Are adjustable beds bought with a doctor's prescription exempt from New York sales tax as medical equipment?

Plain-English summary

Craftmatic Comfort Manufacturing Corp. makes adjustable beds — a remote control raises or lowers the head or foot of the mattress. The beds sell into two markets: to the general public as comfort beds, and to patients on a doctor's prescription, where they can be fitted with side rails, trapeze bars, overhead frames, sockets for intravenous rods and similar apparatus. Craftmatic asked whether its prescription sales (March 1, 1978–February 28, 1981) were exempt medical equipment under § 1115(a)(3).

The Department held the beds themselves are taxable — even on prescription — but the specialized medical attachments are exempt.

• The medical-equipment test. Under 20 NYCRR 528.4(e), exempt "medical equipment" must be primarily and customarily used for medical purposes and not generally useful in the absence of illness, injury or physical incapacity. (The regulation's examples of exempt equipment include hospital beds, wheelchairs, trapeze bars and traction equipment.)
• Plain adjustable/comfort beds fail the test. Beds sold without medical attachments were designed for comfort, not medical use, and are generally useful to anyone — so they are not medical equipment and were taxable, prescription or not.
• A prescription doesn't change the bed's character. Even beds sold on prescription with attachable rails or bars were, absent the attachments, ordinary beds generally useful to anyone. So the bed was taxable even though sold on a doctor's prescription.
• The specialized attachments are exempt. Side rails, trapeze bars, and intravenous rods and sockets are intended for the cure, mitigation or treatment of illness and are not generally useful absent illness or incapacity — so those items were exempt from State and local sales tax under § 1115(a)(3).

What this means for you

A prescription doesn't make an everyday item tax-exempt. New York's medical-equipment exemption turns on the nature of the item, not on paperwork. If a product is generally useful to healthy people — a bed, a chair, a mattress — it's taxable even when a doctor prescribes it and a patient needs it.

Unbundle the genuinely medical parts. The exemption can still reach the truly medical components sold with a general product. Here the bed was taxable but the side rails, trapeze bars and IV rods/sockets were exempt. If you sell a general item with medical add-ons, separately identify the add-ons that are primarily and customarily medical and not useful absent illness — those can qualify.

Apply the "generally useful absent illness" test item by item. Wheelchairs, hospital beds, traction gear and the like pass because they're primarily medical. A "comfort" version of an everyday product usually doesn't, no matter how it's marketed to patients.

Common questions

Q: My customer had a doctor's prescription for the adjustable bed — isn't that enough for the exemption?
A: No. The exemption depends on whether the item is primarily and customarily medical and not generally useful to healthy people. An adjustable/comfort bed is generally useful, so it's taxable even with a prescription.

Q: Then what was exempt in these sales?
A: The specialized medical attachments — side rails, trapeze bars, intravenous rods and sockets — because those are intended for treatment and aren't generally useful in the absence of illness or incapacity.

Q: Would a true hospital bed be treated the same way?
A: No. The regulation lists hospital beds among exempt medical equipment. The issue here was that a comfort adjustable bed, even with removable attachments, remained a generally useful bed.

Citations and references

Statute and regulation:

• Tax Law § 1115(a)(3) — exemption for drugs, medicines, medical equipment and supplies
• 20 NYCRR 528.4(e) — "medical equipment" must be primarily and customarily used for medical purposes and not generally useful absent illness/injury/incapacity

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1981.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a81_40s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-81(40)S
Sales Tax
October 28, 1981

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S810622C

On June 22, 1981, a Petition for Advisory Opinion was received from Craftmatic Comfort
Manufacturing Corp., 1077 Rydal Road, Rydal, Pennsylvania 19046.
The issue raised is whether sales of adjustable beds by Petitioner between March 1, 1978 and
February 28, 1981 to customers having prescriptions from their doctors for such beds were exempt
from the New York State sales tax under section 1115(a)(3) of the Tax Law.
Petitioner manufactures adjustable beds. The beds have a remote control unit which raises
or lowers the head or foot of the mattress, and the mattress conforms to virtually any position
desired.
There are two distinct markets for these beds. In one instance it is sold to the general public
as a comfort bed. In the second instance the beds are sold, pursuant to a doctor's prescription to
patients suffering from various ailments. In these latter cases, the beds can be specially equipped to
meet the patients' needs. Side rails, trapeze bars, overhead frames, sockets for intravenous rods, and
similar apparatus may be attached to accommodate the customers' needs. Further, the beds can be
built to any height that a customer or his doctor requests.
Section 1115(a)(3) of the Tax Law exempts the following from the New York State sales tax:
"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, . . ."
The Sales and Use Tax Regulations provide, in part, as follows:
"(e) Medical equipment. (1) Medical equipment means machinery, apparatus
and other devices (other than prosthetic aids, hearing aids, eye glasses and artificial
devices which qualify for exemption under section 1115(e)(4) of the Tax Law),
which are intended for use in the cure, mitigation, treatment or prevention of illnesses
or diseases or the correction or alleviation of physical incapacity in human beings.
"(2) To qualify such equipment must be primarily and customarily used for
medical purposes and not be generally useful in the absence of illness, injury or
physical incapacity.

JAMES H. TULLY., COMMISSIONER
TP-8 (4/80)

LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

-2­
TSB-A-81(40)S
Sales Tax
October 28, 1981

"Example 1: Items such as hospital beds, wheel chairs, hemodialysis
equipment, iron lungs, respirators, oxygen tents, crutches, back and neck braces,
trusses, trapeze bars, walkers, inhalators, nebulizers and traction equipment are
exempt medical equipment." 20 NYCRR 528.4(e).
During the period in question, Petitioner sold some adjustable beds without side rails, trapeze
bars, or any of the other attachments frequently found on hospital beds. Adjustable beds of this type
were designed to be more comfortable than nonadjustable beds, but were not designed specifically
for medical purposes. This type of bed is not medical equipment within the meaning of section
1115(a)(3) of the Tax Law. 20 NYCRR 528.4(e)(2). The sales of this type of adjustable bed during
the period in question were subject to the State and local sales tax, whether or not customers
purchased the beds pursuant to doctors' prescriptions.
Other adjustable beds were sold by Petitioner, pursuant to doctors' prescriptions, with
attachable side rails, trapeze bars or other parts needed by customers who were suffering from
various ailments. These beds were the same as other beds, absent the specialized attachments. With
the specialized equipment detached, the bed would generally be useful in the absence of illness,
injury or physical incapacity. Petitioner's sales of these beds during the period in question were
subject to State and local sales tax, even though made pursuant to a doctor's prescription.
However, specialized attachments, such as side rails, trapeze bars and intravenous rods and
sockets, were intended for use in the cure, mitigation or treatment of illness and were not generally
useful in the absence of illness, injury or physical incapacity. Therefore, Petitioner's sales of such
items during the period in question were exempt from State and local sales tax. 20 NYCRR 528.4(e).

DATED: October 7, 1981

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau