Sales Tax State Activity Update December 2005

Indiana “Opens Wide” the Debate on Dental Devices

The Department of Revenue has issued a Revenue Ruling to address the taxability of a variety of fixed and removable dental restoration products. The taxpayer requesting the ruling is a group of dental laboratories whose products include crowns, bridges, cosmetic restorations, partial dentures, full dentures, implants, orthodontics, snoring and sleep apnea appliances and TMJ appliances. All sales are made directly to dentists.

Indiana Code 6-2.5-5-18(a) provides, in pertinent part, an exemption for prosthetic devices and dental prosthetic devices if the sales are prescribed by a person licensed to issue the prescription. Indiana Code 6-2.5-1-25 defines prosthetic device to be a replacement, corrective, or supportive device, including repair and replacement parts for the device, worn on or in the body to artificially replace a missing part of the body, prevent or correct physical deformity or malfunction, or support a weak or deformed part of the body.

The items in question can be classified as dentures or occlusal splints. The dentures are removable prosthetics that replace one or more teeth. The splits are appliances that are used to prevent of correct physical deformities or to support a weak or deformed part of the mouth. In all cases the devices are prescribed by a licensed dentist. Therefore, all items qualify for the above outlined exemption from Indiana sales and use tax.

(Revenue Ruling No. 2005-12ST, Indiana Department of Revenue, 9/23/05 )