Document Number
05-106
Tax Type
Retail Sales and Use Tax
Description
Sells and installs medical equipment; using and consuming contractor
Topic
Exemptions
Property Subject to Tax
Date Issued
07-08-2005


July 8, 2005




Re: § 58.1-1821 Application: Retail Sales and Use Tax

Dear *****:

This is in response to your letter in which you seek correction of a retail sales and use tax assessment issued to *****, (the "Taxpayer") for the period of August 2001 through July 2004. I apologize for the delay in the Department's response.

FACTS

The Taxpayer sells and installs a variety of medical equipment, including wheelchairs, scooters, wheelchair lifts and stair lifts. At issue in this case is the application of the retail sales and use tax to the wheelchair lift product ("Handilift") sold and installed by the Taxpayer. The Department's auditor determined that this product becomes real estate upon installation. As a result, the Taxpayer was treated as a using and consuming contractor and assessed tax on Handilifts it sold and installed.

The Taxpayer contends that the Handilift should be exempt from the retail sales and use tax pursuant to the durable medical equipment exemption found in Va. Code § 58.1-609.10 10.

DETERMINATION

Virginia Code § 58.1-609.10 10 provides an exemption from the sales and use tax 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 are purchased by or on behalf of an individual for use by such individual. Durable medical equipment is equipment that (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."

In order to qualify as exempt durable medical equipment, the product must meet the four criteria provided above and the products must be purchased by or on behalf of an individual for use by such individual. The fact that an item is purchased from a medical equipment supplier or is purchased on a physician's prescription is not dispositive of its exempt status. Title 23 of the Virginia Administrative Code (VAC) 10­210-940 G states, "in order to be deemed a purchase on behalf of an individual, the item must be specifically bought for the individual. If items are purchased in bulk and then dispensed to individual patients, no exemption is applicable even if the items is modified or fitted for a specific individual."

The Handilifts at issue can withstand repeated use, primarily serve a medical purpose, are not useful to someone without injury or illness, and are appropriate and designed for use in the home. In addition, the Taxpayer accepts from each customer a doctor's prescription for the installation of a Handilift in that individual's residence. Therefore, the Handilifts sold to individuals on a doctor's prescription are considered durable medical equipment and qualify for exemption under Va. Code § 58.1-609.10 10.

The Handilifts sold to churches, businesses, groups, and other organizations do not qualify as exempt durable medical equipment. Although these lifts meet the four criteria outlined under Va. Code § 58.1-609.10 10, there is no evidence they are purchased by or on behalf of an individual for use by such individual. The Department has previously ruled in Public Document 00-215 (12/7/00) that a taxpayer's purchase documentation (in this case the invoice) must include patient identification information at the time of purchase in order for the purchase to be deemed made on behalf of individuals. The Taxpayer has not presented invoices to substantiate that each Handilift installed in a building occupied by a business or other organization was bought for a specific individual pursuant to a physician's prescription or work order.

Based on this determination, the Handilifts purchased on behalf of individuals will be removed from the assessment. The other contested items purchased for churches, museums, groups and other organizations will remain in the assessment. An updated bill, with interest accrued to date, will be mailed shortly to the Taxpayer. No additional interest will accrue provided the outstanding assessment is paid within 30 days from the date of the updated bill. The Taxpayer should remit its payment to: Virginia Department of Taxation, Office of Policy and Administration, Appeals and Rulings, P.O. Box 27203, Richmond, Virginia 23261-7203, *****.

The Code of Virginia and regulation sections cited, along with other reference documents, are available on-line in the Department's Tax Policy Library, located at www.policylibrary.tax.virginia.gov. If you have any questions about this determination, you may contact ***** at *****.
                • Sincerely,

                    • Kenneth W. Thorson
                      Tax Commissioner


AR/53844.i


Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46