Tax Type
Retail Sales and Use Tax
Description
Medical, dental, and optical supplies and drugs
Topic
Taxability of Persons and Transactions
Date Issued
04-15-1996
April 15, 1996
Re: § 58.1-1821 Application: Retail Sales and Use Tax
Dear*******
This will reply to your correspondence in which you seek correction of sales and use tax assessed to your client, ******** (the "Taxpayer"), for the period February 1992 through January 1995. The Taxpayer has paid the assessment.
FACTS
The Taxpayer is a licensed physician who specializes in the field of oncology. The Taxpayer was audited and assessed tax on purchases of controlled drugs and medical supplies used in administering chemotherapy treatments to cancer patients.
The Taxpayer does not oppose the tax assessed on medical supplies, but disagrees with the tax assessed on the controlled drugs. The Taxpayer argues that such drugs constitute the actual chemotherapy treatment and therefore are exempt of the tax pursuant to Code of Virginia § 58.1-609.7(1).
DETERMINATION
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...and controlled drugs purchased for use by a licensed physician in his professional practice..." Virginia Regulation (VR) 630-10-65 provides further guidance on the exemption. Section C(2) states that sales of controlled drugs to a licensed physician for use in his professional practice 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 Calcium Leukovoran, Normal Saline, Mitomycin, Zofran, Adriamycin, Methotrexate, Velban, Cytoxan, Carboplatin, Vincristine, and Decadron. These medicines are designated as controlled drugs under Schedule VI and are used by the Taxpayer to administer chemotherapy treatments to cancer patients. As such, the medicines are exempt according to the statute and regulation.
It is the department's understanding, based on information received from the Virginia Board of Pharmacy, that Normal Saline (when dispensed intravenously), Zofran, and Decadron are not actual chemotherapy medicines but are used as part of administering the chemotherapy regimen. In this case, those medicines will also qualify for exemption. The exemption does not apply to other items used in administering chemotherapy treatments such as disposable syringes, disposable needles, IV tubing, IV bags of solution - including those containing normal saline solution, and similar items.
I have enclosed a copy of the Virginia Sales and Use Tax Expenditure Study, Vol. 1, No. 4, published by the department, which discusses in detail the exemption for medicines and drugs.
Accordingly, the Taxpayer will receive a refund of the tax attributable to the controlled drugs used in administering chemotherapy treatments to cancer patients. The Taxpayer should allow approximately three weeks for receipt of the refund. If you have additional questions, please contact **** in the Office of Tax Policy at ****
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/9859J
Rulings of the Tax Commissioner