Tax Type
Retail Sales and Use Tax
Description
Application of the tax to purchases of drugs by licensed physicians in centers
Topic
Exemptions
Medicine and Drugs
Date Issued
10-10-2006
October 10, 2006
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****:
This will reply to your letter in which you request a ruling on the application of the retail sales and use tax to prescription drugs purchased by ***** (the "Taxpayer"). I apologize for the delay in responding to your letter.
FACTS
The Taxpayer is an out-of-state nonprofit healthcare system consisting of hospitals, outpatient clinics, ancillary services and medical practices. The Taxpayer maintains a physicians' services division that manages its medical practices, including cancer treatment centers, one of which is in Virginia. The Taxpayer employs physicians that staff the centers and order prescription drugs via the services division for use in the treatment of patients at the centers. All drugs used at the centers are administered through patient-specific physician orders. The Taxpayer requests a ruling on the application of the tax to purchases of drugs by its services division for use at the centers.
RULING
Virginia Code § 58.1-609.10 9 provides an exemption from the retail sales and use tax for "[m]edicines [and] drugs . . . dispensed by or sold on prescriptions or work orders of . . . licensed physicians . . . [and] controlled drugs purchased for use by a licensed physician . . . in his professional practice"
The invoices indicate that the drugs are purchased in the names of the Taxpayer, the cancer center and a physician. Pursuant to the invoice, the drugs are shipped to a center and a physician. In this instance, because the prescription drugs are sold to a licensed physician for use in his practice, the prescription drugs purchased by the Taxpayer qualify for the exemption outlined under Va. Code § 58.1-609.10 9. This is consistent with prior rulings of the Tax Commissioner in Public Documents 96-47 (4/15/96) and 04-116 (9/14/04).
Additionally, in speaking with a member of the Appeals and Rulings staff, you also question the documentation that is necessary to support tax-exempt purchases in this instance. The invoices provided include the name of a physician as purchaser and a federal Drug Enforcement Agency (DEA) number. This information is sufficient to document tax-exempt purchases for use by a physician in his professional practice.
This ruling is based on the facts presented as summarized above. Any change in the facts or the introduction of new facts may lead to a different result.
The Code of Virginia section and public documents cited, along with other reference documents, are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions about this response, you may contact *****, in the Department's Office of Policy and Administration, Appeals and Rulings, at *****.
-
-
-
-
-
-
-
- Sincerely,
-
-
-
-
-
-
-
-
-
-
-
-
-
- Janie E. Bowen
Tax Commissioner
- Janie E. Bowen
-
-
-
-
-
-
AR/56319i
Rulings of the Tax Commissioner