Sales Tax Articles
Sales Tax State Activity Update - April 2008
K-Wires Exemption Firmly Implanted in Tennessee
The Tennessee Department of Revenue has issued a Letter Ruling to analyze the taxability of medical implants known as Kirschner Wires ("K-Wires"). K-Wires are medical corrective devices that are temporarily implanted into a patient with small bone fractures to achieve internal traction and immobilization.
The exemption provisions and definitions of medical related items were changed effective January 1, 2008, in conjunction with Tennessee's move toward conformity with the Streamlined Sales and Use Tax Agreement. Prior to 2008, Tenn. Code Ann. § 67-6-314(5) provided, in pertinent part, an exemption for orthotics and other similarly medical corrective or support appliances and devices. Merriam-Webster's Medical Dictionary defines orthotics as "a branch of mechanical and medical science that deals with the support and bracing of weak or ineffective joints or muscles." As the function of K-Wires is to support or align the skeletal system, these devices were exempt from tax as orthotics, through December 31, 2007.
Effective with the start of 2008, Tenn. Code Ann. § 67-6-314(1) states an exemption for prosthetic devices for human use. The term prosthetic device is defined in § 67-6-102(62)(A) to mean a replacement, corrective, or supportive device worn on or in the body to artificially replace a missing portion of the body, prevent or correct physical deformity or malfunction, or support a weak or deformed portion of the body. As K-Wires are implanted in the body to act as a corrective and support mechanism, these items are exempt from tax as prosthetic devices on or after January 1, 2008, provided they are for human use.
The full ruling can be viewed on the Tennessee.gov Website.(PDF)
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