Which medical supplies and equipment — including rentals and delivery fees — are exempt from Kansas sales tax?

Plain-English summary

The requester asked which medical supplies and equipment — including rented items — are exempt from Kansas sales tax. The Department walked through three different exemptions, and the key lesson is that not everything a patient uses is exempt; the answer turns on the specific item, whether a prescription exists, and who is buying.

1. Prescribed prosthetic and orthopedic appliances — K.S.A. 79-3606(r). This exemption covers "prosthetic and orthopedic appliances prescribed in writing" by a person licensed to practice the healing arts, dentistry, or optometry — apparatus used to replace a missing body part, alleviate a malfunction, or help a disabled person's mobility. From the items on the requester's list, the Department said only wheelchairs, shower/commode chairs, and walkers qualify — and only if a written prescription accompanies the purchase or lease.

2. What is NOT "medical equipment." The Department took the position that hospital beds, patient lift systems, non-powered mattress overlays, continuous air-flow mattresses, and bed trapezes are not "medical equipment." As a result, they are subject to Kansas sales/use tax on the gross rental receipts, including any delivery fees. So renting a hospital bed or lift is taxable, even though renting a prescribed wheelchair may not be.

3. Nonprofit nursing homes — K.S.A. 79-3606(hh) (from Senate Bill 309). The Department explained that Senate Bill 309 (1987) exempts medical supplies and equipment purchased directly by a nonprofit skilled nursing home or nonprofit intermediate nursing care home (as defined by K.S.A. 39-923) to provide medical services to its residents. But this exemption "does not apply to tangible personal property customarily used for human habitation purposes."

4. Nonprofit hospitals — K.S.A. 79-3606(b). Direct purchases (including rentals and leases of tangible personal property) by a public or private nonprofit hospital, used exclusively for hospital purposes, are exempt — except when the hospital uses the items in a separately taxable business it operates.

Delivery fees follow the item. The Department closed by noting that delivery fees are taxable only when the underlying purchase or lease of the property is taxable. If the item is exempt, its delivery charge is exempt too; if the item is taxable, so is the delivery.

Bottom line: exemption is item-by-item. A prescription unlocks the prosthetic/orthopedic exemption for a short list of mobility devices; big-ticket rental items like hospital beds and lifts are taxable; and broad exemptions exist for direct purchases by nonprofit nursing homes and hospitals, subject to the habitation-property and taxable-business limits.

What this means for you

Medical-equipment suppliers and rental companies

Do not treat "medical" as automatically exempt. The prosthetic/orthopedic exemption (79-3606(r)) reaches only prescribed appliances — here, wheelchairs, commode chairs, and walkers — and requires a written prescription on file. Items the Department does not consider "medical equipment," such as hospital beds, lifts, and specialty mattresses, are taxable, including on rental receipts and delivery.

Keep the prescription documentation

Because the exemption for the qualifying mobility devices is conditioned on a written prescription from a licensed provider, keep that prescription with the sale or lease record. Without it, even a wheelchair sale can be taxable.

Selling to nonprofit nursing homes and hospitals

Different exemptions apply when the buyer is a nonprofit skilled/intermediate nursing care home (79-3606(hh)) or a nonprofit hospital (79-3606(b)) buying directly for care/hospital purposes. Watch the limits: no exemption for property used for human habitation, and no exemption where a hospital uses the item in a separately taxable business. Obtain the buyer's exemption certificate.

Delivery charges track the item

Charge tax on delivery only when the item itself is taxable. A delivery fee on an exempt prescribed appliance is exempt; a delivery fee on a taxable hospital-bed rental is taxable.

Common questions

Q: Are wheelchairs and walkers exempt from Kansas sales tax?
A: They can be, under K.S.A. 79-3606(r) — but only as prescribed prosthetic/orthopedic appliances, meaning a written prescription from a licensed healing-arts, dentistry, or optometry provider must accompany the purchase or lease.

Q: Are hospital beds and patient lifts exempt?
A: No. The Department said hospital beds, patient lift systems, mattress overlays, air-flow mattresses, and bed trapezes are not "medical equipment," so they are taxable — including on rental receipts and delivery fees.

Q: Is equipment bought by a nonprofit nursing home exempt?
A: Medical supplies and equipment bought directly by a nonprofit skilled or intermediate nursing care home (K.S.A. 39-923) for resident medical services are exempt under K.S.A. 79-3606(hh), except property customarily used for human habitation.

Q: Are delivery fees taxable?
A: Only when the underlying purchase or lease is taxable. Delivery of an exempt item is exempt; delivery of a taxable item is taxable.

Citations and references

• K.S.A. 79-3606(r) — exempts prosthetic and orthopedic appliances prescribed in writing by a licensed healing-arts, dentistry, or optometry provider; from the requester's list, only wheelchairs, shower/commode chairs, and walkers qualify (with a prescription).
• K.S.A. 79-3606(hh) (from Senate Bill 309, 1987) — exempts medical supplies and equipment purchased directly by a nonprofit skilled or intermediate nursing care home (as defined by K.S.A. 39-923) for residents' medical services, but not property customarily used for human habitation.
• K.S.A. 39-923 — defines the nonprofit skilled and intermediate nursing care homes eligible for the 79-3606(hh) exemption.
• K.S.A. 79-3606(b) — exempts tangible personal property and services (including rentals/leases) purchased directly by a public or private nonprofit hospital and used exclusively for hospital purposes, except when used in a separately taxable business.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2001-117

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

October 26, 2001

XXXXXXXXXXXX
XXXXXXXXXXXXXXXXX
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Dear XXXXXXXXX:

The purpose of this letter is to respond to your letter dated October 10, 2001.

Senate Bill 309, enacted by the 1987 Kansas Legislature, provided that all sales of medical supplies and equipment purchased directly by a nonprofit skilled nursing home or nonprofit intermediate nursing care home, as defined by K.S.A. 39-923, for the purpose of providing medical services to residents thereof, shall be exempt from sales tax in the state of Kansas. However, this exemption does not apply to tangible personal property customarily used for human habitation purposes. [See K.S.A. 79-3606(hh)].

Equipment which qualifies as “medical equipment” would be wheelchairs, shower/commode chairs and walkers. It would be the position of this department that hospital beds, patient lift systems, non-powered mattress overlay, continuous air flow mattresses, as well as a bed trapeze would not be “medical equipment”, and therefore would be subject to the appropriate Kansas sales/use tax on the gross rental receipts, including any delivery fees thereon.

K.S.A. 79-3606(r) exempts from sales tax: “all sales of prosthetic and orthopedic appliances prescribed in writing by a person licensed to practice healing arts, dentistry or optometry. For the purposes of this subsection, the term prosthetic and orthopedic appliances means any apparatus, instrument, device, or equipment used to replace or substitute for any missing part of the body; used to alleviate the malfunction of any part of the body; or used to assist any disabled person in leading a normal life by facilitating such person’s mobility; such term shall include accessories to be attached to motor vehicles, but term shall not include motor vehicles or personal property which when installed becomes a fixture to real property. . ."

In order for an individual to purchase/lease a prosthetic or orthopedic appliance, a person licensed to practice healing arts, dentistry or optometry must write a prescription for said purchase/lease. From the list that you have provided, only wheelchairs, shower/commode chairs and walkers would qualify for the sales tax exemption in K.S.A. 79-3606(r). This is assuming that a prescription order accompanied the purchase/lease request.

K.S.A. 79-3606(b) exempts from sales tax: "all sales of tangible personal property or service, including the renting and leasing of tangible personal property purchased directly by......a public or private nonprofit hospital...and used exclusively for...hospital...purposes, except when: (1) Such...hospital is engaged or proposes to engage in any business specifically taxable under the provisions of this act and such items of tangible personal property or service are used or proposed to be used in such business,..."

In closing, the delivery fees would be subject to sales tax, only when the purchase/lease of tangible personal property is subject to sales tax in the state of Kansas.

This private letter ruling is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to make an accurate determination by the department, this ruling is null and void. This private letter ruling will be revoked in the future by operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or a published revenue ruling, that materially affects this private letter ruling.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

Date Composed: 10/30/2001 Date Modified: 10/30/2001

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