Tax Type
Retail Sales and Use Tax
Description
Cardiac pacemakers
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
09-26-1988
September 26, 1988
Re: Request for Ruling/Retail Sales and Use Tax
Dear****************
This will reply to your letter dated July 19, 1988, in which you requested a ruling on the application of Virginia Retail Sales and Use Tax to cardiac pacemakers .
FACTS
************* ("The Taxpayer" ) manufactures and distributes cardiac pacemakers. The Taxpayer sells the pacemakers directly to hospitals only and through the request of a doctor.
RULING
Va. Code §58.1-608(22), provides an exemption from the sales and use tax for prosthetic devices "when such items...are purchased by or on behalf of an individual for use by such individual." Prosthetic devices are defined as 'devices which replace a missing part or function of the body." Virginia Retail Sales and Use Tax Regulations §630-10-65(B)(1).
Since a cardiac pacemaker is designed to regulate the heartbeat performing a function of the body, we agree that a cardiac pacemaker is a prosthetic device for purposes of the exemption under Va. Code 58.1-608(22). The taxability of these pacemakers depends on whether the sale is to a profit or a nonprofit hospital. Va. Code §58.1 -608(23), provides a general exemption from the retail sales and use tax for hospitals provided such hospitals are "not conducted for profit." Therefore, all purchases, including purchases of pacemakers, by nonprofit hospitals for their use and consumption, are exempt from the sales and use tax. In reference to purchases of pacemakers by those other than nonprofit hospitals, §630-10-65(E)(1) of the Virginia Retail Sales and Use Tax Regulations states that:
-
- The tax does not apply...when such items are purchased by or on behalf of an individual using these items. For example, ii individual A purchases a...[cardiac pacemaker] for use by Individual B, no tax will apply to the transaction since the. . . [cardiac pacemaker] is purchased on behalf of individual B. However, purchases of these items by a profit hospital, licensed nursing home....or by a licensed physician for use in his professional practice are deemed to be purchases on behalf of an individual only if purchased for a specific individual. Items withdrawn from an inventory of items purchased in bulk are not deemed to be purchased on behalf of an individual. (Emphasis added).
- The tax does not apply...when such items are purchased by or on behalf of an individual using these items. For example, ii individual A purchases a...[cardiac pacemaker] for use by Individual B, no tax will apply to the transaction since the. . . [cardiac pacemaker] is purchased on behalf of individual B. However, purchases of these items by a profit hospital, licensed nursing home....or by a licensed physician for use in his professional practice are deemed to be purchases on behalf of an individual only if purchased for a specific individual. Items withdrawn from an inventory of items purchased in bulk are not deemed to be purchased on behalf of an individual. (Emphasis added).
Conversely, all purchases by nonprofit hospitals for their own use and consumption are exempt. Thus, sales to nonprofit hospitals either in bulk or on behalf of a specific individual are exempt under the provisions of Va. Code §58.1-608(23). The required proof of this tax exempt status is Form ST-13 which must be properly filled out by the nonprofit hospital and provided to the Taxpayer/vendor at the time of sale.
Therefore, the Taxpayer must generally collect and remit the tax to the Commonwealth unless a certificate of exemption is provided by the purchaser or the pacemaker is purchased on behalf of a specific individual through a doctor's prescription or profit hospital's work order.
I hope that I have answered all your questions and ii you have any further questions, please contact us.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner