Sales Tax Articles
Sales Tax State Activity Update - April 2006
New York Bites into Dental Prosthetics
The New York State Department of Taxation and Finance has changed its interpretation of the taxability of dental inlays and onlays for sales and use tax effective June 1, 2006.
The Department previously considered these restorative products to be taxable dental supplies, while the new interpretation considers these to be exempt prosthetic aids. Inlays and onlays are known as indirect fillings because unlike a standard filling that is done in a dentist's office, both are made in a laboratory and cemented or bonded to the surface of the tooth during a second visit to the dentist.
Section 528.4(h)(1) of the sales tax regulations imparts that supplies purchased for use in medical services for compensation are taxable. An example states that dental supplies such as porcelain, mercalloy, gold, silver, acrylic denture base, amalgam, composite resin, silicate, and dental floss are not exempt when purchased by a dentist. Section 1115(a)(4) of the Tax Law, in pertinent part, provides an exemption for prosthetic aids. Section 528.5(b) of the sales tax regulations explains that a prosthetic aid must either completely or partially replace a missing body part or the function of a permanently inoperative or permanently malfunctioning body part and must be primarily and customarily used for such purposes and not be generally useful in the absence of illness, injury or physical incapacity. An example states that a crown which is permanently attached to a tooth by a dentist is exempt.
The Department now considers onlays and inlays to qualify as exempt prosthetic aids, along with implants, dentures, bridges, full and partial crowns (both temporary and permanent), onlays, and inlays.
These devices completely or partially replace missing teeth or the functions of permanently inoperative or permanently malfunctioning teeth. Products that are cosmetic in nature, such as laminate veneers, decorative caps, and specialty or jewelry teeth do not qualify as exempt prosthetic aids, since they are not used in conjunction with illness, injury, or physical incapacitation.
The full text can be viewed on the New York State Department of Taxation and Finance website.
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