulation where we 26 already said if you had, like, something to monitor 27 potential cancer within the body, that this -- just 28 having that device -- if you have something 4 1 implanted into you for monitoring your breast to 2 detect potential cancer, we already concluded that 3 that was not subject to tax, right? Or is that 4 confirming that it's not subject to tax? 5 MR. HELLER: Well, the Board has already 6 amended the regulation previously to -- to -- to 7 state that a device that's permanently implanted to 8 mark the location of a medical condition -- 9 MS. STOWERS: Thank you. 10 MR. HELLER: -- so that it could be 11 monitored -- 12 MS. STOWERS: Mm-hmm. 13 MR. HELLER: -- is a medicine. 14 And this one's basically clarifying that if 15 the device basically isn't specifically marking a 16 location but is still implanted for the purposes of 17 monitoring, it's still a medicine. 18 MS. STOWERS: Okay. I understand the 19 difference now. Thank you. I appreciate that. 20 MR. HELLER: You're welcome. 21 MS. HARKEY: All right. Members, any 22 further discussion? 23 MS. MA: No. Move. 24 MS. HARKEY: We have a motion. 25 MS. MA: Move the proposed amendments. 26 MR. HORTON: Second. 27 MS. HARKEY: Okay. Moved by Member Ma, 28 second by Member Horton. 5 1 Any objection? 2 Thank you. Such will be the order. 3 ---oOo--- 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Kathleen Skidgel, Hearing Reporter for 8 the California State Board of Equalization certify 9 that on May 23, 2017 I recorded verbatim, in 10 shorthand, to the best of my ability, the 11 proceedings in the above-entitled hearing; that I 12 transcribed the shorthand writing into typewriting; 13 and that the preceding pages 1 through 6 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: June 1, 2017 18 19 20 ____________________________ 21 KATHLEEN SKIDGEL, CSR #9039 22 Hearing Reporter 23 24 25 26 27 28 7