Tax Type
Retail Sales and Use Tax
Description
Application of the tax to bulk sales of Mirena to licensed physicians, hospitals, and clinics.
Topic
Medicine and Drugs
Taxable Transactions
Date Issued
12-11-2009
December 11, 2009
Re: Ruling Request: Retail Sales and Use Tax
Dear *********:
This will respond to your letter in which you request a ruling on the application of the retail sales and use tax to the sale of a product sold by ******* (the “Taxpayer”). I apologize for the delay in responding to your letter.
FACTS
The TP is a wholesale distributor of the product Mirena, an intrauterine contraceptive device (IUD). Mirena slowly releases a chemical agent levonorgestrel into the body that causes contraceptive effects. Mirena is classified by the Virginia Board of Pharmacy as a Schedule VI Legend Drug under Va. Code § 58.1-3455 (3). The TP seeks a ruling on the application of the tax to bulk sales of Mirena to licensed physicians, hospitals, and clinics.
RULING
Physicians
Virginia Code § 58.1-609.10 9 provides, in pertinent part, that the retail sales and use tax does not apply to:
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- Controlled drugs purchased for use by a licensed physician, optometrist, licensed nurse practitioner, or licensed physician assistant in his professional practice, regardless of whether such practice is organized as a sole proprietorship, partnership, or professional corporation, or any other type of corporation in which the shareholders and operators are all licensed physicians, optometrists, licensed nurse practitioners, or licensed physician assistants engaged in the practice of medicine, optometry, or nursing. . . .
The Department recently addressed the taxability of the IUD Mirena in Public Document (P.D. 09-127) (8/24/09). Based on this ruling, Mirena constitutes a controlled drug as described in Schedule VI of the Virginia Drug Control Act and is exempt from the sales and use tax pursuant to Va. Code § 58.1-609.10 9 when purchased for use by a licensed physician, optometrist, licensed nurse practitioner, or licensed physician assistant in his professional practice. Accordingly, the Taxpayer may sell Mirena to licensed physicians exempt of the tax for use in their professional practice.
Hospitals and Clinics
Virginia Code § 58.1-609.10 9 also provides, in pertinent part, that the retail sales and use tax does not apply to “[m]edicines and drugs purchased for use or consumption by a licensed hospital, nursing home, clinic, or similar corporation not otherwise exempt under this section. . . .” Pursuant to Va. Code § 58.1-609.10 9, the Taxpayer may sell Mirena exempt of the tax to licensed hospitals and clinics, regardless of whether such entities are nonprofit or for profit.
This response is based on the facts provided as summarized above. Any change in facts or the introduction of new facts may lead to a different result.
The Code of Virginia sections and public document cited 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 ruling, you may contact ******** in the Department's Office of Tax Policy, Appeals and Rulings, at *********.
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- Sincerely,
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- Janie E. Bowen
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AR/1-2671637855.T
Rulings of the Tax Commissioner