Tax Type
Retail Sales and Use Tax
Description
Nicotine gum
Topic
Taxability of Persons and Transactions
Date Issued
04-22-1996
April 22, 1996
Re: Request for Ruling: Retail Sales and Use Tax
Dear**********
This is in reply to your letter of March 19, 1996, in which you request a ruling on the application of the sales and use tax to sales of Nicorette nicotine polacrilex gum.
FACTS
Nicorette nicotine polacrilex gum is a nicotine substitute designed to assist persons to quit smoking cigarettes. Until recently, Nicorette was dispensed by a physician's prescription only. You submit information which now advertises Nicorette as available without a prescription in two and four milligram dosages. You request a ruling on the tax status of Nicorette in light of its sale as a nonprescription drug.
RULING
Code of Virginia § 58.1-609.7(1), copy enclosed, provides an exemption from the retail sales and use tax for medicines and drugs dispensed by or sold on prescriptions or work orders of licensed physicians. The exemption applies to controlled drugs and proprietary medicines described under the Virginia Drug Control Act (Chapter 34 of the Code of Virginia § 54.1).
Based on information received from the Virginia Pharmacy Board, the Food and Drug Administration (FDA) now classifies the Nicorette products, considered in this case, as medications that do not require dispensing by prescription, but instead may be sold over-the-counter (OTC). As such, the Nicorette products, when sold OTC, no longer qualify for exemption from the sales tax. Nicorette products dispensed by prescription will continue to qualify for exemption.
The 1990 Session of Virginia General Assembly enacted legislation that would exempt nonprescription drugs, proprietary medicines, and certain OTC medications. The effective date of the exemption, however, was deferred in the 1996 Session to July 1, 1998. It is suggested that you contact the department after March 31, 1997 for a ruling on the types of medical products that will qualify for exemption under the legislation.
I hope this has responded to your inquiry and if you have additional questions, please do not hesitate to contact the department.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/11073J
Rulings of the Tax Commissioner