Tax Type
Retail Sales and Use Tax
Description
Medical, dental, and optical supplies and drugs; Documentation
Topic
Taxability of Persons and Transactions
Date Issued
05-23-1997
May 23, 1997
Re: Request for Ruling: Retail Sales and Use Tax
Dear**************************
This is in reply to your letter of April 21, 1997, in which you seek information on the application of the sales and use tax to*************** (the "Taxpayer").
FACTS
The Taxpayer makes sales of radiopharmaceuticals in unit doses provided in syringes to nuclear medicine departments of hospitals for use in myocardial, skeletal, and liver/spleen imaging. The Taxpayer receives orders for the radiopharmaceuticals via telephone and fax from hospitals pursuant to a physician's order. The Taxpayer is provided the prescribing physician's name for its records, but does not receive the written prescription from the hospital. The Taxpayer questions the documentation required to make tax exempt sales of the radiopharmaceuticals to for-profit and nonprofit hospitals.
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 1 through Vl of the Virginia Drug Control Act (Chapter 34 of the Code of Virginia § 54.1.)
For-Profit Hospitals
Title 23 of the Virginia Administrative Code (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."
It is my understanding, based on information received from the Virginia Pharmacy Board, that the radiopharmaceuticals described in this case are considered controlled drugs under Schedule Vl of the Virginia Drug Control Act and are dispensed by a physician's prescription only. It is also my understanding that hospitals, in accordance with Nuclear Regulatory Commission guidelines, must maintain specific patient information regarding the purchasing and dispensing of nuclear medicines.
Based on the above, the Taxpayer may sell radiopharmaceuticals to for-profit hospitals exempt of the tax when such purchases are made by the hospital pursuant to a physician's prescription for a specific patient. The statute and regulation require that the Taxpayer obtain a written prescription or work order that identifies the purchase is for a specific patient. As such, documentation indicating the prescribing physician's identification only is not acceptable.
Nonprofit Hospitals
Code of Virginia § 58.1-609.7(4) provides an exemption from the sales tax for "[t]angible personal property for use or consumption by a nonprofit hospital or a nonprofit licensed nursing home." The Taxpayer may sell radiopharmaceuticals to nonprofit hospitals exempt of the tax upon receipt of Form ST-13 (exemption certificate for certain nonprofit entities).
The department recently issued a ruling, Public Document (P.D.) 97-181 (4/18/97), that deemed the sale of radioactive isotopes to a for-profit hospital for use in diagnostic studies of patients exempt of the tax when purchased pursuant to a physician's prescription for a specific patient. I am enclosing a copy of P.D. 97-181 and copies of the cited statutes, the regulation, and Form ST-13 for your information.
I hope the foregoing has responded to your inquiry. If you have additional questions, please contact********** at *******.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/12487J
Rulings of the Tax Commissioner