Tax Type
Retail Sales and Use Tax
Description
Orthodontics; Bulk purchases of dental braces
Topic
Taxability of Persons and Transactions
Date Issued
07-03-1984
July 3, 1984
Re: §58-1118 Application/Sales and Use Tax
Dear ****
This will reply to your letter of April 26, 1984 in which you submit an application for correction of sales and use tax assessed to ***** as the result of an audit.
FACTS
You are engaged in the practice of orthodontics and as part of such practice, dental bands and other items are purchased in bulk for use in the fabrication of dental braces for your patients. A recent sales and use tax audit of your practice revealed the failure to remit the sales and use tax on certain such purchases.
You question the validity of the assessment generated by that audit, contending that your suppliers had been advised previously by the department that specific orthodontic appliances were exempt from tax. In addition, you assert that the items in question are used by you in a manner similar to exempt items used by other medical professionals.
DETERMINATION
§ 58-441.6(sl) of the Code of Virginia exempts the following items from the sales and use tax:
Wheelchairs and parts therefor, braces, crutches, prosthetic devices, orthopedic appliances, catheters, urinary accessories, insulin and insulin syringes, and equipment, devices or chemical reagents which 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.
While this statute was intended to exempt persons medically in need of the above items from the sales and use tax, rather than physicians or dentists, the department has permitted dentists to purchase braces and prosthetic devices exclusive of the tax when such items are purchased for a specific patient under a prescription or dentist's work order. However, bulk orders of such items by a dentist for use in his practice generally have been deemed taxable by the department. The department's position in this respect is consistent with 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 a hospital made a taxable use of drugs purchased in bulk, even though such drugs were later dispensed to patients under the work order or prescription of physicians.
In this case, you indeed purchased items in bulk from which you fabricated dental braces for your patients. Therefore, I must conclude that such purchases are subject to tax. The same would be true for any other medical professional who made bulk purchases of orthopedic appliances, prosthetic devices or any of the other types of items specified in Virginia Code § 58-441.6(sl).
As you note, contact lenses may be purchased in bulk exclusive of the tax; however, this is possible because a different exemption statute is involved Virginia Code § 58-441.6(s) specifically exempts "[m]edicines, drugs, hypodermic syringes, artificial eyes, contact lenses, eyeglasses and hearing aids dispensed by or sold on prescriptions or work orders of licensed physicians, dentists, optometrists, ophthalmologists, opticians, audiologists, hearing aid dealers and fitters." Thus, the law specifically permits the exemption of contact lenses that are dispensed by an eye doctor. On the other hand, the Virginia Code § 58-441.6(sl) exemption requires that braces and prosthetic devices by purchased by or on behalf of an individual.
Based upon the foregoing, the assessment issued to your practice was correct and I find no basis for relief of tax assessed.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner