Did SC PLR 92-4 exempt prescription-only TENS pain-relief devices from sales and use tax as medicine or prosthetic devices?

Plain-English summary

South Carolina PLR 92-4 held that sales or leases of prescription-only transcutaneous electrical nerve stimulators (TENS devices) were not exempt from sales and use tax under the historical exemption for medicine and prosthetic devices sold by prescription.

The devices sent electrical impulses through the affected area to reduce or relieve pain. But being prescribed for pain control did not itself make the equipment exempt.

Why the exemption did not apply

The ruling examined both parts of the exemption in Section 12-36-2120(28).

Not “medicine” under the cited definition

The cited Board of Pharmacy rule defined drugs or medicine broadly but expressly excluded devices and their components, parts, and accessories. The PLR treated the TENS unit as an electrical device, not a substance or preparation used to treat disease.

Not a prosthetic device

The cited tax regulation defined a prosthetic device as an artificial device replacing a missing body part. A TENS unit relieved pain but did not replace any missing part of the body.

Prescription and medical use were insufficient

The ruling acknowledged that physicians prescribed the units and that federal law treated them as durable medical equipment for Medicaid purposes. Neither fact changed their classification under South Carolina's cited sales-tax exemption.

The PLR also applied the rule that tax exemptions are strictly construed against the taxpayer.

What this means for you

Medical-equipment sellers and lessors

Under the historical law analyzed, a physician's prescription did not automatically exempt a device. The product still had to satisfy the tax statute's definition of medicine or prosthetic device.

Patients and healthcare providers

The therapeutic purpose of equipment was not enough. The ruling distinguished pain-relief equipment from medicine and from a device replacing a missing body part.

Tax professionals

The PLR classified the product under South Carolina's own tax definitions. A federal durable-medical-equipment label did not control the state sales-tax result.

Current transactions

Verify the current statute and regulations before applying this historical result. The cited definitions and exemption language may have changed since the ruling.

Common questions

Q: Were the TENS devices taxable even with a prescription?

A: Yes. The ruling concluded that the sales or leases were not exempt under Section 12-36-2120(28).

Q: Why were the devices not medicine?

A: The cited definition excluded devices and their components, parts, and accessories.

Q: Why were they not prosthetic devices?

A: They did not replace a missing body part.

Q: Did Medicaid durable-medical-equipment treatment create an exemption?

A: No. The ruling mentioned that classification but still denied the state sales-and-use-tax exemption.

Q: Can another medical supplier rely on PLR 92-4?

A: No. The ruling was temporary, fact-specific, and nonprecedential.

Citations and references

• S.C. Code Ann. § 12-36-910(A) — sales tax on retail sales of tangible personal property
• S.C. Code Ann. § 12-36-1310(A) — use tax on tangible personal property purchased at retail
• S.C. Code Ann. § 12-36-2120(28) — historical prescription medicine and prosthetic-device exemption
• S.C. Regulation 117-174.257 — historical medicine and prosthetic-device definitions
• S.C. Board of Pharmacy Regulation 99-2 — drug or medicine definition cited by the ruling
• 42 U.S.C. § 1395m — durable medical equipment reference
• Owen Industrial Products, Inc. v. Sharpe, 274 S.C. 193, 262 S.E.2d 33 (1980)
• Hollingsworth on Wheels, Inc. v. Greenville County Treasurer, 276 S.C. 314, 278 S.E.2d 340 (1981)
• York County Fair Association v. South Carolina Tax Commission, 249 S.C. 337, 154 S.E.2d 361 (1967)

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/PLR92-4.pdf

Original ruling text

SC PRIVATE LETTER RULING #92-4

TO:

ABC Medical, Inc.

TAX ANALYST: Steve Hallman
SUBJECT:

Electrical Devices Sold by Prescription
(Sales and Use Tax)

REFERENCE:

42 U.S.C. Section 1395m
S.C. Code Ann. Section 12-36-910(A) (Supp. 1991)
S.C. Code Ann. Section 12-36-1310(A) (Supp. 1991)
S.C. Code Ann. Section 12-36-2120(28) (Supp. 1991)
Regulation 99-2
Regulation 117-174.257

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (Supp. 1991)
SC Revenue Procedure #87-3

SCOPE:

A Private Letter Ruling is a temporary document issued to a taxpayer, upon
request, and it applies only to the specific facts or circumstances related in
the request.
Private Letter Rulings have no precedential value and are not intended for
general distribution.

Question:
Are sales or leases of electrical devices known as TENS devices, prescribed by physicians for
use as pain relievers, exempt from the sales and use tax pursuant to Code Section 12-362120(28)?
Facts:
ABC Medical, Inc. is engaged in the business of selling and leasing medical instruments. One of
the principal products sold or leased by ABC Medical is an electrical device which can only be
prescribed by a doctor for use as a pain reliever for certain patients.
This pain relieving device is known as a TENS device. TENS is an acronym for transcutaneous
electrical nerve stimulator. Such a device transmits electrical pulses through the affected area of
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a patient's body to reduce or relieve pain. The electrical charge transmitted by the TENS device
results in the patient's body releasing biological chemicals which reduce pain. Typically, the
device is prescribed for patients with arthritis, polio, chronic back pain or similar afflictions.
ABC Medical advertises that one of the benefits of the use of these electrical devices is "pain
control without drugs". One of the brochures used by ABC Medical to promote the use of TENS
devices states, in part:
...A battery-powered unit sends minute electrical impulses to the nerves through
electrodes placed on or near the painful site. The result is a tingling sensation that
reduces pain until it seems to vanish. While TENS is not considered a treatment for the
actual cause of the pain, it has helped many thousands of people control their pain since
the first models were introduced more than a decade ago...
Discussion:
Code Section 12-36-910(A) states:
A sales tax, equal to five percent of the gross proceeds of sales, is imposed upon every
person engaged or continuing within this State in the business of selling tangible personal
property at retail. (Emphasis added)
Code Section 12-36-1310(A) reads:
A use tax is imposed on the storage, use, or other consumption in this State of tangible
personal property purchased at retail for storage, use, or other consumption in this State,
at the rate of five percent of the sales price of the property, regardless of whether the
retailer is or is not engaged in business in this State. (Emphasis added)
Code Section 12-36-2120(28) exempts from the sales and use tax the sale or purchase of
"medicine and prosthetic devices sold by prescription."
In summary, the sales and use taxes are imposed upon sales of tangible personal property at
retail, but medicine and prosthetic devices sold by prescription are exempted from the tax.
Thus, it must be determined whether the electrical devices, TENS devices, sold or leased by
ABC Medical are "medicine" or "prosthetic devices".
MEDICINE
Regulation 117-174.257 provides, in pertinent part:
...To assist in the administration of this exemption [Code Section 12-36-2120(28)], the
Tax Commission has adopted definitions for the terms "medicine" ... as follows:

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Medicine - Websters Third New International Dictionary of the English Language,
Unabridged, Copyright 1966, defines the term "medicine" in part as "...a substance or
preparation used in treating disease."...(Emphasis added)
The S.C. Board of Pharmacy regulates the practice of pharmacy, the operation of drugstores and
pharmacies, the compounding, dispensing and sale of drugs, medicines, poisons, and physicians
prescriptions. In providing further guidance as to what constitutes "medicine", Regulation 99-2,
promulgated by this Board, states, in part:
..."Drug or Medicine" means (1) articles recognized in the official United States
Pharmacopoeia, official Homeopathic Pharmacopoeia of the United States, or the official
National Formulary, or any supplement to any of them; and (2) articles intended for use
in the diagnosis, cure, mitigation, treatment, or prevention of diseases in man or other
animals; and (3) articles (other than food) intended to affect the structure of any function
of the body of man or other animals; and (4) articles intended for use as a component of
any article specified in (1), (2), or (3); but does not include devices or their components,
parts, or accessories....(Emphasis added)
PROSTHETIC DEVICES
Regulation 117-174.257 also defines the term "prosthetic device". This definition states, in part:
...Prosthetic Device - an artificial device to replace a missing part of the body Eyeglasses,
contact lens, hearing aids and orthopedic appliances, such as braces, wheelchairs and
orthopedic custom-made shoes, do not come within the exemption. ....(Emphasis added)
The TENS devices in question do not replace a missing part of the body.
Finally, in reviewing Code Section 12-36-2120(28) it must be remembered that, as a general
rule, tax exemption statutes are strictly construed against the taxpayer. Owen Industrial Products,
Inc. v. Sharpe, 274 S.C. 193, 262 S.E.2d 33 (1980); Hollingsworth on Wheels, Inc. v. Greenville
County Treasurer et al, 276 S.C. 314, 278 S.E.2d 340 (1981). This rule of strict construction
simply means that constitutional and statutory language will not be strained or liberally
construed in the taxpayer's favor. York County Fair Association v. South Carolina Tax
Commission, 249 S.C. 337, 154 S.E.2d 361 (1967).
Moreover, TENS devices are considered as durable medical equipment for Medicaid purposes.
(See 42 U.S.C. Section 1395m)
Conclusion:
The TENS devices sold or leased by ABC Medical, Inc. are not exempt from the sales and use
taxes, based upon the exemption at Code Section 12-36-2120(28).

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