Sales, Use and International Tax Activity Update - September 2012
Missouri Rules on Taxability of Medical Device and Drug/Device Combinations
Letter Ruling LR 7116 pertained to a surgery center's purchases of Spinal Cord Stimulators. The surgery center purchased these stimulators to implant in patients for pain management purposes. The stimulators were for patients who had back surgeries but were still dealing with pain that could not be alleviated via conventional methodologies.
The stimulator was permanently inserted along the patient's spinal cord and allowed the patient to obtain pain relief. The Missouri Department of Revenue (MDOR) ruled that the purchases of Spinal Cord Stimulators were taxable. Section 144.030.2(18) of the Missouri code exempts from sales tax all sales of insulin, and prosthetic and orthopedic devices. However, the MDOR determined that the stimulators did not qualify for an exemption because they were not deemed to be an orthopedic or prosthetic device.
A copy of this ruling can be found at: http://dor.mo.gov/rulings/show.php?num=7123
Also, in a private letter ruling (LR 7123) issued on July 20, 2012, the Department determined that a biotechnology company's sales of drug-device combination products, which are used by surgeons to fill gaps between bones and promote the healing of musculoskeletal injuries and diseases, are taxable. The sales of their products are only exempt from tax if the hospitals or surgery centers that they sell to are exempt, nonprofit organizations, as evidenced by a Department issued exemption letter.
These products do not meet the definition of orthopedic devices under Regulation 12 CSR 10-110.013(2)(A) because they are not rigid or semi rigid braces that provide support and restrict the movement of weak or injured body parts, are not casting materials, and do not replace malfunctioning internal body organs.
A copy of this ruling can be found at: http://dor.mo.gov/rulings/show.php?num=7123
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