Tax Type
Retail Sales and Use Tax
Description
Oxygen concentrators; Nursing home
Topic
Taxability of Persons and Transactions
Date Issued
06-29-1988
June 29, 1988
Re: Virginia Code §58.1-1821 Application
Retail Sales and Use Tax
Dear*****************
This is in reply to your letter of April 29, 1988 in which you make application for correction of the sales and use tax assessment that resulted from the recent audit of the *********** (Center). Specifically, you contest the assessment of use tax on the purchase of oxygen by the Center.
FACTS
The Center is a nursing home conducted for profit. In order to provide oxygen to those patients who require it, the Center leases oxygen concentrators. The lease payments for the use of these concentrators are based upon the amount of oxygen produced.
During the recent sales tax audit of the Center, the department assessed use tax to the Center on its rental of oxygen concentrators. You contest this assessment of tax and contend that the lease of the equipment is exempt under Virginia Regulation (VR) 630-10-65.
DETERMINATION
VR 630-10-65 provides that sales of medicines and drugs (including oxygen) to nursing homes conducted for profit are subject to the tax "unless the sales are made as a result of a written prescription of a licensed physician for a particular patient under the care of the ... nursing home." Likewise this same regulation provides that the purchase of durable medical equipment (including oxygen concentrators) is exempt if such purchase is "on behalf of" an individual for his use. To be exempt, the purchase must be specifically for a particular individual.
Based upon the information that was made available to the department's auditors, the Center was (1) unable to produce records showing that an oxygen concentrator was leased for a particular patient, (2) unable to produce records to establish that the oxygen administered was pursuant to a physician's prescription and (3) unable to demonstrate that the patients at the Center were charged for oxygen consumption based upon a specific meter reading taken from a specific concentrator.
Absent the above evidence, the department must hold that the oxygen concentrators in question were leased by the Center for their own use in providing its services, rather than "on behalf of" a particular individual. Accordingly the assessment will stand. If the Center is able to provide evidence that supports your contention that these leases of oxygen concentrators meet the requirements for exemption under VR 630-10-65, the assessment will be adjusted accordingly. Please send any supporting documentation within the next 30 days to the department's Technical Services Section, P. O. Box 6-L, Richmond, Virginia 23282.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner