Tax Type
Retail Sales and Use Tax
Description
Medical, dental, and optical suppliers and drugs; Radioactive isotopes
Topic
Taxability of Persons and Transactions
Date Issued
04-18-1997
April 18, 1997
Re: Request for Ruling: Retail Sales and Use Tax
Dear*****************
This is in reply to your letter in which you request information regarding the application of the sales and use tax to purchases of radioactive isotopes by your client, a for-profit hospital (the "Hospital").
FACTS
The Hospital is located in Virginia and purchases radioactive isotopes ("isotopes") for use in diagnostic studies of patients to trace cancer, reveal stress fractures, or detect other internal diseases or abnormalities. The isotopes are administered by means of injection, ingestion, through a catheter, or inhaled. The isotopes are purchased pursuant to a physician's prescription order for individual patients. The Hospital is required to document patient information regarding isotope usage in compliance with the Nuclear Regulatory Commission's guidelines.
You request a ruling as to whether the Hospital's purchases of isotopes qualify for exemption from the sales tax in accordance with 23 VAC 10-210-940 (formerly Virginia Regulation 630-10-65.)
RULING
Code of Virginia § 58.1-609.7(1) provides an exemption from the 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 contained in Schedules I through VI of the Virginia Drug Control Act (Chapter 34 of the Code of Virginia § 54.1.)
Title 23 VAC 10-210-940 provides in subsection C(3) that "[s]ales of medicines and drugs to hospitals and 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 hospital or nursing home."
According to information received from the Virginia Pharmacy Board, the isotopes described in this case are considered controlled drugs under Schedule VI and are dispensed by prescription only. Based on this information and the requirements set forth in the statute and regulation, the Hospital may purchase the isotopes exempt of the tax pursuant to a physician's prescription order when the purchase is for use in diagnostic studies of specific patients.
I hope the foregoing has responded to your inquiry. If you have additional questions, you may contact **********at ******** .
Sincerely,
Janie E. Bowen
Assistant Tax Commissioner
Office of the Commissioner
OTP/11834J
Rulings of the Tax Commissioner