Is an implantable spinal device (a prosthetic device) exempt from Kansas sales tax even when a for-profit hospital buys it?

Plain-English summary

A device maker asked whether a new implantable spinal device — a motion-preserving implant placed surgically between the spinous processes — would be subject to Kansas sales tax if bought by a for-profit hospital.

The Department said the device is exempt under K.S.A. 79-3606(r), which exempts sales of prosthetic devices ... prescribed in writing by a person licensed to practice the healing arts, dentistry, or optometry. A "prosthetic device" is a replacement, corrective, or supportive device worn on or in the body to replace a missing part, correct a deformity or malfunction, or support a weak or deformed portion of the body. The implant fits that definition.

Because this exemption turns on the nature of the device (a prescribed prosthetic device), not on who buys it, it applies even when a for-profit hospital is the purchaser.

What this means for you

Medical-device makers and sellers

Implantable prosthetic devices prescribed in writing are exempt under K.S.A. 79-3606(r). The buyer's for-profit or nonprofit status does not change that — the exemption follows the device, not the purchaser.

Hospitals (including for-profit)

You can buy qualifying prescribed prosthetic devices exempt even if your facility itself does not hold an entity-based exemption.

Common questions

Q: Does the for-profit hospital have to pay tax on the implant?
A: No. The implant is an exempt prosthetic device under K.S.A. 79-3606(r), and that exemption does not depend on the buyer's tax status.

Q: What makes the implant a "prosthetic device"?
A: It is a supportive device worn in the body, prescribed in writing by a licensed practitioner — matching the statute's definition.

Citations and references

• K.S.A. 79-3606(r) — exempts "all sales of prosthetic devices ... prescribed in writing by a person licensed to practice the healing arts, dentistry or optometry," and defines "prosthetic device" as a replacement, corrective, or supportive device worn on or in the body. The Department classified the implantable spinal device under this exemption, so it is exempt even when purchased by a for-profit hospital.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2005-014

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

June 3, 2005

XXXXX
XXXXX
XXXXX
XXXXX

Dear XXXXX:

I have been asked to answer your letter dated May 23, 2005. In it, you inquired about your new device, a motions preserving implant that is placed surgically between the spinous processes, and whether or not it would be subject to Kansas retail sales tax if purchased by a for-profit hospital.

The new device would be classified under our exemption listed under Kansas statute as K.S.A. 79-3606(r) as stated below:

(r) all sales of prosthetic devices and mobility enhancing equipment prescribed in writing by a person licensed to practice the healing arts, dentistry or optometry, and in addition to such sales, all sales of hearing aids, as defined by subsection (c) of K.S.A. 74-5807, and amendments thereto, and replacement parts therefore, including batteries, by a person licensed in the practice of dispensing and fitting hearing aids pursuant to the provisions of K.S.A. 74-5808, and amendments thereto. For the purposes of this subsection: (1) "Mobility enhancing equipment" means equipment including repair and replacement parts to same, but does not include durable medical equipment, which is primarily and customarily used to provide or increase the ability to move from one place to another and which is appropriate for use either in a home or a motor vehicle; is not generally used by persons with normal mobility; and does not include any motor vehicle or equipment on a motor vehicle normally provided by a motor vehicle manufacturer; and (2) "prosthetic device" means a replacement, corrective or supportive device including repair and replacement parts for same worn on or in the body to artificially replace a missing portion of the body, prevent or correct physical deformity or malfunction or support a weak or deformed portion of the body;

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.

I trust this information is of assistance. If I can be of further service, please feel free to contact me.

Sincerely,

Thomas P. Browne, Jr.
Tax Specialist

DVL

Date Composed: 06/03/2005 Date Modified: 06/03/2005

Table 1

Table 2