Sales Tax State Activity Update - February 2004

Emergency Rule Continues Prescription Medical Equipment Exemption in West Virginia

The West Virginia Tax Division has adopted an emergency legislative rule to clarify that medical appliances sold under prescription remain exempt after December 31, 2003.

During its 2003 session, the West Virginia Legislature passed H.B. 3014, which incorporated provisions of the Streamlined Sales and Use Tax Agreement, including definitions for the terms “durable medical goods,” “drugs,” “mobility enhancing equipment,” “prescription,” and “prosthetic devices.” The definitions became effective January 1, 2004. H.B. 3014 also deleted the existing definition of “drug”, which was found in W. Va. Code § 11-15-2(f). This definition provided that drugs included appliances sold to a pur-chaser upon prescription. By deleting this definition, it appeared that appliances sold upon prescription would be taxable after December 31, 2003. This is because W. Va. Code § 11-15-9 (as amended by S.B. 531, also passed in 2003) exempts only sales of drugs dispensed upon prescription and appliances are not included in the new definition of “drugs.” This was not the intended consequence, hence the necessity for the emergency rule. §110-15G-2 of this rule reads as follows: Sales of drugs, durable medical goods, mobility enhancing equipment and prosthetic devices to a purchaser upon a prescription of a physician or dentist, and any other professional person licensed to prescribe drugs in this State, are exempt from consumers sales and use tax both before and after December 31, 2003. §110-15G-3 of the emergency rule restates the definitions of the above terms as provided in W. Va. Code § 11-15B-2(b). “Drug” means a compound, substance or preparation, and any component of a compound, substance or preparation, other than food and food ingredients, dietary supplements or alcoholic beverages:

(A) Recognized in the official United States pharmacopoeia, official homeopathic pharmaco-poeia of the United States, or official national formulary, and supplement to any of them;
(B) Intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in humans; or
(C) Intended to affect the structure or any function of the human body.

“Durable medical equipment” means equipment including repair and replacement parts for the equipment, but does not include “mobility enhancing equipment,” which:

(A) Can withstand repeated use;
(B) Is primarily and customarily used to serve a medical purpose;
(C) Generally is not useful to a person in the absence of illness or injury; and
(D) Is not worn in or on the body.

“Mobility enhancing equipment” means equipment, including repair and replacement parts to the equipment, but does not include “durable medical equipment,” which:

(A) Is primarily and customarily used to provide or increase the ability to move from one place to another and which is appropriate for use either in a home or a motor vehicle;
(B) Is not generally used by persons with normal mobility; and
(C) Does not include any motor vehicle or equipment on a motor vehicle normally pro-vided by a motor vehicle manufacturer.

“Prescription” means an order, formula or recipe issued in any form of oral, written, elec-tronic, or other means of transmission by a duly licensed practitioner authorized by the laws of this state to issue prescriptions. “Prosthetic device” means a replacement, corrective, or supportive device including repair and replacement parts for the device worn on or in the body to:

(A) Artificially replace a missing portion of the body;
(B) Prevent or correct physical deformity or malfunction of the body; or
(C) Support a weak or deformed portion of the body.

(West Virginia Tax Division, Emergency Legislative Rule §110-15G-1, §110-15G-2, §110-15G-3, 12/16/2003) 02/04

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