Were single-use physician-order tools for treating vertebral compression fractures exempt from Florida sales tax?

Subject

Medical Devices

Plain-English summary

The described single-use tools for treating vertebral compression fractures were exempt when federal law required the physician-order legend. The procedure used an introducer kit, inflatable bone tamp and syringe, and bone-filler device to create and fill a void in a vertebral body.

The exemption did not extend to prescription-legend equipment intended for repeated practitioner or facility use, such as x-ray machines, or to general consumable supplies such as gloves, trash bags, and laboratory supplies.

What this means for you

Single-use status and the required federal prescription restriction distinguished the exempt devices from reusable capital equipment and ordinary supplies.

Common questions

Q: Were the compression-fracture devices exempt? Yes.

Q: Were reusable diagnostic machines exempt under this ruling? No.

Q: Were general consumables exempt? No.

Citations and references

• Fla. Stat. § 212.08(2)(a) — prescription medical products and supplies
• Fla. Admin. Code rr. 12A-1.002(1) and 12A-1.020(6) — practitioners and medical products
• Fla. Stat. § 465.186 — dispensing procedures cited
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 01A-032

Original ruling text

SUMMARY

QUESTION: What is the taxable status of one-time use,
prescription medical devices.

ANSWER - Based on Facts Below: Medical devices that
are intended for one-time use and that are required under
federal law to bear a prescription legend that reads either
"RX only", or "CAUTION: Federal law restricts this device
to sale (or use) by or on the order of a licensed physician,"
would be exempt from tax.

Jun 14, 2001

Re: Technical Assistance Advisement 01A-032
Sales Tax -- Medical Devices
Section 212.08(2), F.S.
Rules 12A-1.002(2), 12A-1.020(6), F.A.C.

Dear :

This is in response to your letter of May 14, 2001, requesting
the issuance of a Technical Assistance Advisement regarding the
taxable status of certain medical devices which your company
sells in Florida. Your letter provides in part:

XXX manufactures medical devices used in the treatment of
compression fractures. The devices are manufactured in
California and have been sold to hospitals in Florida
beginning April 21, 2000. Each device is labeled with a
symbol that indicates the device is for single use only.
Each device is labeled with the following warning: Federal
(U.S.A.) Law restricts this device to use by or on the
order of a licensed physician.

The most common application of our products is to treat
compression fractures in the vertebrae of the spine. The
procedure entails drilling into one or more vertebral

bodies so that our inflatable bone tamp can [be] inserted,
then inflated, to create a void in the cancellous bone of
the vertebral body. Our products include an introducer
tool kit (consisting of a guide pin, dissector, cannula,
and drill bit), inflatable bone tamp inflation syringe, and
bone filler device....

Law

Section 212.08(2), F.S., provides in part:

(2) EXEMPTIONS; MEDICAL.
(a) There shall be exempt from the tax imposed by this
chapter any medical products and supplies or medicine
dispensed according to an individual prescription or
prescriptions written by a prescriber authorized by law to
prescribe medicinal drugs;....

Rule 12A-1.020, F.A.C., provides, in part:

(6)(a) Medical products and supplies used in the cure,
mitigation, alleviation, prevention or treatment of injury,
illness, disease or incapacity are taxable, unless:

1. Temporarily or permanently incorporated into a patient
   or client by a practitioner of the healing arts licensed by
   the State of Florida.

2. Ordered and dispensed by or on the prescription of a
   duly licensed practitioner authorized by the laws of the
   state to prescribe medicinal drugs; or

3. Ordered and dispensed by a pharmacist pursuant to the
   established dispensing procedures determined by the joint
   committee of medical, osteopathic and pharmacy professions
   as created by section 465.186, F.S.

(b) The sale of medical products or supplies to physicians,
dentists, veterinarians and hospitals is taxable even
though the medical products or supplies may be used in
connection with medical treatment, unless the products and

supplies are specifically exempt from tax under this rule
or in Rule 12A-1.021, F.A.C.

[Rule 12A-1.021, F.A.C. deals with certain exempt
prosthetic and orthopedic appliances, which are not at issue
here.]

Rule 12A-1.002, F.A.C., dealing with "Practitioners of the
Healing Arts," provides:

(1) All licensed practitioners of the healing arts are the
consumers of the various items of tangible personal
property which they use in the rendition of their
professional services and the tax will apply upon their
purchases of items of tangible personal property, including
equipment except such items as are exempt under Rule 12A1.020.

Conclusion

Medical devices, such as those that you have described, that are
intended for one-time use and that are required under federal
law to bear a prescription legend that reads either "RX only",
or "CAUTION: Federal law restricts this device to sale (or use)
by or on the order of a licensed physician," would be exempt
from tax.

The exemption does not extend to prescription legend devices
that are intended to be reusable by the health care practitioner
or facility. The exemption thus would not be applicable to
items such as x-ray machines or similar diagnostic machinery.
Consumable supplies, such as rubber gloves, trash bags, or
laboratory supplies, would be taxable.

Closing Statement

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S. which is binding on the department only
under facts and circumstances described in the request for this
advice as specified in s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized

above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response, your request and
related backup documents are public records under Chapter 119,
F.S., which are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Your name, address, and any other
details which might lead to identification of the taxpayer must
be deleted by the Department before disclosure. In an effort to
protect the confidentiality of such information, we request you
provide the undersigned with an edited copy of your request for
Technical Assistance Advisement, backup material and response
within fifteen days of the date of this advisement.

Sincerely,

Jonathan E. Swift
Tax Law Specialist
Technical Assistance and Dispute Resolution
(850) 922-4840

Control #45291