87-228 | Virginia Tax

Tax Type

Retail Sales and Use Tax

Description

Medical alert communication systems

Topic

Taxability of Persons and Transactions

Date Issued

10-14-1987

October 14 1987

Re: Ruling Request/ Sales and Use Tax

Dear ****************

This will reply to your letter of June, 1987 seeking a ruling on the correct application of the sales and use tax to the sale of *************** medical alert communication systems.

FACTS

According to your letter ********** (taxpayer) typically sells or leases and installs these systems in the homes of person living alone, such as the elderly and handicapped. The in-home portion of the system consists of a miniature radio transmitter ********* ( unit) and an automatic telephone dialer. In connection with these transactions, an individual also purchases for a monthly fee, continuous access to a computer monitoring information system operated by a company unrelated to the taxpayer This system is activated by pushing a button on the ********** unit. Once activated, the monitoring system is designed to promptly relay information about medical or other emergencies to local emergency response officials and to provide other pertinent information about an individual to such officials.

Accordingly, you ask whether the sale or lease of these systems, represents the sale or lease of tangible personal property
subject to Virginia's sales and use tax.

RULING

§58 .1-608(2) of the Virginia Code provides an exemption from the sale and use tax for"... personal service transactions which involve sales as inconsequential elements for which no separate charges are made..."

In addition, Virginia Regulation 630-10-17.1, copy enclosed, provides that the tax does not apply to sales of so called "monitored [alarm] systems." "The person selling/leasing and installing a monitored system is deemed to be the consumer of all property used in providing the service and must pay the tax on such property at the time of purchase."

However, this same regulation provides further that the term "monitored system" means:

- ...alarm systems which are furnished, installed and monitored under contract with the person furnishing and installing much systems. Systems which are monitored by a person other than the person who furnishes and installs such system...are not monitored systems as the term is used in this regulation. (Emphasis added)

Since the alarm systems which the taxpayer sells/lease and installs, are monitored by an unrelated company, they do not meet the definition of "monitored systems" provided above Accordingly, except for any separately stated charges for installation labor, the total charge for the sale/lease and installation of such units is subject to the tax. However, after registering with the department, the taxpayer may purchase pursuant to resale certificate of exemption, (Form ST-10), copy enclosed, any items which it purchases for taxable resale to its customers.

I hope that the foregoing has responded to your questions, but let me know if you have any further questions.

Sincerely,

W. H. Forst
Tax Commissioner

Rulings of the Tax Commissioner