Tax Type
Retail Sales and Use Tax
Description
Orthodontic appliances
Topic
Taxability of Persons and Transactions
Date Issued
05-30-1984
May 30, 1984
Re: Request for Ruling/Sales and Use Tax
Dear *************
This will reply to your letter of March 29, 1984 in which you request a ruling on the applicability of the sales and use tax to purchases of orthodontic appliances used in your practice.
§ 58-441.6(sl) of the Code of Virginia provides an exemption from the sales and use tax for "wheelchairs and parts therefor, braces, crutches, prosthetic devices, orthopedic appliances, catheters, urinary accessories, insulin and insulin syringes, when purchased by or on behalf of an individual for use by such individual." While this statute was intended to exempt patients rather than physicians or dentists from the tax, dentists have been permitted under a departmental regulation to purchase braces and prosthetic devices, such as dentures, exclusive of the sales tax when such items are purchased for a specific patient under a prescription or dentist's work order.
Therefore, you may at the present time purchase braces, dentures, etc., from dental laboratories exclusive of the tax when such purchase is for a specific patient under your own prescription or work order. However, bulk orders of dental bands and other items used in the fabrication of braces, dentures, etc., will be deemed taxable inasmuch as such items will not be used for the benefit of a specific patient. This constraint is based upon the ruling of the Virginia Supreme Court in Commonwealth v. Bluefield Sanitarium, 216 Va. 686, 222 S.E. 2d 526 (1976), in which the Court held that bulk purchases of drugs by a hospital were used by the hospital and were taxable even though such drugs would later be dispensed to patients under doctors' prescriptions or work orders.
I must note, however, the regulation permitting exempt purchases of braces and prosthetic devices by a dentist for specific patients is in the process of being revised. Such revision, likely to take effect on January 1, 1985, is based in large part upon a re-reading of the Court's opinion in Bluefield Sanitarium. The original regulation was promulgated in 1966, well before the Bluefield opinion in 1976. In Bluefield, the Court held that hospitals, physicians, and dentists were "engaged in essentially service businesses" and were therefore the taxable users or consumers of all items used in rendering their services, 216 Va. at 690. In rendering its opinion, the Court relied heavily upon two Alabama court cases in which the sale of materials by a dental supply company to dentists was held taxable on the ground that the dentists were the consumers of the property in the course of providing a service to their patients, 216 Va. at 689, since it is the patient rather than the service provider who is to be relieved of tax.
Therefore, based upon the foregoing, you may purchase braces, dentures, and other prosthetic devices exclusive of the tax until January 1, 1985, provided that such purchases are made for a specific patient. This proposed revision is part of the revision of all sales and use tax regulations which will be submitted for public comment under the Administrative Process Act on or before June 8, 1984. We have sent a copy of the revision to the Virginia Dental Association for comment, but have received no comment. If you are aware of any other group who might be interested in reviewing the proposed regulation (copy enclosed), we would appreciate your letting us know. After that date though, such purchases will likely be taxable. You should receive a copy of the revised regulations if you are dealer registered to collect the sales tax and/or remit the use tax.
Sincerely,
W. H. Forst
State Tax Commissioner
Re: Request for Ruling/Sales and Use Tax
Dear *************
This will reply to your letter of March 29, 1984 in which you request a ruling on the applicability of the sales and use tax to purchases of orthodontic appliances used in your practice.
§ 58-441.6(sl) of the Code of Virginia provides an exemption from the sales and use tax for "wheelchairs and parts therefor, braces, crutches, prosthetic devices, orthopedic appliances, catheters, urinary accessories, insulin and insulin syringes, when purchased by or on behalf of an individual for use by such individual." While this statute was intended to exempt patients rather than physicians or dentists from the tax, dentists have been permitted under a departmental regulation to purchase braces and prosthetic devices, such as dentures, exclusive of the sales tax when such items are purchased for a specific patient under a prescription or dentist's work order.
Therefore, you may at the present time purchase braces, dentures, etc., from dental laboratories exclusive of the tax when such purchase is for a specific patient under your own prescription or work order. However, bulk orders of dental bands and other items used in the fabrication of braces, dentures, etc., will be deemed taxable inasmuch as such items will not be used for the benefit of a specific patient. This constraint is based upon the ruling of the Virginia Supreme Court in Commonwealth v. Bluefield Sanitarium, 216 Va. 686, 222 S.E. 2d 526 (1976), in which the Court held that bulk purchases of drugs by a hospital were used by the hospital and were taxable even though such drugs would later be dispensed to patients under doctors' prescriptions or work orders.
I must note, however, the regulation permitting exempt purchases of braces and prosthetic devices by a dentist for specific patients is in the process of being revised. Such revision, likely to take effect on January 1, 1985, is based in large part upon a re-reading of the Court's opinion in Bluefield Sanitarium. The original regulation was promulgated in 1966, well before the Bluefield opinion in 1976. In Bluefield, the Court held that hospitals, physicians, and dentists were "engaged in essentially service businesses" and were therefore the taxable users or consumers of all items used in rendering their services, 216 Va. at 690. In rendering its opinion, the Court relied heavily upon two Alabama court cases in which the sale of materials by a dental supply company to dentists was held taxable on the ground that the dentists were the consumers of the property in the course of providing a service to their patients, 216 Va. at 689, since it is the patient rather than the service provider who is to be relieved of tax.
Therefore, based upon the foregoing, you may purchase braces, dentures, and other prosthetic devices exclusive of the tax until January 1, 1985, provided that such purchases are made for a specific patient. This proposed revision is part of the revision of all sales and use tax regulations which will be submitted for public comment under the Administrative Process Act on or before June 8, 1984. We have sent a copy of the revision to the Virginia Dental Association for comment, but have received no comment. If you are aware of any other group who might be interested in reviewing the proposed regulation (copy enclosed), we would appreciate your letting us know. After that date though, such purchases will likely be taxable. You should receive a copy of the revised regulations if you are dealer registered to collect the sales tax and/or remit the use tax.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner