Sales Tax Articles
Sales Tax State Activity Update - March 2006
Alabama Doctor Pushes Up Taxability of Medical Implants
The Administrative Law Division of the Alabama Department of Revenue ruled that a physician was liable for use tax on implants purchased tax-free from an out of state vendor that were used in the performance of cosmetic surgical procedures. The taxpayer, a plastic surgeon, had personally purchased the breast implants, even though the hospital where he practiced stored and monitored the inventory of implants.
The taxpayer incorrectly asserted that he used or consumed the implants incidental to the professional services he provided to his patients, and that consumption of such items was "not within the purview of the State's sales and use tax act."
The Alabama Supreme Court, in previous rulings, has affirmed that while doctors are not making retail sales when they provide tangible property to their patients incidental to their professional services, their use or consumption of the property in providing the services in Alabama is clearly subject to Alabama use tax.
labama Regulation 810-6-1-.55 states that medical doctors are the consumers of supplies, office furniture, office fixtures, and special tools and equipment which they use in the practice of their profession, and that sales of these items to doctors are taxable retail sales. The taxpayer is thus liable for Alabama use tax on the breast implants he purchased tax-free outside of Alabama and later used in Alabama.
View the full text on the Alabama Department of Revenue website.
(Feagin vs. Alabama Dept. of Rev., Docket No. S. 05-711, Admin. Law Div., 01/18/06)
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