Tax Type
Retail Sales and Use Tax
Description
PiIICam Video SB and ESO capsules do not meet exemption criteria
Topic
Durable Medical Equipment Exemption
Medicine and Drugs
Date Issued
10-10-2006
October 10, 2006
Re: Request for Ruling: Retail Sales and Use Tax
Dear ********:
This will reply to your letter in which you request a ruling on the application of the retail sales and use tax to the purchase of the PiIICam Video SB capsule and the PiIICam Video ESO capsule by ***** (the "Taxpayer").
FACTS
The Taxpayer diagnoses digestive system disorders. The Taxpayer is currently using the PiIICam Video SB capsules in its practice and may use the PiIICam Video ESO capsule in the near future. The SB and ESO capsules are considered medical devices and are part of a diagnostic kit that includes sensors and a data recorder.
The SB and ESP capsules, about the size of a multivitamin, are equipped with miniature cameras on both ends and can be swallowed easily. The PiIICam Video SB is used to capture images and data regarding the gastrointestinal tract, and the PiIICam Video ESO captures images and data regarding the inner lining of the esophagus.
The PiIICam Video SB capsule is ingested by the patient and as the capsule passes through the digestive system, images and data are captured. The images and data are transmitted via the sensors secured to the abdomen to the data recorder, which is affixed to a belt around the patient's waist.
The PiIICam Video ESO capsule is ingested by the patient while lying down. The PiIICam travels through the esophagus by normal muscular contractions. Images and data are transmitted via the sensors secured to the chest to the data recorder affixed to a belt around the patient's waist.
The SB and ESO capsules are disposable and are passed naturally through the body within 24 hours.
RULING
Virginia Code § 58.1-609.10 10 provides an exemption from the retail sales and use tax for 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 supply store or is purchased on a physician's prescription is not dispositive of its exempt status.
The SB and ESO capsules do not meet criteria (i) and (iv) because they are disposable and are not appropriate for use in the home, as the images must be read by a trained professional. While I recognize that the SB and ESO capsules represent new technology and are used to medically diagnose gastrointestinal and esophageal conditions, they do not meet all of the mandatory requirements set out in the exemption statute. Absent the statutory authority, I am unable to grant an exemption from the retail sales and use tax in this instance.
This ruling is based on the facts presented summarized above. Any change in facts or the introduction of new facts may lead to a different result.
The Code of Virginia section cited, along with other reference documents, are available on-line at www.tax.virginia.gov in the Tax Policy Library of the Department's web site. If you have any questions about this ruling, you may contact ***** in the Office of Policy and Administration, Appeals and Rulings, at *****.
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- Sincerely,
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- Janie E. Bowen
Tax Commissioner
- Janie E. Bowen
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AR/56922.i
Rulings of the Tax Commissioner