Tax Type
Retail Sales and Use Tax
Description
Continuous Positive Airway Pressure; durable medical equipment exemption
Topic
Durable Medical Equipment Exemption
Date Issued
10-05-2006
October 5, 2006
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 October 2001 through December 2004. I apologize for the delay in the Department's response.
FACTS
The Taxpayer performs sleep studies on patients and provides a variety of medical equipment, including a Continuous Positive Airway Pressure ("CPAP") machine. At issue in this case is the application of the retail sales and use tax to purchases of the CPAP machine by the Taxpayer. The Taxpayer contends that the CPAP machine should be exempt from 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 retail sales and use tax for "wheelchairs and parts therefore, 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 10-210-940 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."
Although the CPAP machines 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 an individual. The Taxpayer has not presented invoices to substantiate that each CPAP machine purchased was ordered for a specific individual. Rather, the evidence provided indicates the CPAP machines are withdrawn from a bulk inventory for use by individual patients. Consistent with P.D. 00-215, the fact that the Taxpayer can trace a CPAP machine to a specific patient after the fact does not mean the machine is purchased by or on behalf of a specific individual for use by such individual, as required by the exemption statute and regulation.
CONCLUSION
Based on the foregoing, the assessment is correct. 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 Code of Virginia and regulation sections cited, along with other reference documents, are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions about this determination, you may contact ***** in the Department's Office of Policy and Administration, Appeals and Rulings, at *****.
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- Sincerely,
Janie E. Bowen
Tax Commissioner
- Sincerely,
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AR/55610.i
Rulings of the Tax Commissioner