Were the purchaser's two prescription-labeled, single-use medical products exempt from Florida sales tax, and how could it recover tax paid in error?

Plain-English summary

Both redacted medical products were exempt from Florida sales tax. The Department relied on their labels: each product was marked "RX" and "Single Use Only," bringing it within the rule for prescription-only medical products intended for one patient and not for reuse.

Because the vendor had charged sales tax, the purchaser first needed documentation showing that the tax was paid in error and generally had to obtain the refund from the vendor. After refunding the customer, the vendor could apply to the Department using Form DR-26S.

If the vendor would not issue the refund, it could assign its refund right to the purchaser. The advisement says Form DR-26A could be used for the notarized assignment, with the purchaser then submitting the assignment, Form DR-26S, and proof of the erroneous tax payment. The ruling states a three-year limitations period from the date the tax was remitted.

What this means for you

The product label did the decisive work in this ruling. A medical purpose alone was not the only stated criterion; the two products carried both prescription and single-use labels.

For tax paid to a seller in error, the normal route runs through that seller. A direct claim by the purchaser required an assignment of the seller's refund right and supporting records.

Common questions

Were the two products taxable? No. Both carried "RX" and "Single Use Only" labels.

Could the purchaser request the refund directly from the Department immediately? The cited rule says a customer that paid tax to a dealer generally must secure the refund from the dealer.

What if the vendor would not refund the tax? The vendor could assign its refund right, allowing the purchaser to apply directly with the assignment and supporting forms and records.

How long did the ruling say the claimant had? Three years from the date the tax was remitted.

Citations and references

• Fla. Stat. § 212.08(2)(a).
• Fla. Stat. § 215.26.
• Fla. Admin. Code rr. 12A-1.020(6)(a), 12A-1.020(6)(c)1., and 12A-1.014(3)-(5).
• Forms DR-26S and DR-26A, as described in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 24A-002

Original ruling text

Florida Department of Revenue Jim Zingale
Technical Assistance and Dispute Resolution Executive Director

EPARTMENT OF REVENUE

FLORIDA

5050 West Tennessee Street, Tallahassee, FL 32399 floridarevenue.com

QUESTION: Whether Taxpayer’s purchases of two medical products from yy.
(“Vendor’’) are exempt from Florida sales tax.

RESPONSE: Both medical products are exempt from Florida sales tax as both products carry
Prescription labels and Single Use labels.

March 18, 2024

Subject: Technical Assistance Advisement
STATUTE CITE(S): Sections 212.08 and 215.26, Florida Statutes (F.S.)
RULE CITES: Rules 12A-1.014 and 12A-1.020, Florida Administrative Code (F.A.C.)
("1 2xpayer”)
FEIN:
BP

Der

This is in response to your letter dated NN, requesting this Department’s issuance
of a Technical Assistance Advisement (“TAA”’) pursuant to section 213.22, F.S., and Rule Chapter
12-11, F.A.C., concerning the matter referenced below. An examination of your letter has
established that Taxpayer has complied with the statutory and regulatory requirements for issuance
of a TAA. Therefore, the Department is hereby granting your request for a TAA.

Requested Advisement

Whether Taxpayer’s purchases of two medical products! from Vendor are exempt from Florida
sales tax. If the two medical products are specifically exempt from Florida sales tax, what remedy

‘Tn an email, dated gg, Taxpayer withdrew its request for a TAA for 6 of the 8 products initially listed
in its original TAA request, dated [as Taxpayer could not find enough support to request a binding
TAA on the 6 products removed from the TAA request.

Technical Assistance Advisement
February 08, 2024
Page 2

does Taxpayer have if Vendor has charged Florida sales tax on its sales to Taxpayer of such
products?

Facts

Taxpayer operates several x. Taxpayer purchased the following
products from Vendor, and Vendor charged Taxpayer Florida sales tax on the sales price of each
of the products. Taxpayer asserts that the two products listed below are specifically exempted
from Florida sales and use tax under Rule 12A-1.020(6)(c), F.A.C.

Medical Product Description Part # Label(s)
| RX and Single Use Only
|| RX and Single Use Only

Taxpayer described the two products under advisement as follows:

Law and Discussion

Medical Products

Unless a specific exemption applies, s. 212.05, F.S., provides it is the legislative intent that every
person is exercising a taxable privilege that engages in the business of selling tangible personal
property in this state. For exercising such a privilege, a tax is levied on each taxable transaction or
incident. The tax is due and payable at the rate of 6 percent, plus any applicable surtaxes imposed
under s. 212.055, F.S., on the total consideration received for each item or article of tangible
personal property when sold at retail in this state. Exemptions from tax are strictly construed
against the claimant. Wanda Marine Corp. v. Dep't of Revenue, 305 So. 2d 65, 69 (Fla. lst DCA
1975).

Technical Assistance Advisement
February 08, 2024
Page 3

Section 212.08(2)(a), F.S., provides that certain medical products and supplies? are specifically
exempt from tax when dispensed according to an individual prescription written by a prescriber
authorized by law. Additionally, items are exempt if included on the Nontaxable Medical Items
and General Grocery List, form DR-46NT, as approved by the Department of Business and
Professional Regulation.

Pursuant to Rule 12A-1.020(6)(c)1., F.A.C., medical products, supplies, or devices sold to
hospitals and healthcare entities or to licensed practitioners are exempt when dispensed under
federal or state law only by the prescription or order of a licensed practitioner and are intended for
use on a single patient and not intended to be reusable.

The two medical products referenced above, the i and the iy
EE are labeled RX and Single Use Only and thus both medical products would
be specifically exempt from Florida sales tax. See s. 212.08(2)(a), F.S. and Rule 12A-
1.020(6)(c)1., F.A.C.

Refunds

Section 215.26, F.S., discusses refunds of taxes paid in error, and it states in pertinent part as
follows:

(1) The Chief Financial Officer may refund to the person who paid same, or his or her
heirs, personal representatives, or assigns, any moneys paid into the State Treasury which
constitute:

(a) An overpayment of any tax, license, or account due;
(b) A payment where no tax, license, or account is due; and

(c) Any payment made into the State Treasury in error;

oR KK

(2) Application for refunds as provided by this section must be filed with the Chief
Financial Officer, except as otherwise provided in this subsection, within 3 years after the
right to the refund has accrued or else the right is barred. Except as provided in chapter 198
and ss. 220.23 and 624.50921, an application for a refund of a tax enumerated in s. 72.011,
which tax was paid after September 30, 1994, and before July 1, 1999, must be filed with
the Chief Financial Officer within 5 years after the date the tax is paid, and within 3 years
after the date the tax was paid for taxes paid on or after July 1, 1999....

oR KK

2 “Medical products, supplies, or devices” are “any products, supplies, or devices that are intended or designed to be
used for a medical purpose to treat, prevent, or diagnose human disease, illness, or injury. The purpose is assigned to
a product, supply, or device by its label or its general instructions for use.” See Rule 12A-1.020(6)(a), F.A.C.

Technical Assistance Advisement
February 08, 2024
Page 4

(4) This section is the exclusive procedure and remedy for refund claims between
individual funds and accounts in the State Treasury.

oR KK

Rule 12A-1.014, F.A.C., implements the refund procedures with respect to sales and use tax, and
it states in pertinent part as follows:

oR KK

(3) Whenever a dealer credits a customer with tax on returned merchandise or for tax
erroneously collected, the dealer must refund such tax to the customer before the dealer's
claim to the State for credit or refund will be approved.

(4) A taxpayer who has overpaid tax to a dealer, or who has paid tax to a dealer when no
tax is due, must secure a refund of the tax from the dealer and not from the Department of
Revenue.

(5)(a) Any dealer entitled to a refund of tax paid to the Department of Revenue may seek
a refund by filing an Application for Refund-Sales and Use Tax (form DR-26S,
incorporated by reference in Rule 12-26.008, F.A.C.) with the Department. Form DR-26S
must meet the requirements of Sections 213.255(2) and (3), F.S., and Rule 12-26.003,
F.A.C.

There must be sufficient documentation and information to prove that sales taxes were paid in
error on Taxpayer’s purchases of the two products under advisement from its Vendor, before a
refund of such taxes is due. Once this has been established, the refund of taxes paid in error must
be secured from the Vendor (dealer) to whom Taxpayer paid the taxes. After Vendor has refunded
the taxes paid in error to Taxpayer, Vendor would then submit an application for refund (Form
DR-26S, Application for Refund — Sales and Use Tax Only) to the Department for a refund of the
taxes paid in error.

If Vendor does not wish to refund the sales taxes paid in error to Taxpayer, s. 215.26, F.S.,
authorizes the Department to refund the taxes to Taxpayer as an assignee. In this case, Vendor is
assigning its right to the refund to Taxpayer, and Taxpayer would apply directly to the Department
of Revenue for the refund of the sales taxes paid in error. The Department does not have a standard
assignment form that is required to be filed. A Form DR-26A, Assignment of Rights to Refund of
Tax, may be used for the assignment of rights. Form DR-26A must be filled out by Vendor and
notarized, and returned to Taxpayer. Taxpayer should include Form DR-26A, along with Form
DR-26S and all documentation showing that it paid the taxes to Vendor in error, if Taxpayer
applies for a refund. All documents should be sent to the address on the DR-26S. The statute of
limitations on claiming refunds is three years from the date the tax was remitted.

Technical Assistance Advisement
February 08, 2024
Page 5

Conclusion

As provided in Rule 12A~-1.020(6)(a), F.A.C., a medical product’s label provides the medical
product’s purpose. Vendor’s sales of the two medical products under advisement are exempt from
Florida sales tax under Rule 12A-1.020(6)(c)1., F.A.C. since both products carry “RX” and “Single
Use” labels. If Taxpayer thinks that Florida sales tax was paid in error to Vendor, please follow
the advice provided in this TAA under the heading, “Refunds.”

This response constitutes a TAA under s. 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 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., 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 TAA, 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 ten (10) days of the date of this letter.

If you have any further questions with regard to this matter and wish to discuss them, you may
contact me directly at (850)717-6363.

Sincerely,

Leigh €. Ceci
Leigh L. Ceci, MAcc
Tax Law Specialist

Technical Assistance & Dispute Resolution
(850)717-6363

Record ID: 7001132248

Technical Assistance Advisement
February 08, 2024
Page 6

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