Tax Type
Retail Sales and Use Tax
Description
Medical Implant Devices
Topic
Taxability of Persons and Transactions
Date Issued
07-31-2000
July 31, 2000
Re: Request for Ruling: Retail Sales and Use Tax
Dear ****
This is in reply to your letter in which you seek a ruling on the application of the retail sales and use tax to two products to be sold by ***** (the "Taxpayer"). I apologize for the delay in responding to your letter.
FACTS
The Taxpayer has developed two medical implant devices ("Device A" and "Device B") for use in bone regeneration resulting from surgical defects and traumatic injury. Device A is termed a cancellous bone void filler that is composed of a synthetic material that resembles the porous inner core of human bone. Device A is implanted into the defective or injured bone site in block or morsel form. Device B is termed cortical bone void filler which is a synthetic material that possesses the characteristics of the hard outer component of human bone. Device B is implanted through injection in putty form. During the process of normal bone healing, the implanted materials are absorbed into the body.
The Taxpayer requests a ruling that the sale of the implant devices qualifies for exemption from the sales and use tax.
RULING
Code of Virginia § 58.1-609.7(2) provides an exemption for "prosthetic devices [and] . . . other durable medical equipment and devices . . . when such items or parts are purchased by or on behalf of an individual for use by such individual." Title 23 VAC 10-210-940 defines prosthetic devices as devices "which replace a missing part or function of the body . . . ."
According to the information provided by the Taxpayer, Devices A and B are designed to fill gaps in bony tissue. The devices are implanted in the cancellous and corticle bone regions as replacement bone until new natural bone growth occurs. Based on this information, Devices A and B are used as bone replacement until the natural bone is able to grow or regenerate. Therefore, Devices A and B are considered prosthetic devices as defined in the regulation 23 VAC 10-210-940.
The Taxpayer may sell Devices A and B exempt of the tax when such devices are purchased by, or on behalf of an individual for use by such individual. The department has not prescribed a certificate of exemption to use when prosthetic devices or other durable medical equipment are purchased on behalf of a specific person. When the purchaser is not entitled to an exemption for its purchases, it is necessary for the Taxpayer to obtain a signed statement from the purchaser, (e.g., for-profit hospitals, licensed physicians) certifying that the implant device is purchased on behalf of a specific patient through a doctor's prescription or profit hospital's work order and is for sole use by such patient. The purchaser is also responsible for retaining a copy of the doctor's prescription or hospital work order as part of the record of the transaction for tax auditing purposes. See P.D. 95-266 (10/17/95), copy enclosed.
I hope the foregoing has responded to your inquiry. If you have questions concerning this letter, please contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/25458J
Re: Request for Ruling: Retail Sales and Use Tax
Dear ****
This is in reply to your letter in which you seek a ruling on the application of the retail sales and use tax to two products to be sold by ***** (the "Taxpayer"). I apologize for the delay in responding to your letter.
FACTS
The Taxpayer has developed two medical implant devices ("Device A" and "Device B") for use in bone regeneration resulting from surgical defects and traumatic injury. Device A is termed a cancellous bone void filler that is composed of a synthetic material that resembles the porous inner core of human bone. Device A is implanted into the defective or injured bone site in block or morsel form. Device B is termed cortical bone void filler which is a synthetic material that possesses the characteristics of the hard outer component of human bone. Device B is implanted through injection in putty form. During the process of normal bone healing, the implanted materials are absorbed into the body.
The Taxpayer requests a ruling that the sale of the implant devices qualifies for exemption from the sales and use tax.
RULING
Code of Virginia § 58.1-609.7(2) provides an exemption for "prosthetic devices [and] . . . other durable medical equipment and devices . . . when such items or parts are purchased by or on behalf of an individual for use by such individual." Title 23 VAC 10-210-940 defines prosthetic devices as devices "which replace a missing part or function of the body . . . ."
According to the information provided by the Taxpayer, Devices A and B are designed to fill gaps in bony tissue. The devices are implanted in the cancellous and corticle bone regions as replacement bone until new natural bone growth occurs. Based on this information, Devices A and B are used as bone replacement until the natural bone is able to grow or regenerate. Therefore, Devices A and B are considered prosthetic devices as defined in the regulation 23 VAC 10-210-940.
The Taxpayer may sell Devices A and B exempt of the tax when such devices are purchased by, or on behalf of an individual for use by such individual. The department has not prescribed a certificate of exemption to use when prosthetic devices or other durable medical equipment are purchased on behalf of a specific person. When the purchaser is not entitled to an exemption for its purchases, it is necessary for the Taxpayer to obtain a signed statement from the purchaser, (e.g., for-profit hospitals, licensed physicians) certifying that the implant device is purchased on behalf of a specific patient through a doctor's prescription or profit hospital's work order and is for sole use by such patient. The purchaser is also responsible for retaining a copy of the doctor's prescription or hospital work order as part of the record of the transaction for tax auditing purposes. See P.D. 95-266 (10/17/95), copy enclosed.
I hope the foregoing has responded to your inquiry. If you have questions concerning this letter, please contact ***** at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/25458J
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Rulings of the Tax Commissioner