Tax Type
Retail Sales and Use Tax
Description
Catheter: Does it qualify as an exempt prosthetic device
Topic
Property Subject to Tax
Date Issued
10-03-2001
October 3, 2001
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****
This is in reply to your letter of August 22, 2001, in which you request a ruling on the application of the Virginia retail sales and use tax to implantable catheter systems sold by ******** (the "Taxpayer").
FACTS
The Taxpayer sells implantable catheter systems to customers for specific patients. The catheter system is a device that is surgically implanted beneath the skin and provides access to the venous (vein) system. Once implanted, the device allows for the delivery of medications, nutritional solutions, other fluids, and the sampling of blood. The Taxpayer asks if the catheter systems qualify as exempt prosthetic devices.
RULING
Code of Virginia § 58.1-609.7(2) provides an exemption for "wheelchairs and parts therefor, braces, crutches, prosthetic devices, orthopedic appliances, catheters, urinary accessories, other durable medical equipment and devices, and related parts and supplies specifically designed for those products ...when such items or parts are purchased by or on behalf of an individual for use by such individual. Durable medical equipment is equipment which (i) can withstand repeated use, (ii) is primarily and customarily used to serve a medical purpose, (iii) generally is not useful to a person in the absence of illness or injury, and (iv) is appropriate for use in the home."
The statute clearly exempts catheters purchased for specific individuals. The department has previously addressed the application of the tax to intravenous catheter systems, similar to those of the Taxpayer, in Public Document (P.D.) 89-287 (11/27/89).
The ruling included catheter devices and supplies as items which constitute durable medical equipment (DME). In addition, P. D. 84-196 (11/22/84) provides a list of DME that is exempt from the tax and includes catheter devices and supplies. The list is also contained in the department's regulation on DME found in Title 23 of the Virginia Administrative Code (VAC) 10-210-940.
The Taxpayer's catheter system does not qualify as an exempt prosthetic device because it does not meet the definition provided in the regulation. Title 23 VAC 10-210-940(B) defines prosthetic devices to mean "devices which replace a missing part or function of the body and shall include any supplies physically connected to such devices." The Taxpayer's catheter system does not serve a replacement purpose. Instead, the system is designed to permit repeated access to an individual's vein system. The Taxpayer should not consider its catheter system as a prosthetic device for Virginia sales and use tax purposes.
Summary
The implantable catheter system is considered DME and sales of such by the Taxpayer are exempt provided such sales are made on behalf of specific individuals or patients. The department is in the process of revising Form ST-13 for use when DME is purchased on behalf of a specific person. In the meantime, the Taxpayer should obtain a signed statement from each customer certifying that the DME is purchased on behalf of a specific patient through a doctor's prescription or a for-profit hospital's work order and is for the sole use by such patient. The department will issue the Taxpayer Form ST-13 once it is available.
I hope the foregoing responds to your inquiry. Copies of the cited statute, regulation, and rulings are enclosed for your review. If you have additional questions, you may contact ***** in the department's Office of Policy and Administration, Appeals and Rulings, at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
ARO/36609J
Rulings of the Tax Commissioner