Are the single-use 'fistula needles' used to connect a hemodialysis patient's blood vessels to the dialysis machine exempt prosthetic aids, or taxable medical supplies?

Plain-English summary

Hemodialysis removes toxins and excess fluid from the blood of patients whose kidneys no longer function, typically three times a week for four hours at a time. Blood access for routine treatment uses a surgically created arteriovenous (AV) fistula -- a direct connection between an artery and vein, usually in the forearm. Two "fistula needles," each attached to a length of tubing, are inserted into the fistula: one carries blood out to the dialyzer (artificial kidney) to be cleaned, and the other returns cleansed blood to the body. Fresenius USA, which sells hemodialysis equipment, asked whether its sales of these needles are exempt.

New York exempts "prosthetic aids" that completely or partially replace a missing body part or the function of a permanently malfunctioning one, as long as they're primarily and customarily used for that purpose and aren't generally useful to people without the underlying medical condition -- an exemption that, unlike the general medical-equipment/supplies exemption, applies even when bought by a provider performing services for compensation. The Department had already ruled that the dialyzer, dialysis machine, and blood-line tubing collectively qualify as exempt prosthetic aids because together they replace the lost filtration function of a failed kidney (Comprehensive Dialysis Center of WNY and Cobe Laboratories). Since the fistula needles are the connection point linking that blood-line tubing to the patient's own vascular system -- specifically designed for and used exclusively in hemodialysis, with no general usefulness outside that treatment -- the Department found they contribute to restoring the kidney's lost function in the same way, so they qualify for the same prosthetic-aid exemption.

The Department was careful to note the limits of this conclusion: needles and syringes in general don't prosthetically replace a missing body part or function, so they remain ordinary taxable medical supplies. It's specifically the fistula needle's role as an integral connector in the prosthetic hemodialysis regimen -- not needles as a category -- that earns the exemption here.

What this means for you

Medical device manufacturers and dialysis equipment suppliers

Components that are specifically designed for and exclusively used as an integral part of a recognized prosthetic treatment regimen (here, hemodialysis) can qualify for the prosthetic-aid exemption even though, viewed in isolation, they might look like an ordinary medical supply (a needle). The key question is whether the item is essential to restoring the lost bodily function, not what category of object it superficially resembles.

Dialysis centers and providers billing for compensation

Because this is a prosthetic-aid exemption rather than the narrower general medical-equipment exemption, it applies to your purchases of fistula needles even when you're using them to perform dialysis services for compensation -- unlike ordinary medical supplies, which lose their exemption in that scenario.

Accountants and tax professionals

This ruling extends the Department's established dialysis-equipment exemption chain (dialyzer, dialysis machine, tubing) one link further to the vascular-access needles themselves, while expressly preserving the general rule that needles/syringes are ordinarily taxable medical supplies. When advising on any other component of a recognized prosthetic treatment regimen, ask whether it's essential, specifically designed for, and exclusively used in that regimen -- the same test applied here and in the companion gastrostomy-feeding ruling, TSB-A-00(23)S.

Common questions

Q: Are all needles used in medical treatment exempt from sales tax?
A: No. Ordinary needles and syringes remain taxable medical supplies. Fistula needles are exempt specifically because they're an integral, exclusively-used connector in the prosthetic hemodialysis regimen that replaces a failed kidney's function.

Q: Does it matter if a dialysis provider bills patients for using these needles as part of its services?
A: No -- because fistula needles qualify as prosthetic aids under § 1115(a)(4), the exemption applies regardless of whether they're purchased for use in performing medical services for compensation.

Q: Can another equipment supplier rely on this ruling?
A: No. It binds the Department only as to this petitioner's facts, though it applies the same reasoning as the Department's other dialysis-equipment rulings.

Citations and references

Statutes and regulations:

• Tax Law § 1105(a) (tax on retail sales of tangible personal property)
• Tax Law § 1115(a)(3) (exemption for medical equipment and supplies)
• Tax Law § 1115(a)(4) (exemption for prosthetic aids and artificial devices)
• 20 NYCRR § 528.4(g), (h) (medical supplies; taxable medical equipment and supplies)
• 20 NYCRR § 528.5(a), (b)(1) (prosthetic aid exemption and qualification test)

Prior rulings and Department guidance referenced:

• Comprehensive Dialysis Center of WNY, Inc., Adv Op Comm T&F, Aug. 4, 1998, TSB-A-98(51)S
• Cobe Laboratories, Inc., Adv Op Comm T&F, Aug. 6, 1998, TSB-A-98(53)S
• New York State Dept. of Taxation and Finance, Publication 822, Taxable Status of Medical Equipment and Supplies, Prosthetic Devices and Related Items, 7/87

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2000.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a00_12s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-00(12)S
Sales Tax
February 29, 2000

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S991221B

On December 21, 1999, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Fresenius USA, Inc., 2637 Shadelands Drive, Walnut Creek, CA 94598.
Petitioner, Fresenius USA, Inc., provided additional information pertaining to the Petition on January
5, 2000.
The issue raised by Petitioner is whether its sales of fistula needles used in hemodialysis
treatment are subject to sales and compensating use taxes.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner previously sold equipment used in hemodialysis treatment. Hemodialysis
treatment is a way to remove toxins and fluid from the blood of a person afflicted with kidney
failure. It is usually performed three times a week for four hours at a time. Hemodialysis is not
used unless a person has diseased kidneys which no longer function properly or no longer function
at all.
At each dialysis treatment, the toxic substances are removed from the patient’s blood using
a filter called a dialyzer (artificial kidney). A dialysis machine provides the power to pump the blood
from the patient, through the dialyzer, and return it to the patient in a continuous manner. The
method of vascular (blood) access for routine hemodialysis is via an artery and a vein in the patient’s
forearm which are surgically connected. The surgical connection between the artery and vein is
called an AV (arteriovenous) fistula. Two “fistula needles,” each connected to a hollow plastic tube,
or line, are inserted in the AV fistula. One line carries the patient’s blood out of the body (artery)
to the dialyzer to be cleaned. The cleansed blood is returned to the body (vein) through the second
tube and needle combination in the patient’s AV fistula. Without well-functioning vascular access,
other hemodialysis technology is rendered virtually useless.
The fistula needles are exclusively used in hemodialysis treatment. They are short (1"), sharp
needles which provide minimal damage to the patient on insertion and have very large openings to
enable high blood flows, at prescribed rates, which expedite the dialysis process. The needles are
intended for single use with only one patient.
Applicable Law and Regulations
Section 1105(a) of the Tax Law imposes a tax on “[t]he receipts from every retail sale of
tangible personal property, except as otherwise provided in this article.”

-2­
TSB-A-00(12)S
Sales Tax
February 29, 2000

Section 1115(a) of the Tax Law exempts from the sales tax imposed by Section 1105(a) of
the Tax Law and from the compensating use tax imposed under Section 1110:
*

*

*

(3) Drugs and medicines intended for use, internally or externally, in the cure,
mitigation, treatment or prevention of illnesses or diseases in human beings, medical
equipment (including component parts thereof) and supplies required for such use or
to correct or alleviate physical incapacity, and products consumed by humans for the
preservation of health but not including . . . medical equipment (including component
parts thereof) and supplies, other than such drugs and medicines, purchased at retail
for use in performing medical and similar services for compensation.
(4) Prosthetic aids, hearing aids, eyeglasses and artificial devices and
component parts thereof purchased to correct or alleviate physical incapacity in
human beings.
Section 528.4 of the Sales and Use Tax Regulations provides, in part:
*

*

*

(g) Supplies. (1) Supplies used in the cure, mitigation, treatment or
prevention of illnesses or diseases or for the correction and alleviation of physical
incapacity are exempt.
*

*

*

(2) Medical supplies are not exempt if purchased by a person performing
medical or similar services for compensation. . . .
(h) Taxable medical equipment and supplies. (1) Medical equipment and
supplies purchased for use in performing medical or similar services for
compensation are not exempt from tax.
Section 528.5 of the Sales and Use Tax Regulations provides, in part:
(a) Exemption. Prosthetic aids, hearing aids, eyeglasses and artificial devices
and component parts thereof, purchased to correct or alleviate physical incapacity in
human beings are exempt from the tax.

-3­
TSB-A-00(12)S
Sales Tax
February 29, 2000

(b) Qualifications. (1) In order to qualify as a prosthetic aid, a hearing aid,
eyeglasses or an artificial device, the property must either completely or partially
replace a missing body part or the function of a permanently inoperative or
permanently malfunctioning body part and must be primarily and customarily used
for such purposes and not be generally useful in the absence of illness, injury or
physical incapacity.
Opinion
Petitioner sold fistula needles used in hemodialysis treatment. Section 1115(a)(3) of the Tax
Law exempts medical equipment and supplies from sales and compensating use tax, unless
purchased at retail for use in performing medical and similar services for compensation. Section
1115(a)(4) exempts prosthetic aids and artificial devices used to correct or alleviate physical
incapacity in human beings, even when purchased at retail by providers of medical services. The
function of the fistula needles is key in determining whether they should be classified as medical
equipment or as prosthetic aids (see Comprehensive Dialysis Center of WNY, Inc., Adv Op Comm
T&F, August 4, 1998, TSB-A-98(51)S; Cobe Laboratories, Inc., Adv Op Comm T&F, August 6,
1998, TSB-A-98(53)S).
In patients with diseased kidneys that are malfunctioning or have totally ceased functioning,
the hemodialysis regimen replaces the function of these failed, vital organs. Therefore, as
determined in Comprehensive Dialysis Center of WNY, Inc. and Cobe Laboratories, Inc., supra,
certain items essential to the dialysis process qualify as prosthetic aids under Section 1115(a)(4) of
the Tax Law. These items include the dialyzer (artificial kidney), dialysis machine and the tubing
(lines) which transport the patient’s blood to and from the body. See Cobe Laboratories, Inc., supra.
When dialysis is carried out via an arteriovenous fistula, these blood lines are connected to the
patient’s blood vessels through the fistula needles which are the subject of this Advisory Opinion.
As such, these needles contribute to the restoration of the lost function of the kidney as part of the
hemodialysis regimen. Moreover, since fistula needles are specifically designed for and exclusively
used in hemodialysis treatment, they satisfy the regulatory requirement that they be primarily and
customarily used for medical purposes and are not generally useful in the absence of illness, injury
or physical incapacity. See Section 528.5(b) of the Sales and Use Tax Regulations. Accordingly,
Petitioner’s sales of fistula needles used in hemodialysis treatment qualify for the sales tax
exemption for prosthetic aids under Section 1115(a)(4) of the Tax Law and are not subject to New
York sales and compensating use taxes, regardless of whether they are purchased for use in
performing medical or similar services for compensation.
It is noted that needles/syringes in general do not prosthetically replace missing body parts
or functions and do not qualify as prosthetic supplies or devices under Section 1115(a)(4) of the Tax
Law. Rather, they are considered medical supplies described in Section 1115(a)(3) of the Tax Law,
the charges for which are subject to sales and use taxes when purchased for use in providing medical

-4­
TSB-A-00(12)S
Sales Tax
February 29, 2000

or similar services for compensation. See New York State Department of Taxation and Finance
Publication 822, Taxable Status of Medical Equipment and Supplies, Prosthetic Devices and Related
Items, 7/87.

DATED: February 29, 2000

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.