Tax Type
Retail Sales and Use Tax
Description
Medical, dental, and optical supplies and drugs; Vaccines for employees
Topic
Taxability of Persons and Transactions
Date Issued
12-08-1995
December 8, 1995
Re: Request for Ruling: Retail Sales and Use Tax
Dear****************:
This will reply to your letter of November 14, 1995 in which you request a ruling on the application of the sales and use tax to purchases of vaccines by nursing facilities (the "Taxpayers").
FACTS
The Taxpayers are for-profit nursing facilities and in conformance with federal health regulations, are required to vaccinate employees within specific departments (housekeeping, laundry, and nursing) who are exposed to body fluids of the patients. A prescription is written for each individual employee by a licensed physician who serves as the medical director of the nursing facility. The prescription is filled by a retail pharmacy who forwards the order to a pharmaceutical manufacturer. The manufacturer ships single dosage vaccines, directly to the nursing facility, which are dispensed to the employees, free of charge, by a registered nurse employed by the nursing facility.
The nursing facilities do not inventory vaccines; however, to ensure that new employees are vaccinated, the same procedures apply as in the case of the individual prescriptions except a blanket prescription is written for the department as a whole and forwarded to the pharmacy.
The vaccines are dispensed by prescription and you question if the sale of such drugs qualify for exemption under Virginia Regulation (VR) 630-10-65. You also question the tax application regarding blanket prescriptions.
RULING
Code of Virginia § 58.1-609.7(1) exempts from the sales and use tax "[m]edicines, drugs...dispensed by or sold on prescription or work orders of licensed physicians..." VR 630-10-65 further interprets the exemption and provides in section C(1) that sales of medicines written on prescriptions of physicians are exempt from the tax. The exemption applies to controlled drugs contained in Schedules I through VI of the Virginia Drug Control Act (Chapter 34 of the Code of Virginia § 54.1).
The medicines in this case are hepatitis B and influenza vaccines which are designated as controlled drugs under Schedule VI and as such are dispensed by prescription only. Based on the sample prescription order provided, the vaccines are written on a prescription order of a licensed physician for an individual and as such, meet the requirements for exemption as set forth in the statute and regulation.
You also inquire about the tax application if a blanket prescription is written for the vaccines. A blanket prescription provides individual dosages of the vaccines for future employees in specified departments but does not designate specific individuals. This should not change the application of the tax since the vaccines are still dispensed on a prescription order form written by a licensed physician.
However, it should be noted that if these procedures change such that the vaccines are no longer dispensed by a licensed physician's prescription order, but instead purchased by the nursing facility itself, the vaccines are taxable as sales to a for-profit nursing facilities under to VR 630-10-65(C).
I have enclosed copies of the cited statutes and regulation along with an excerpt from the Virginia Sales and Use Tax Expenditure Study published by the department which discusses in detail the exemption for medicines and drugs.
If you have additional questions, please contact*************in the Office of Tax Policy at**************.
Sincerely
Danny M. Payne
Tax Commissioner
OTP/10529J
Rulings of the Tax Commissioner