Tax Type
Retail Sales and Use Tax
Description
Taxpayer is a retailer of dental supplies and equipment
Topic
Durable Medical Equipment Exemption
Exemptions
Medicine and Drugs
Sale for Resale
Date Issued
11-12-2010
November 12, 2010
Re: Request for Ruling: Retail Sales and Use Tax
Dear *****:
This is in response to your letter submitted on behalf of ***** (the "Taxpayer"), in which you request a ruling on the application of the retail sales and use tax to the sale of custom fitted mouth guards. I apologize for the delay in responding to your correspondence.
FACTS
The Taxpayer is a retailer of dental supplies and equipment. The Taxpayer has salespeople and repair technicians operating in all states. The Taxpayer sells a line of custom fitted sports mouth guards ("mouth guards"). In instances where a dental patient would like to purchase a mouth guard, the patient's dentist will take an impression of the patient's teeth and send the impression to the manufacturer of the mouth guards. The manufacturer will produce a mouth guard in one of three versions: a mouthpiece designed for the most comfortable fit to be used in non-contact sports; a mouth guard with a strap designed to offer additional protection for contact sports; a mouth guard without a strap to offer additional protection for contact sports.
The Taxpayer requests a ruling regarding whether one or more of these versions is an exempt dental service, a prescription medical device, a prosthetic device or safety gear. If the provision of the mouth guards is deemed to be a sale of tangible personal property, rather than a dental service, the Taxpayer inquires whether it can accept a resale exemption certificate from the dentist and whether the dentist should charge sales tax on the sale to the patient.
RULING
Classification of the Mouth Guards
The Taxpayer inquires about the proper classification of the mouth guards for Virginia retail sales and use tax purposes.
Virginia Code § 58.1-609.10 10 provides that the retail sales and use tax does not apply to:
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- Wheelchairs and parts therefor, braces, crutches, prosthetic devices, orthopedic appliances, catheters, urinary accessories, other durable medical equipment and devices, and related parts and supplies specifically designed for those products; and insulin and insulin syringes, and equipment, devices or chemical reagents that may be used by a diabetic to test or monitor blood or urine, when such items or parts are purchased by or on behalf of an individual for use by such individual. Durable medical equipment is equipment that (i) can withstand repeated use, (ii) is primarily and customarily used to serve a medical purpose, iii generally is not useful to a person in the absence of illness or injury, and (iv) is appropriate for use in the home. [Emphasis added.]
Title 23 of the Virginia Administrative Code (VAC) 10-210-920 B 1 defines prosthetic devices as "devices which replace a missing part or function of the body and shall include any supplies physically connected to such devices."
In order to qualify for the durable medical equipment exemption, the mouth guards at issue must meet the criteria established in Va. Code § 58.1-609.10 10. Based upon the information provided on the manufacturer's website, it is clear that the mouth guards can withstand repeated use. However, the final three criteria are not met because the mouth guards do not appear to serve a medical purpose and because they are not used to address some illness or injury. Additionally, the mouth guards are for use by the patients in sporting events, not in the homes of the patients as required. Based upon the information provided, the mouth guards are used to prevent injury to those participating in sports, and are also designed to improve athletic performance. Accordingly, the mouth guards do not qualify for the durable medical equipment exemption.
The mouth guards do not replace a missing part or function of the body. Accordingly, the mouth guards would not be considered prosthetic devices as considered in the Title 23 VAC 10-210-940 definition.
Application of the Retail Sales and Use Tax
The Taxpayer inquires about the application of the retail sales and use tax should the provision of the mouth guards be deemed the sale of tangible personal property.
Virginia Code § 58.1-602 defines sale, in pertinent part, as "any transfer of title or possession, or both, exchange, barter, lease or rental, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property and any rendition of a taxable service for a consideration ...."
Virginia Code § 58.1-603 states, in pertinent part, "[t]here is hereby levied and imposed, in addition to all other taxes and fees of every kind now imposed by law, a license or privilege tax upon every person who engages in the business of selling at retail ... tangible personal property in this Commonwealth ...."
Virginia Code § 58.1-612 A provides that the sales tax is "collectible from all persons who are dealers." This same section defines a dealer as every person who "sells at retail, or who offers for sale at retail, or who has in his possession for sale at retail, or for use, consumption, or distribution, or for storage to be used or consumed in this Commonwealth, tangible personal property."
Pursuant to Va. Code § 58.1-613 A, "Every person desiring to engage in or conduct business as a dealer in this Commonwealth shall file with the Tax Commissioner an application for a certificate of registration for each place of business in this Commonwealth."
Pursuant to Va. Code § 58.1-623 A, "All sales or leases are subject to the tax until the contrary is established. Subsection B provides that an exemption certificate "shall relieve the person who takes such certificate from any liability for payment or collection of the tax, except upon notice from the Tax Commissioner that such certificate is no longer acceptable."
In accordance with the aforementioned references, and based upon the facts presented, the Taxpayer is selling the mouth guards to the dentists for resale. The dentists then sell the mouth guards to their patients. The Taxpayer is permitted to sell the mouth guards exempt of the tax to the dentists, provided the Taxpayer takes from the dentists valid resale exemption certificates. The dentists will be required to register with the Commonwealth as a dealer, and must charge, collect and remit the Virginia sales tax on the sale of mouth guards to their patients.
I hope the foregoing responds to your inquiry. This response is based on the facts provided as summarized above. Any change in facts or the introduction of new facts may lead to a different result.
The Code of Virginia sections and regulations cited 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 Tax Policy, Appeals and Rulings, at *****.
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- Sincerely,
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- Linda D. Foster
Deputy Tax Commissioner
- Linda D. Foster
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AR/1-4390637913.P
Rulings of the Tax Commissioner