Tax Type
Retail Sales and Use Tax
Description
Medical, dental and optical supplies and drugs; Nonprescription and disposable medical supplies
Topic
Taxability of Persons and Transactions
Date Issued
04-21-1997
April 21, 1997
Re: Request for Ruling: Retail Sales and Use Tax
Dear**********************
This will reply to your letter of February 22, 1997, in which you request a ruling on the application of the Virginia sales and use tax to certain medical equipment and supplies.
FACTS
The Taxpayer is engaged in the sale of controlled drugs, medical equipment, and disposable supplies to individual patients. The Taxpayer requests a ruling on the application of the tax to nonprescription and disposable medical supplies sold to individual patients.
RULING
Durable medical equipment: Code of Virginia § 58.1-609.7(2), copy enclosed, provides an exemption for "[w]heelchairs and parts therefor, braces, crutches, prosthetic devices, orthopedic appliances, catheters, urinary accessories, other durable medical equipment and devices, and related parts and supplies specifically designed for those products...when such items or parts are purchased by or on behalf of an individual for use by such individual." Durable medical equipment is equipment which (I) can withstand repeated use, (ii) is primarily and customarily used to serve a medical purpose, (iii) generally is not useful to a person in the absence of illness or injury, and (iv) is appropriate for use in the home.
In order to qualify as exempt durable medical equipment, an item must meet all of the four criteria set forth above and must be purchased by or on behalf of an individual. The fact that an item is purchased from a medical equipment supplier or is purchased on a physician's prescription is not dispositive of its exempt status. Title 23 of the Virginia Administrative Code (VAC) 10-210-940, copy enclosed, provides an exemplary, but not all inclusive, listing of exempt durable medical equipment.
Public Document (P.D.) 96-47 (4/15/96) addresses the issue of disposable medical supplies used in administering chemotherapy treatments. In that case, the department ruled that the exemption did not apply to items used in administering chemotherapy treatments to cancer patients such as disposable syringes, disposable needles, IV tubing. IV bags of solution-including those containing normal saline solution, and similar items. IV tubing, IV catheters, and IV bags do not meet all four of the criteria as set forth above as they are not designed for repeated use. Thus, these items do not qualify under the above exemption and are taxable when sold to individual patients. Such items may be purchased from the vendor under a resale exemption certificate.
Disposable medical supplies: The above Code section provides an exemption from the tax only for those supplies specifically designed for use with durable medical equipment. General purpose medical supples such as tape, gauze, and dressings generally are taxable. Likewise, alcohol swabs, sharps containers (for disposal of used needles), and waste bags are not designed for use with durable medical equipment and do not qualify under the above exemption. The purchase of such disposable medical supplies should be made under a resale exemption certificate. Accordingly, you must collect the tax on sales of disposable medical supplies to individual patients.
I note that Code of Virginia § 58.1-609.7(20), copy enclosed, exempts sales of medical products and supplies such as bandages, gauze dressings, incontinence products and wound care products, when purchased by a Medicaid recipient through a Department of Medical Assistance (DMAS) provider agreement. The exemption will apply to sales of such products to individual patients. This exemption is scheduled to expire June 30, 1998, unless reenacted by the General Assembly.
Nonprescription medicines: The 1990 Virginia General Assembly enacted legislation that would exempt sales of nonprescription drugs, nonproprietary medicines, and certain over-the-counter (OTC) medications. Code of Virginia § 58.1-609.7.(15), copy enclosed. The effective date of the exemption, however, has been deferred to July 1, 1998. It is suggested that you contact the department after March 31, 1998 for a ruling on the types of medical products that will qualify for exemption under the legislation.
Controlled drugs: Code of Virginia § 58.1-609.7(1) provides, in part, an exemption from the sales and use tax for medicines, drugs, and hypodermic syringes 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.
You are correct in purchasing medications, syringes, and insulin dispensed by prescription exempt of the tax. Further, sales of these items are not taxable when sold on prescription to individual patients.
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, drugs, medical equipment and supplies.
I hope the foregoing has responded to your inquiry. If you have additional questions, please contact********* in the Office of Tax Policy at***************
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12240T
Rulings of the Tax Commissioner