Which dental-lab materials were exempt in Florida, and what documentation did the seller need?

Plain-English summary

Florida exempted raw materials that dentists or dental labs used as component parts of dental products ultimately dispensed to patients. The ruling included one-time-use products such as impression materials bearing the federal "Rx Only" warning.

Documentation depended on the product and buyer. Product-specific Rx-only sales required no further certificate. Non-Rx products sold for resale to registered dentists or labs required an Annual Resale Certificate. An unregistered buyer could provide an affidavit, including the suggested Form DR-97 format, stating that the material would be incorporated into a patient under a doctor's order. Equipment and consumable supplies were taxable.

What this means for you

Dental-product sellers should classify each item by its use, labeling, and path to the patient, then retain the documentation that matches the buyer's registration status. The medical exemption did not cover general equipment or consumables.

Common questions

Q: Were all sales to dental labs exempt? No. Equipment and consumable supplies were taxable.

Q: What supported exemption for a non-Rx product sold to an unregistered buyer? An affidavit identifying the product and stating that it would be incorporated into a patient under a doctor's order.

Citations and references

• Fla. Stat. § 212.08(2) — medical-product exemptions
• Fla. Admin. Code r. 12A-1.020(6)(a) — qualifying medical products and supplies
• Fla. Admin. Code r. 12A-1.021(1)(b) — materials incorporated into the body
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 03A-003

Original ruling text

SUMMARY

QUESTION: What is the taxable status of various dental
products and what is the proper documentation required for
exempt sales?

ANSWER - Based on Facts Below: The purchase by a dentist or
a dental lab of raw materials that will become component
parts of medical or dental products that will in turn be
dispensed to a healthcare patient by a healthcare
practitioner is exempt from tax. One-time use products,
such as dental impression materials, that contain the FDA
warning "Rx-Only" would be included within this category.

For sales of medical products that are to be resold, and
which are not "Rx-only", to dental labs and dentists who
are registered for sales and use tax purposes, a copy of
their Annual Resale Certificate should be obtained. For
sales of non-Rx materials to unregistered dental labs and
unregistered dentists, an affidavit should be obtained
which states that the specified products will be
incorporated into a patient pursuant to a doctor's orders
and are therefore exempt from tax pursuant to section
212.08(2), Florida Statutes. Form DR-97, titled "Suggested
Format for Blanket Exemption Certificate Based on
Property's Use", may be used if Taxpayer used the space
marked "Other" to insert the justifying language.

Sales to dental labs and dentists of equipment and
consumable supplies are not exempt from tax, and the vendor
should collect tax from the customer.

Jan 27, 2003

Re: Technical Assistance Advisement 03A-003
Sales and Use Tax - Sales to Dental Labs
Section: 212.08, F.S.
Rules: 12A-1.020, 12A-1.021, F.A.C.

Petitioner: XXX (herein "Taxpayer")
FEI: XX

Dear :

This letter is a response to your petition dated December 3,
2002, for the Department's issuance of a Technical Assistance
Advisement ("TAA") concerning the above referenced party and
matter. Your petition has been carefully examined and the
Department finds it to be in compliance with the requisite
criteria set forth in Chapter 12-11, F.A.C. This response to
your request constitutes a TAA and is issued to you under the
authority of s. 213.22, F.S.

FACTS

The petition sets forth the following facts:

[Taxpayer] is in the business of developing, manufacturing
and selling dental and dental laboratory products.
[Taxpayer] is located outside the state of Florida, but
sells to customers within the state of Florida, and has
nexus with Florida. Therefore, [Taxpayer] is required to
collect applicable [sales and] use tax from Florida
customers

Most of [Taxpayer]'s products that are sold to dental
laboratories become a component part of the dentures,
dental crowns, bridges, and other products manufactured by
the dental labs for sale to dentists. A few products, such
as impression material and composites, are purchased by the
dental labs for resale to dentists without any change in
form. The following is a list of the [Taxpayer]'s products
that are sold to dental labs:

ALLOYS - metals that are used to make the framework or
structure that is the base for a dental crown, cap or
bridge. These alloys can be made of a combination of
precious metals, mostly a gold and palladium mixture, or of
non-precious metals, such as nickel or chrome-cobalt. In
some cases, the [Taxpayer] will sell the precious metal in

its pure form to dental laboratories for specific
applications.

PORCELAIN - material that is applied as a veneer over the
metal base of a dental crown, cap or bridge.

COMPOSITES - materials that are used to manufacture
bridges, crowns, inlays, etc. (Note: This should not be
confused with composites [that] are used by dentists to
cement dental work or as a chair-side restorative.)

IMPRESSION MATERIAL - this is used by a dentist or doctor
to take an impression of the patient's mouth. From the
impression a working model is produced to simulate the
patient's upper and lower teeth.

DENTAL OFFICE MATERIALS - Laboratories will rarely purchase
dental office composites, impression materials, or bonding
agents [that] will then be resold to dentists without a
change in form.

The sale of all of the above items by [Taxpayer] is subject
to federal regulation by the Food and Drug Administration
("FDA"). Under section 21 of Code of Federal Regulations,
these devices must bear the language "Caution: Federal law
restricts this device to sale by or on the order of a
dentist". See 21 C.F.R. 801.109 for this application.
Under proposed rules, currently being treated as FDA
regulations by the FDA, this statement can be reduced to
"Rx Only".

[Taxpayer] also sells relatively small amounts of supplies
to the labs, such as abrasives, which are used by
[Taxpayer]'s customers in manufacturing the dental crowns
and other dental products, etc. Machinery and equipment
are also sold to the dental labs. [Taxpayer] intends to
charge the dental labs use tax on the sale of such items.

REQUESTED ADVISEMENT

Advice is requested on the taxability of the various products

and proper documentation required for exempt sales.

LAW AND DISCUSSION

Section 212.08(2), Florida Statutes, 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....

(f) Sales of drugs to or by physicians, dentists,
veterinarians, and hospitals in connection with medical
treatment are exempt.

Rule 12A-1.020(6)(a), Florida Administrative Code, provides:

(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.

Rule 12A-1.021(1)(b), Florida Administrative Code, provides in
part:

... *NOTE: Gold, silver and other materials/devices

temporarily or permanently incorporated into the human body
by physicians or dentists shall be exempt (i.e.: organ
implant, dentures, dental bridge work and crowns).

The purchase by a dentist or a dental lab of raw materials that
will become component parts of medical or dental products that
will in turn be dispensed to a healthcare patient by a
healthcare practitioner is exempt from tax. One-time use
products, such as dental impression materials, that contain the
FDA warning "Rx-Only" would be included within this category.

Such sales to licensed dental labs (and to licensed dentists)
would require no further documentation when the medical product
being sold is subject to federal regulation or is an "Rx-only"
product. These one-time use products that contain the "Rx-Only"
labeling would be product specific exempt, and the vendor would
not be required to obtain a resale certificate or affidavit.

For sales of medical products that are to be resold, and which
are not "Rx-only", to dental labs and dentists who are
registered for sales and use tax purposes, a copy of their
Annual Resale Certificate should be obtained. For sales of nonRx materials to unregistered dental labs and unregistered
dentists, an affidavit should be obtained which states that the
specified products will be incorporated into a patient pursuant
to a doctor's orders and are therefore exempt from tax pursuant
to section 212.08(2), Florida Statutes. Form DR-97, titled
"Suggested Format for Blanket Exemption Certificate Based on
Property's Use," may be used if Taxpayer used the space marked
"Other" to insert the justifying language. This form is
available on the Department's web site, www.myflorida.com/dor.

Sales to dental labs and dentists of equipment and consumable
supplies are not exempt from tax, and the vendor should collect
tax from the customer.

This response constitutes a Technical Assistance Advisement
under Section 213.22, F.S., which is binding on the department
only under the facts and circumstances described in the request
for this advice, as specified in Section 213.22, F.S. Our
response is predicated upon 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 from that which is 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., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

Sincerely,

Sara D. Faulkenberry
Tax Law Specialist
Technical Assistance and Dispute Resolution
850/414-9838

Control #52951