Did IDOR decide whether gelatin embolization pledgets qualified for Illinois's reduced medical-appliance tax rate?

Plain-English summary

A medical-device company asked whether disposable gelatin pledgets delivered through a catheter to occlude blood flow in tumors and arteriovenous malformations were subject to Illinois sales tax.

IDOR did not state a product-specific answer. It supplied the medical-appliance test:

• Qualifying drugs, medicines, and medical appliances received the lower 1% state rate plus applicable local taxes; other items received the general-merchandise rate stated in the letter.
• A medical appliance was an item the manufacturer intended to directly substitute for a malfunctioning part of the body.
• The product could be prescribed, purchased by a health professional for a patient, or bought directly by an individual, but a prescription alone did not make it a qualifying appliance.
• Diagnostic, treatment, and rehabilitative equipment generally did not qualify when it did not directly substitute for a malfunctioning body part.

Because the response stopped at those rules, the public letter does not establish the pledgets' tax rate.

Common questions

Did the physician-order restriction make the pledgets low-rate appliances? Not by itself.

Did IDOR expressly classify the pledgets? No.

Citations and references

• 86 Ill. Adm. Code 130.311(d), (d)(7)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2012.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2012/st-12-0046.pdf

Original ruling text

ST 12-0046-GIL 08/09/2012 MEDICAL APPLIANCES
A medical appliance is defined as an item which is intended by its manufacturer for use
in directly substituting for a malfunctioning part of the body. See 86 Ill. Adm. Code
130.311. (This is a GIL.)
August 9, 2012
Dear:
This letter is in response to your letter dated June 29, 2012, in which you request information. The
Department issues two types of letter rulings. Private Letter Rulings (“PLRs”) are issued by the
Department in response to specific taxpayer inquiries concerning the application of a tax statute or
rule to a particular fact situation. A PLR is binding on the Department, but only as to the taxpayer
who is the subject of the request for ruling and only to the extent the facts recited in the PLR are
correct and complete. Persons seeking PLRs must comply with the procedures for PLRs found in the
Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information Letter
(“GIL”) is to direct taxpayers to Department regulations or other sources of information regarding the
topic about which they have inquired. A GIL is not a statement of Department policy and is not
binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website at
www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant to your
inquiry.
The nature of your inquiry and the information you have provided require that we respond with a GIL.
In your letter you have stated and made inquiry as follows:
I am requesting a ruling for the COMPANYS’ NAME embolization pledgets product to
determine if it’s subject to sales tax in your state. COMANY is a medical device
company focused on bringing solutions to interventional cardiologists and interventional
radiologists.
NAME embolization pledgets are pre-formed, radially compressed pledgets of gelatin
foam that are designed to be delivered through a catheter to embolize vessels in
hypervascular tumors and arteriovenous malformations. Once in the artery or vein the
pledgets help to occlude blood flow. Each tray of NAME pledgets contains two delivery
tubes, each containing one pledget, along with a 1cc or 3cc delivery syringe. This is a
disposable, single use product sold to hospitals and clinics that has restrictive labeling
stating “CAUTION: Federal Law (U.S.A.) restricts this device to sale by or on the order
of a physician.”
Enclosed are copies of the literature and instructions for use for this product. Additional
information can be found at WEBSITE. Please contact me with any questions you
have.
DEPARTMENT’S RESPONSE:
Please see the Department’s regulation at 86 Ill. Adm. Code Section 130.311, which is its regulations
governing Drugs, Medicines, Medical Appliances, and Grooming and Hygiene Products. Those
products that qualify as drugs, medicines and medical appliances are taxed at a lower State rate of
1% plus any applicable local taxes. Those items that do not qualify for the low rate of tax are taxed at
the general merchandise rate of 6.25% plus applicable local taxes.

ST 12-0046-GIL
August 9, 2012
Page 2
The definition of a medical appliance is "an item which is intended by its manufacturer for use in
directly substituting for a malfunctioning part of the body." Please note that 86 Ill. Adm. Code
130.311(d)(7) provides that medical appliances may be prescribed by licensed health care
professionals for use by a patient, purchased by health care professionals for the use of patients, or
purchased directly by individuals. Note, though, not all items prescribed by physicians or other
licensed health care professionals qualify for the low rate. Examples of items that qualify for the
reduced rate are corrective medical appliances such as hearing aids, eyeglasses and contact lenses.
As a general proposition, diagnostic, treatment, and rehabilitative equipment items do not qualify for
the reduced rate of tax as medical appliances, even if prescribed by a licensed health care
professional, because such items are not "for use in directly substituting for a malfunctioning part of
the body," 86 Ill. Adm. Code 130.311(d).
I hope this information is helpful. If you require additional information, please visit our website at
www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.
Very truly yours,

Debra M. Boggess
Associate Counsel