If your company purchases or sells medical products, it’s important to be aware of potential sales-use tax refund opportunities which can benefit you, as well as your customers. My previous post (Medical Equipment Tax Change Opens Door: CA Regulation 1591) discussed a relatively minor change in the wording of a California regulation which could result in tax refunds for companies in the medical products industry. Today’s post details my most recent research pertaining to durable medical equipment (DME) sales and use tax exemptions in Missouri, Nevada and Virginia. (BTW, if your company - or your client - is active in the medical products area and potentially impacted by the regulations referenced in either of these posts, I invite you to contact me for a free consultation. If this is of interest, simply open my FIRM PROFILE page and select the orange “Request a Consultation” link.)
In most states/jurisdictions DME is generally defined as any equipment that provides therapeutic benefits to a patient in need because of certain medical conditions and/or illnesses. Items generally regarded as DME include, but are not limited, to the following: wheelchairs, hospital beds, crutches, monitors and ventilators.
Missouri: effective August 28, 2016, there is a sales and use tax exemption applicable to all sales, rentals, repairs and parts of DME. The exemption noted in Missouri Revised Statutes chapter 144, section 144.030, subdivision (19), was revised to state (changes italicized):
(19) All sales of insulin, and all sales, rentals, repairs, and parts of durable medical equipment, prosthetic devices, and orthopedic devices as defined on January 1, 1980, by the federal Medicare program pursuant to Title XVIII of the Social Security Act of 1965, including the items specified in Section 1862(a)(12) of that act, and also specifically including hearing aids and hearing aid supplies and all sales of drugs which may be legally dispensed by a licensed pharmacist only upon a lawful prescription of a practitioner licensed to administer those items, including samples and materials used to manufacture samples which may be dispensed by a practitioner authorized to dispense such samples and all sales or rental of medical oxygen, home respiratory equipment and accessories including parts, and hospital beds and accessories and ambulatory aids including parts, and all sales or rental of manual and powered wheelchairs including parts, and stairway lifts, Braille writers, electronic Braille equipment and, if purchased or rented by or on behalf of a person with one or more physical or mental disabilities to enable them to function more independently, all sales or rental of scooters including parts, and reading machines, electronic print enlargers and magnifiers, electronic alternative and augmentative communication devices, and items used solely to modify motor vehicles to permit the use of such motor vehicles by individuals with disabilities or sales of over-the-counter or nonprescription drugs to individuals with disabilities, and drugs required by the Food and Drug Administration to meet the over-the-counter drug product labeling requirements in 21 CFR 201.66, or its successor, as prescribed by a health care practitioner licensed to prescribe;
Nevada: the legislature is proposing a constitutional amendment that would exempt DME, oxygen delivery equipment and mobility enhancing equipment from sales and use tax. The proposal was on the ballet in 2016 and it received a 71.8% approval from the voters. Pursuant to Nevada’s constitution, however, it must be approved by voters again in 2018 before it can become law. Based on the 2016 results though, it appears that its passing is inevitable. As is the case with most of these situations, it will likely take some time for manufacturers and vendors of these items to become aware of this new exemption, so keep an eye out for refund opportunities following the likely passage of this constitutional amendment.
Virginia: Implanted Heart Monitor- the Virginia Department of Taxation ruled in June 2016 that a taxpayer’s sale of a cardiac heart monitor was exempt from sales and use tax because it was DME that was to be used by the individual in question. The DME is a monitor that is designed to be implanted and used to monitor the individual’s cardiac rhythms. It’s designed for long-term use and it can remain in the body for up to three years. The Department noted that the item fit the definition of DME and that it was exempt from tax because it was purchased on behalf of or by the patient in question. The vendor in question had been collecting tax on its sales of the device until a patient questioned the practice. (Ruling of Commissioner, P.D. 16-133, Virginia Department of Taxation, June 24, 2016)
Please contact me if you have any questions regarding the forgoing. In addition, if you sell DME, and are subjecting it to tax, please give me a call (or send a "Consultation Request") so that we can evaluate if there are avenues that can be pursued to reduce your (or your customer’s) tax burden.
Other recent “Medical Industry Tax” posts by James R. Dumler:
- Hospitals & Medical Services: Proposed Changes to CA Reg 1503
- Taxability of Orthotic Devices in California
- New Medical Equipment Tax Refund Opportunities in Missouri
- California Medical Marijuana Retailers: Tax Update & Exemption Rules
- Sales & Use Tax Refund Opportunities: Durable Medical Equipment