Are sales and leases of therapeutic medical beds and mattresses exempt from Kansas sales tax?

Plain-English summary

The requester asked whether the gross receipts from transferring therapeutic medical beds and mattresses are exempt from Kansas retail sales tax. The Department pointed to the exemption in K.S.A. 79-3606(b) and enclosed detailed taxability guidelines for the specific situations presented.

K.S.A. 79-3606(b) exempts "all sales of tangible personal property or service, including the renting and leasing of tangible personal property," when the property is purchased directly by ... a public or private nonprofit hospital and used exclusively for ... hospital ... purposes — except when the hospital is (or proposes to be) engaged in a separately taxable business and uses the items in that business.

So whether a sale or lease of these therapeutic beds and mattresses is exempt turns on who buys them and how they are used: a transfer that meets the direct-purchase-by-a-nonprofit-hospital-for-hospital-use test is exempt, and one that does not is taxable. The Department's enclosed guidelines addressed the particular instances the requester raised.

What this means for you

Sellers and lessors of durable medical equipment

A sale or lease of therapeutic beds and mattresses is exempt when it is purchased directly by a nonprofit hospital and used exclusively for hospital purposes. Document the hospital's direct purchase and exempt use; other transfers are generally taxable.

Hospitals and healthcare facilities

The exemption is for property you purchase directly and use exclusively for hospital purposes — not for items used in a separately taxable business you operate.

Common questions

Q: Are therapeutic beds and mattresses automatically exempt?
A: No. Exemption depends on the buyer and use — the K.S.A. 79-3606(b) exemption applies to property a nonprofit hospital buys directly and uses exclusively for hospital purposes.

Q: What if the hospital uses the equipment in a taxable business?
A: Then the exemption does not apply to those items — K.S.A. 79-3606(b) excepts property used in a separately taxable hospital business.

Citations and references

• K.S.A. 79-3606(b) — quoted by the Department as exempting "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," subject to the exception for property used in a separately taxable business. The Department enclosed taxability guidelines for the specific therapeutic bed and mattress instances requested.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2005-006

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

May 20, 2005

XXXXX
XXXXX
XXXXX
XXXXX

Dear XXXXX:

This letter is in response to your request for a Private Letter Ruling dated April 13, 2005.

You inquired whether the gross receipts from the transfer of said tangible property exempt from Kansas retail sales tax.

The following paraphrased statute relates to your 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,..."

Enclosed are the taxability guidelines for the requested instances.

This is a private letter ruling pursuant to K.A.R. 92-19-59. It is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to an accurate determination by the department, this ruling is null and void. This ruling will be revoked in the future by the operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or published revenue ruling, that materially effects this private letter ruling.

Sincerely,

Thomas P. Browne, Jr.
Tax Specialist

DVL

enclosed

Date Composed: 05/23/2005 Date Modified: 05/23/2005

Table 1

Table 2