Are gastrostomy (stomach) feeding tubes for patients who cannot eat by mouth exempt from New York sales tax?

Plain-English summary

Microvasive, Inc. sells gastrostomy feeding tubes — tubes that carry nutrition straight into the stomach for patients who cannot be fed by mouth. Its kits are used in the percutaneous endoscopic gastrostomy (PEG) procedure, which places a feeding tube through the abdominal wall without open surgery or general anesthesia. Most PEG patients never resume eating by mouth. Microvasive asked whether the tubes are exempt from sales tax under Tax Law § 1115(a)(3) and (4).

The Department said the tubes are exempt, on either of two grounds.

• As a prosthetic aid — § 1115(a)(4). A device is a prosthetic aid if it completely or partially replaces the function of a permanently inoperative or permanently malfunctioning body part, is primarily and customarily used for that purpose, and is not generally useful in the absence of illness, injury, or physical incapacity (20 NYCRR § 528.5(b)(1)). A gastrostomy tube that replaces the function of a body part that can no longer perform normal feeding qualifies and is exempt.
• As medical equipment/supplies — § 1115(a)(3). Even a tube that doesn't meet the prosthetic-aid test is exempt if it is used in the cure, mitigation, treatment, or prevention of illness or disease, or to correct or alleviate physical incapacity — except when it is purchased at retail for use in performing medical and similar services for compensation (the provider-consumption carve-out).

What this means for you

Feeding tubes for patients who can't eat orally are generally tax-exempt in New York. They fit the state's medical exemptions either as a prosthetic aid (replacing the function of a body part that no longer works) or as medical equipment/supplies used to treat illness or alleviate incapacity.

Know the two tests — they have different edges. The prosthetic-aid exemption (§ 1115(a)(4)) turns on replacing a permanently lost function and being useless to a healthy person. The broader medical-supply exemption (§ 1115(a)(3)) covers items used to treat illness or alleviate incapacity, but it does not apply when a provider buys the item at retail to perform a paid medical service — in that situation the exemption is lost and the purchase can be taxable.

Match the exemption to how the item is actually bought and used. The same tube can be exempt when sold to or for a patient's use, yet fall into the § 1115(a)(3) carve-out if it's purchased at retail as a supply consumed in delivering a compensated service.

Common questions

Q: Are gastrostomy feeding tubes taxable in New York?
A: No. They're exempt as prosthetic aids under § 1115(a)(4) when they replace the function of a permanently inoperative body part, and otherwise as medical equipment/supplies under § 1115(a)(3).

Q: What makes something a "prosthetic aid" for the exemption?
A: It must completely or partially replace a missing body part or the function of a permanently inoperative/malfunctioning one, be primarily used for that purpose, and not be generally useful to someone who isn't ill or incapacitated (20 NYCRR § 528.5(b)(1)).

Q: Is there any situation where the tube would be taxable?
A: The § 1115(a)(3) exemption doesn't apply to items purchased at retail for use in performing medical or similar services for compensation. So a tube bought as a supply consumed in delivering a paid service can fall outside that exemption.

Citations and references

Statute and regulation:

• Tax Law § 1115(a)(3) — exempts drugs and medicines, and medical equipment and supplies, used in the cure/mitigation/treatment/prevention of illness or to correct or alleviate physical incapacity, other than those purchased at retail for use in performing medical services for compensation
• Tax Law § 1115(a)(4) — exempts prosthetic aids, hearing aids, eyeglasses, and artificial devices (and their component parts) purchased to correct or alleviate physical incapacity
• 20 NYCRR § 528.5(b)(1) — a prosthetic aid/artificial device must completely or partially replace a missing body part or the function of a permanently inoperative/malfunctioning body part, be primarily and customarily used for that purpose, and not be generally useful in the absence of illness, injury, or incapacity

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1989.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a89_9s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-89 (9)S
Sales Tax
March 28, 1989

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S881216A

On December 16, 1988, a Petition for Advisory Opinion was received from Microvasive,
Inc., 480 Pleasant Street, Watertown, MA 02l72.
The issue raised is whether the sale of gastrostomy feeding tubes are exempt from sales tax
pursuant to Section 1115(a)(3) and (4) of the Tax Law.
Petitioner is engaged in the sale of gastrostomy feeding tubes. Gastrostomy feeding tubes are
used on patients who are incapable of oral feeding. Intravenous lines often do not provide enough
calories to the patient for long periods of time and also pose other medical risks. Enteral feeding
(through the use of gastrostomy feeding tubes) is usually the preferred treatment for such patients,
provided the patient's gastrointestinal tract is intact. Enteral feeding tubes allow substances to enter
the stomach unaltered through a tube which penetrates the abdominal wall.
Until recently, gastrostomy tubes required surgical placement. Such surgical procedures are
often done under general anesthesia, usually to patients who are considered high risks for surgery.
A new procedure, called percutaneous endoscopic gastrostomy (PEG), allows a feeding tube to be
placed in a patient without surgery or general anesthesia. Petitioner's gastrostomy feeding tube kits
are used during one type of PEG procedure. Most patients of the PEG procedure will never again
resume the oral ingestion of food.
Section 1115(a)(3) of the Tax Law provides for an exemption from sales and use taxes for:
"[d]rugs and medicines intended for use, internally or externally, in the cure, mitigation,
treatment or prevention of illness or diseases in human beings, medical equipment (including
component parts thereof) and supplies required for such use or to correct or alleviate physical
incapacity ..., other than such drugs and medicines, purchased at retail for use in performing
medical and similar services for compensation."
Section 1115(a)(4) of the Tax Law provides for an exemption from sales and use taxes for
"[p]rosthetic aids, hearing aids, eyeglasses and artificial devices and component parts thereof
purchased to correct or alleviate physical incapacity in human beings."
The Sales and Use Tax Regulations provide that:
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. 20
NYCRR 528.5(b)(1).

-2­
TSB-A-89 (9)S
Sales Tax
March 28, 1989

Accordingly, gastrostomy feeding tubes that either completely or partially replace a missing
body part or the function of a permanently inoperative or permanently malfunctioning body part
qualify as a prosthetic aid as defined by Section 528.5(b)(1) of the Sales and Use Tax Regulations
and are exempt from sales and use taxes pursuant to Section 1115(a)(4) of the Tax Law. Moreover,
gastrostomy feeding tubes that are not exempt under Section 1115(a)(4) of the Tax Law but that are
used in the cure, mitigation, treatment or prevention of illness or disease in human beings or to
correct or alleviate physical incapacity are exempt from sales and use taxes pursuant to Section
1115(a)(3) of the Tax Law except when purchased at retail for use in performing medical and similar
services for compensation.

DATED: March 28, 1989

s/FRANK J. PUCCIA
Director
Technical Services

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