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Multistate Sales & Use Tax Updates Related to the Medical Industry

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In keeping with my promise to update the blog as additional pertinent information becomes available, I present the following for your reading pleasure. I’ve also included the applicable citations.

Indiana: the Department of Revenue recently amended an Information Bulletin that addresses the application of tax to products used and sold by the medical industry. The revision is intended to clarify language from 2015 legislation which exempted medical equipment, supplies and devices from Indiana gross retail tax if the items are sold by a licensed practitioner or pharmacist. The revised Bulletin also addresses the exemption that is in place for items such as insulin, oxygen and blood if these items are purchased by a licensed practitioner/health facility. (Indiana Information Bulletin No. ST48, 05/01/2016.)

New Mexico: a Hearing Officer for the Taxation and Revenue Department (TRD) recently found that NMSA 1978 § 7-9-93 does not prohibit a for-profit hospital from taking a deduction for services provided by health care practitioners. The primary issue in this case was receipts generated by licensed professionals employed by a rehabilitation hospital. While the TRD initially conceded that a deduction could be taken for payments received from Medicare for such receipts, it disputed the applicability of the deduction to similar receipts where payment was not remitted by Medicare. (In the Matter of the Protest of Healthsource Rehabilitation, N.M. Taxation and Revenue Department Decision and Order No. 16-16, 05/11/2016.)

Georgia: the Department of Revenue recently released a ruling that addressed the application of tax to the sale of a dental appliance. While the state provides a general exemption for prosthetic devices obtained through prescription, some confusion existed as to whether a dental appliance qualified as a prosthesis. The DOR determined that the appliance fits the legal definition of a prosthetic device, since is worn by the patient to correct misaligned teeth. According, the appliance is exempt from tax. (No. LR SUT-2015-13, 09/22/2015 , released 05/2016.)

Washington: effective July 1, 2016, the Department of Revenue will exempt from tax products sold by marijuana retailers with a medical endorsement if the products are determined by the Department of Health (DOH) to be beneficial for medicinal use. For the exemption to apply, the retailer must obtain a medical endorsement and the product in question must be determined by the DOH to be beneficial for medicinal use. (Washington Special Notice No. 05/06/2016 (Medical Endorsement), 05/06/2016.)

Maine: effective October 1, 2016, there will be an exemption for prosthetic and/or orthotic devices that are sold under a prescription. Maine defines a prosthetic/orthotic device, in general, as one that replaces a missing portion of the body or corrects a deformity or malfunction. The definition includes crutches and wheelchairs. Again, the item in question needs to be sold by prescription in order to qualify for the exemption. (2015 Maine House Paper No. 695, Maine One Hundred Twenty-Seventh Legislature - First Regular Session; TITLE: An Act To Define Prosthetic and Orthotic Devices for Purposes of the Sales Tax Law; (LD 1000))

Questions or comments? Please feel free to comment on this blog post (or contact me directly) if you have any questions regarding this topic or any other sales/use tax matter.

About the Author: James R. Dumler is a Certified Public Accountant (CPA) and an Equity Partner at McClellan Davis LLC, a professional firm specializing in a full spectrum of multistate sales and use tax services. James’ primary focus is multi-state sales and use tax audit, compliance and appeals matters, as well as cigarette & tobacco tax and sales and use tax return preparation. In addition, James has assisted numerous medical distributors and health facilities with compliance, refund and audit related matters in jurisdictions nation-wide.

Contact the Author: James can be easily reached using the "Request a Consultation" link on his associated FIRM PROFILE page. Post-related comments or questions are also welcome and may be submitted by using the on-page "Comment" feature, subject to disclaimer at bottom of page.

Other recent “Medical Industry Tax” posts by James R. Dumler:

NOTE: All blog content, comments, and participation subject to disclaimer at bottom of page.

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