Tax Type
Retail Sales and Use Tax
Description
Medical Equipment and Devices; Dialysis Unit Water Treatment Systems
Topic
Taxability of Persons and Transactions
Date Issued
05-29-1991
May 29, 1991
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 sales and use tax to dialysis units sold by*********************(the "Taxpayer").
FACTS
The Taxpayer, a water treatment company, provides equipment, expendables and services to profit and nonprofit hemodialysis facilities to allow them to meet certain federal water quality standards. The Taxpayer furnishes two types of systems to its customers - 1) permanent systems which it designs and installs directly to dialysis units; and 2) portable exchange tanks which it hooks-up to dialysis units, and periodically supplies and services on an as needed basis.
The Taxpayer requests a ruling whether the equipment, supplies and services it provides are tax exempt. The Taxpayer further requests whether it should be charging the tax to purchases by for-profit facilities, unless a tax exemption certificate is received from the customer.
RULING
Va. Code §58.1-608(7)(c) provides an exemption for hemodialysis and peritoneal dialysis drugs and supplies. As set forth in Virginia Regulation (VR) 630-10-65, this exemption applies to all equipment, supplies and drugs that are purchased for and used in the actual treatment of dialysis patients.
The water treatment systems which the Taxpayer furnishes to its customers for use with dialysis units would qualify as exempt equipment. General purpose items, such as trays, paper towels, etc., would not qualify for this exemption and would be taxable, unless another exemption is applicable to the customer.
VR 630-10-65 provides further that the exemption is applicable regardless of the nature of the purchaser. Thus, physicians, patients, profit and nonprofit hospitals, and any other entities are eligible to purchase dialysis equipment, supplies and drugs exempt of the tax. Because the exemption applies to all dialysis equipment regardless of the purchaser, an exemption certificate is not required by the purchaser. Thus, for-profit hospitals can purchase hemodialysis and peritoneal dialysis equipment and supplies exempt of the tax without the use of a certificate of exemption.
If you have any questions on this matter, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner