Which medicines, prosthetic devices, diabetic supplies, and medical equipment qualified for South Carolina sales-tax exemptions?

Plain-English summary

South Carolina Revenue Ruling 11-3 is an item-by-item guide to medical-product sales tax. Its central message is that medical use alone does not make a purchase exempt. The result can change based on the product, purchaser, prescription, patient setting, payment source, and seller qualifications.

The ruling covers prescription and over-the-counter medicines, diabetic supplies, prosthetic devices, oxygen, nutrition products, disposable supplies, hearing aids, wheelchairs, ostomy products, free clinics, hospitals, Medicare and Medicaid payments, and durable medical equipment.

Prescription medicines and provider purchases

A prescription medicine sold by a pharmacy to an individual on an actual prescription was exempt. An over-the-counter medicine did not become exempt merely because a doctor wrote a prescription for it.

Sales to doctors, hospitals, nursing homes, and similar institutions were generally not treated as medicines “sold by prescription,” because the institution's purchase did not itself require a patient prescription. The ruling identified specific exceptions, including qualifying medicines used for respiratory syncytial virus, rheumatoid arthritis, cancer and related diseases, treatment effects, and prescription drugs dispensed to Medicare Part A nursing-home patients.

Federal government hospitals and the narrowly described charitable hospitals predominantly serving children without charge could qualify under their separate institutional exemptions.

Diabetic supplies, prosthetics, and hearing aids

Specified diabetic supplies—including insulin, testing strips, lancets, meters, needles, and similar items—were exempt when sold to a diabetic under a physician's authorization and direction. The same supplies sold to a doctor or hospital for treating patients were not sales “to diabetics” and did not qualify under that provision.

Hearing aids meeting the statutory definition were exempt, but batteries and cords were not. Dental prosthetic devices meeting the regulation's definition were exempt when sold to providers. Other surgically implanted prosthetic devices sold to a doctor or hospital were taxable under the ruling because that provider purchase was not made by prescription.

Ostomy bags, catheters, and drainage units sold to an individual qualified only when sold by prescription and used to replace a missing body part, not merely a missing bodily function.

Oxygen, nutrition, and disposable supplies

Prescription oxygen in cylinders and oxygen concentrators sold by prescription to an individual were exempt. Masks, tubing, regulators, and tank holders were taxable under the ruling.

Total parenteral nutrition solutions sold to individuals were exempt prescription medicines; enteral nutrition formulas were taxable. Provider purchases of these products followed the narrower institutional rules.

Disposable bags, tubing, needles, and syringes had a specific exemption only when dispensed by a licensed pharmacist on an individual prescription for intravenous administration outside a hospital, skilled nursing facility, or ambulatory surgical treatment center and in direct contact with the medicine.

Free clinics and other institutions

A health clinic's purchases of prescription and over-the-counter medicines and specified medical and diabetic supplies were exempt under § 12-36-2120(63) only when the clinic provided both medical and dental care without charge to all patients.

If the clinic omitted either medical or dental care, or charged any patient, that broad clinic exemption did not apply. Other tangible property bought by a qualifying free clinic remained taxable unless another exemption covered it.

Medicare, Medicaid, and durable medical equipment

Medicare or Medicaid payment did not by itself turn a retail sale into a sale to the federal government. For an otherwise taxable item, the taxable amount depended on whether law prohibited the seller from billing the patient beyond the program reimbursement.

The ruling described a phased durable-medical-equipment exemption that became fully effective January 1, 2013 under the version then in force. Qualification required all of the following:

• the item met federal and state Medicare or Medicaid definitions;
• South Carolina or federal program funds paid directly;
• the governing law prohibited payment of sales or use tax; and
• the seller held a South Carolina retail license and had its principal place of business in South Carolina.

Those historical program and seller requirements should be verified under current law.

Common questions

Q: Is every prescription written by a doctor enough for exemption?

A: No. An over-the-counter medicine did not qualify merely because a doctor prescribed it.

Q: Are hospital purchases of prescription drugs automatically exempt?

A: No. The ruling generally taxed provider purchases unless a specific institutional, disease-treatment, or Medicare Part A exception applied.

Q: Are diabetic supplies exempt when a hospital buys them?

A: Not under the “sold to diabetics” exemption. That provision required a sale to a diabetic under physician direction.

Q: Does Medicare or Medicaid reimbursement automatically exempt an item?

A: No. The item needed an applicable exemption, including the detailed durable-medical-equipment conditions where relevant.

Citations and references

• S.C. Code Ann. § 12-36-2120(28) — medicines, prosthetic devices, diabetic supplies, and specified disposable supplies
• S.C. Code Ann. § 12-36-2120(63) — qualifying free medical-and-dental clinics
• S.C. Code Ann. § 12-36-2120(74) — durable medical equipment and related supplies
• S.C. Code Ann. § 12-36-2120(2) and (47) — federal government and specified charitable hospitals
• S.C. Code Ann. § 12-36-2120(38) — hearing aids
• S.C. Code Ann. § 12-36-2120(57) — sales tax holiday rules discussed by the ruling
• S.C. Regulations 117-308.8 and 117-332 — provider, medicine, prosthetic, and diabetic-supply guidance cited by the ruling
• Home Medical Systems, Inc. v. South Carolina Department of Revenue, 677 S.E.2d 582 (S.C. 2009) — “medicine sold by prescription” authority cited by the ruling

Subject

Medicines, Prosthetic Devices, Diabetic Supplies and Other Medical Supplies

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR11-3.pdf

Original ruling text

State of South Carolina

Department of Revenue
301 Gervais Street, P. O. Box 125, Columbia, South Carolina 29214
Website Address: http://www.sctax.org

SC REVENUE RULING #11-3

SUBJECT:

Medicines, Prosthetic Devices, Diabetic Supplies and
Other Medical Supplies
(Sales and Use Tax)

EFFECTIVE DATE:

Applies to all periods open under the statute.

SUPERSEDES:

SC Revenue Ruling #10-2 and all previous advisory opinions
and any oral directives in conflict herewith.

REFERENCES:

S. C. Code Ann. Section 12-36-2120 (2000, Supp. 2010)
Act No. 32, Section 1 of 2011
S. C. Code Ann. Section 12-36-110 (2000)
SC Regulation 117-308.8
SC Regulation 117-332
S. C. Code Ann. Section 12-36-950 (2000)

AUTHORITY:

S. C. Code Ann. Section 12-4-320 (2000)
S. C. Code Ann. Section 1-23-10(4) (Supp. 2010)
SC Revenue Procedure #09-3

SCOPE:

The purpose of a Revenue Ruling is to provide guidance to the
public and to Department personnel. It is an advisory opinion
issued to apply principles of tax law to a set of facts or general
category of taxpayers. It is the Department’s position until
superseded or modified by a change in statute, regulation, court
decision, or another Departmental advisory opinion.

INTRODUCTION:
The South Carolina sales and use tax statute exempts the retail sale of certain medicines,
prosthetic devices and medical supplies. The purpose of this advisory opinion is to
provide guidance as to the application of these exemptions with respect to sales of these
items to individuals, doctors, clinics and hospitals and similar facilities.

1

LAW AND DISCUSSION:
Code Section 12-36-2120(28) exempts from the sales and use tax:
(a) medicine and prosthetic devices sold by prescription, prescription
medicines used to prevent respiratory syncytial virus, prescription
medicines and therapeutic radiopharmaceuticals used in the treatment of
rheumatoid arthritis, cancer, lymphoma, leukemia, or related diseases,
including prescription medicines used to relieve the effects of any such
treatment, free samples of prescription medicine distributed by its
manufacturer and any use of these free samples;
(b) hypodermic needles, insulin, alcohol swabs, blood sugar testing strips,
monolet lancets, dextrometer supplies, blood glucose meters, and other
similar diabetic supplies sold to diabetics under the authorization and
direction of a physician;
(c) disposable medical supplies such as bags, tubing, needles, and
syringes, which are dispensed by a licensed pharmacist in accordance with
an individual prescription written for the use of a human being by a
licensed health care provider, which are used for the intravenous
administration of a prescription drug or medicine, and which come into
direct contact with the prescription drug or medicine. This exemption
applies only to supplies used in the treatment of a patient outside of a
hospital, skilled nursing facility, or ambulatory surgical treatment center;
(d) medicine donated by its manufacturer to a public institution of higher
education for research or for the treatment of indigent patients; and
(e) dental prosthetic devices;
(f) prescription drugs dispensed to Medicare Part A patients residing in a
nursing home are not considered sales to the nursing home and are not
subject to the sales tax.[1]
Code Section 12-36-2120(63) exempts (effective June 7, 2005) from the sales and use
tax:
prescription and over-the-counter medicines and medical supplies,
including diabetic supplies, diabetic diagnostic equipment, and diabetic
testing equipment, sold to a health care clinic that provides medical and
dental care without charge to all of its patients.

1

The exemption for prescription drugs dispensed to Medicare Part A patients residing in a nursing home
became effective July 1, 2007.

2

Code Section 12-36-2120(74) provides an exemption for durable medical equipment and
related supplies as defined under federal and state Medicaid and Medicare laws. (This
sales tax exemption is phased-in; it becomes fully effective January 1, 2013).
In order for the purchase of the durable medical equipment and related supplies to be
exempt, the following conditions must be met:

1. The purchase must be paid directly by funds of South Carolina or the United
   States under the Medicaid or Medicare programs.
2. State or federal law or regulation authorizing the payment must prohibit the
   payment of the sale or use tax.
3. The durable medical equipment and related supplies must be sold by a provider
   who holds a South Carolina retail sales license and whose principal place of
   business is located in South Carolina.
   An uncodified provision 2 provides for the phase-out of the sales and use tax rate on the
   sale of durable medical equipment and related supplies meeting the requirements of Code
   Section 12-36-2120(74). The rate of tax imposed on the gross proceeds of sales of
   qualifying durable medical equipment and related supplies is summarized below.
   Date of Sale
   July 1, 2007 to June 30, 2011
   July 1, 2011 to June 30, 2012
   July 1, 2012 to December 31, 2012
   January 1, 2013 and thereafter

State Tax Rate
5.5%
3.5%
1.75%
0%

Local Tax Rate
Applies; rate varies by county
Applies; rate varies by county
Applies; rate varies by county
0%

Furthermore, Code Section 12-36-110(1) defines "retail sale," in part as:
(i) sales of drugs, prosthetic devices, and other supplies to hospitals,
infirmaries, sanitariums, nursing homes, and similar institutions, medical
doctors, dentists, optometrists, and veterinarians, if furnished to their
patients as a part of the service rendered. These institutions, companies,
and professionals are deemed to be the users or consumers of the property;
(j) sales, not otherwise exempted, when reimbursed or paid in whole or in
part by Medicare or Medicaid. However, only the net amount reimbursed
by Medicare and Medicaid is subject to the tax, if the vendor is prohibited
by law from charging the purchaser the difference between the retail sale
and the amount reimbursed.

2

See Act No. 32, Section 1 of 2011.

3

SC Regulation 117-308.8, “Hospitals, Infirmaries, Sanitariums, Nursing Homes and like
Institutions,” states:
Hospitals, infirmaries, sanitariums, nursing homes and like institutions are
engaged primarily in the business of rendering services. They are not
liable for the sales tax with respect to their gross proceeds or receipts from
meals, bandages, dressings, drugs, x-ray photographs and other tangible
personal property where such property is used in the rendering of the
primary medical service to patients. This is true irrespective of whether or
not such tangible items are billed separately to their patients. Hospitals,
infirmaries, sanitariums, nursing homes and like institutions are deemed to
be the users or consumers of such tangible personal property and the
instate sellers of these items are required to report and remit the tax due on
the sale of such property to the hospitals, infirmaries, sanitariums, nursing
homes, and like institutions or in the case of out-of-state purchases, use tax
shall be reported and remitted by the purchaser.
Where meals and beverages are furnished by hospitals, infirmaries,
sanitariums, nursing homes and like institutions to the patient as a part of
their primary medical service, with or without a separate charge being
made, the hospitals, infirmaries, sanitariums, nursing homes and like
institutions are deemed to be the users or consumers of the prepared meal
if same is purchased or acquired or the users or consumers of the
unprepared food products if the hospitals, infirmaries, sanitariums, nursing
homes and like institutions purchase such products and prepare the meal.
Sales of meals, foodstuffs or beverages by hospitals, infirmaries,
sanitariums, nursing homes or like institutions to members of the staff,
nurses, attendants, employees, visitors or patients, other than those meals
furnished as a part of the primary medical service rendered, are sales at
retail and such institution is required to obtain a retail license for each
location and report and remit the sales tax on the gross proceeds of such
sales, to include sales for cash, credit, payroll deduction and sales at
special event functions. This includes sales made in institutions, cafeterias,
snack bars, canteens and commissaries.
Where drugs, prosthetic devices and other supplies are furnished to their
patients as a part of the medical service rendered, such hospitals,
infirmaries, sanitariums, nursing homes and like institutions are deemed to
be users or consumers of such drugs, prosthetic devices and other supplies.
Gases such as oxygen, etc., sold to hospitals, medical doctors, dentists,
and others for professional use are subject to the sales or use tax,
whichever may apply.

4

SC Regulation 117-332 (previously SC Regulation 117-174.257), "Medicines, Prosthetic
Devices and Hearing Aids," states:
Code Section 12-36-2120(28) exempts from the sales and use taxes:
(a) medicines and prosthetic devices sold by prescription, [prescription
medicines used to prevent respiratory syncytial virus, 3] prescription
medicines and therapeutic radiopharmaceuticals used in the treatment of
[rheumatoid arthritis, 4] cancer, lymphoma, leukemia, or related diseases,
including prescription medicines used to relieve the effects of any such
treatment, and free samples of prescription medicine distributed by its
manufacturer and any use of these free samples;
(b) hypodermic needles, insulin, alcohol swabs, blood sugar testing strips,
monolet lancets, dextrometer supplies, blood glucose meters, and other
similar diabetic supplies sold to diabetics under the authorization and
direction of a physician;
(c) medicine donated by its manufacturer to a public institution of higher
education for research or for the treatment of indigent patients; and
(d) dental prosthetic devices.
[(f) prescription drugs dispensed to Medicare Part A patients residing in a
nursing home are not considered sales to the nursing home and are not
subject to the sales tax. 5]
To assist in the administration of this exemption, the Department has
adopted definitions for the terms "medicine" and "prosthetic devices" as
follows:
"Medicine" - a substance or preparation used in treating disease.
"Prosthetic Device" - an artificial device to replace a missing part of the
body.

3

The exemption for “prescription medicines used to prevent respiratory syncytial virus” became effective
on June 18, 2003 and is not presently shown in SC Regulation 117-332. See also Act No. 23 of 2009, Part
IB, Section 89, Proviso 89.79 which, through a temporary proviso set to expire on June 30, 2006, changed
the effective date of this exemption to January 1, 1999 and provided that no refund of sales and use taxes
may be claimed as a result of this change in the effective date.
4
The exemption for “prescription medicines used in the treatment of rheumatoid arthritis” or “used to
relieve the effects of any such treatment” became effective on July 1, 2005 and is not presently shown in
SC Regulation 117-332.
5
The exemption for “prescription drugs dispensed to Medicare Part A patients residing in a nursing home”
became effective on July 1, 2007 and is not presently shown in SC Regulation 117-332.

5

The sale of prescription lenses that replace a missing part of the eye are
exempted from the tax, as for example eyeglasses prescribed for a person
whose natural lenses have been surgically removed.
Eyeglasses, contact lens, hearing aids and orthopedic appliances, such as
braces, wheelchairs and orthopedic custom-made shoes, do not come
within the exemption at Code Section 12-36-2120(28). However, sales of
hearing aids are exempt pursuant to Code Section 12-36-2120(38).
Hypodermic needles, insulin, alcohol swabs, blood sugar testing strips,
monolet lancets, dextrometer supplies, blood glucose meters, and other
similar diabetic supplies sold to diabetics are only exempt if sold pursuant
to the written authorization and direction of a physician. (Emphasis
added.)
Code Section 12-36-950 states:
It is presumed that all gross proceeds are subject to the tax until the
contrary is established. The burden of proof that the sale of tangible
personal property is not a sale at retail is on the seller.
However, if the seller receives a resale certificate signed by the purchaser
stating that the property is purchased for resale, the liability for the sales
tax shifts from the seller to the purchaser.
The resale certificate must include the purchaser's name, address, retail
sales tax license number, and any other provisions or information
considered necessary by the department.
The department may require the seller to provide information it considers
necessary for the administration of this section.
In reviewing the above, one issue that arises concerns the taxability of medicines used by
doctors, nursing homes, hospitals and similar institutions in their practice in providing
professional services to their patients.
A similar issue was addressed in 1997 in an unpublished decision by the South Carolina
Court of Appeals in Associated Medical Specialist, P.A. v. South Carolina Tax
Commission and South Carolina Department Of Revenue, SC Ct. of App., Unpublished
Opinion No. 97-UP-447.
In Associated Medical, the Court held that a professional association specializing in
oncology and hematology was the user and consumer of chemotherapy drugs it
administered to patients as part of its professional services. The Court, while
acknowledging that these were prescription drugs, held that these drugs were not sold to
the doctor by prescription. Therefore, the sale of these drugs to the professional
6

association did not qualify for the exemption for “medicine ... sold by prescription.” See
Code Section 12-36-2120(28). Note, the exemption for prescription medicines used in
the treatment of cancer, lymphoma, leukemia, or related diseases or used to relieve the
effects of any such treatment was subsequently enacted by the General Assembly in 1998
and became effective on June 28, 1999. (Act 362, Section 2, of 1998)
The terms “sale at retail” and “retail sale” found in Code Section 12-36-110(i) include
sales of “drugs, prosthetic devices, and other supplies to hospitals, infirmaries,
sanitariums, nursing homes, and similar institutions, medical doctors, dentists,
optometrists, and veterinarians, if furnished to their patients as a part of the service
rendered.” That section further states that “[t]hese institutions, companies, and
professionals are deemed to be the users or consumers of the property.”
The exemption does not exempt medicine. It only exempts “medicine … sold by
prescription;” “prescription medicines used to prevent respiratory syncytial virus,”
“prescription medicines and therapeutic radiopharmaceuticals used in the treatment of
rheumatoid arthritis, cancer, lymphoma, leukemia, or related diseases, including
prescription medicines used to relieve the effects of any such treatment;” certain free
samples or donated medicines; and prescription medicines “dispensed to Medicare Part A
patients residing in a nursing home.”
Therefore, in order for the exemption for “medicine … sold by prescription” to apply, the
retail sale must be one in which a prescription is used to purchase the medicine. In
addition, the statute specifically exempts “prescription medicines used to prevent
respiratory syncytial virus” and “prescription medicines and therapeutic
radiopharmaceuticals used in the treatment of rheumatoid arthritis, cancer, lymphoma,
leukemia, or related diseases, including prescription medicines used to relieve the effects
of any such treatment” and “prescription … medicines … sold to a health care clinic that
provides medical and dental care without charge to all of its patients” and “prescription
drugs dispensed to Medicare Part A patients residing in a nursing home.” These
provisions would have been unnecessary if the exemption for “medicine … sold by
prescription” exempted all prescription medicines purchased by doctors or hospitals or
similar institutions for the benefit of a patient of the doctor, hospital or institution.
However, the exemption for “medicine … sold by prescription” only applies to medicines
when sold by prescription.
In addition, the Court noted that “[i]t is not unusual for a sales and use tax exemption to
focus on a transaction to determine whether an item is exempt from taxation. A
substantial number of sales tax and use exemptions focus on items sold by or to particular
customers, or items used by a particular customer.” As such, the Court noted that the
language of the statute does not exempt prescription medicines sold to a professional
medical association since they were not “sold by prescription.”
The South Carolina Supreme Court affirmed this longstanding position of the Department
in a separate case in 2009 – Home Medical Systems, Inc. v. South Carolina Department of
Revenue, 382 S.C. 556, 677 S.E. 2d 582 (2009). In its decision, the Court held:
7

Regarding the enteral nutritional formulas,[6] the ALC[7] found they were
“medicine sold by prescription.”[8] The DOR 9 argues that because the
formulas are “over the counter” (OTC) products[10] which do not require
a prescription, the ALC erred. Furthermore, the DOR contends that
CMNs[11] are not equivalent to a prescription. We agree.
As discussed above, the DOR has set forth a definition for “medicine by
prescription” – the medicine must be of a type that requires a prescription,
the sale must require a prescription, and it must actually be sold by
prescription. Taxpayer argues that a prior legislative version (a 1970
reimbursement statute) more explicitly stated the requirement –
“medicines required by law to be sold only by prescription” – and
therefore, the current language is not exclusively for medicines that
require a prescription. In our opinion, however, the current statutory
language – “medicine … sold by prescription” – clearly evidences a
legislative intent that the exemption be only for those medicines requiring
a prescription. See TNS Mills, Inc., supra (tax exemption statute must be
given its plain, ordinary meaning and must be strictly construed against
the claimed exemption.[12]
6

Earlier in the decision, the Court described “enteral nutritional formulas” as follows: “These are
prescribed for patients who, due to an illness or disease, are unable to consume food products orally. The
formula prescribed is selected by the physician based on the caloric and metabolic needs of the individual
patient. The formulas may include specific nutrients to treat specific metabolic disorders such as sodium
imbalances and protein needs. Enteral formulas are typically administered by: (1) a gravity feed bag and
tubing connected to a feeding tube inserted in the patient, or (2) an electronic pump which also requires
bags and tubing and connects to a feeding tube or catheter inserted in the patient.”
7
ALC means “Administrative Law Court.”
8
The Court noted in a footnote here: “We recognize the ALC found that all the items at issue – even the
durable devices – were medicine sold by prescription. In making this determination, the ALC relied on the
definition of medicine for pharmacists found in S.C. Code Ann. § 40-43-30(16). We agree with the DOR
that this definition has no application to the definition of medicine in the sales tax exemption statute found
in section 12-36-2120(28)(a). See § 40-43-30 (where statute specifies that the definitions are for “purposes
of this chapter”) (emphasis added).”
9
DOR means “Department of Revenue.”
10
The Court noted in a footnote here: “One example the DOR highlights is PediaSure with Fiber which can
be purchased at a grocery store.”
11
CMN means “Certificate of Medical Necessity.”
12
The Court noted in a footnote here:
Moreover, in another section of the sales tax exemption statute, the Legislature seems to
have made a distinction between prescription and OTC medicines. The statute provides
the following exemption:
(63) prescription and over-the-counter medicines and medical supplies, including diabetic
supplies, diabetic diagnostic equipment, and diabetic testing equipment, sold to a health
care clinic that provides medical and dental care without charge to all of its patients.
§ 12-36-2120. Thus, if the Legislature had intended to include OTC medicines in the
exemption at issue here, it could have used language evidencing that intent.

8

Finally, SC Technical Advice Memorandum #88-23 further demonstrates the
Department’s longstanding policy on this issue when it states that "it is unreasonable to
interpret the intent of the legislature so as to exempt...medicines and drugs merely
because such items are sold pursuant to a prescription. Therefore, … medicines [to be
exempt] must require a prescription."
Based on the above, sales by suppliers to doctors, nursing homes, hospitals and similar
institutions of prescription medicines for use in their practices and institutions in treating
patients are retail sales. However, such sales to doctors, nursing homes, hospitals and
similar institutions are not sales “by prescription” and do not qualify for the exemption
found in Code Section 12-36-2120(28), unless such prescription medicines are used by
the doctor, nursing home, hospital or similar institution (a) to prevent respiratory
syncytial virus; (b) in the treatment of rheumatoid arthritis, cancer, lymphoma, leukemia,
or related diseases; (c) to relieve the effects of any such treatment of rheumatoid arthritis,
cancer, lymphoma, leukemia, or related diseases; or (d) are dispensed to a Medicare Part
A patient residing in a nursing home. In addition, the phrase “related diseases” limits the
exemption for medicines used in the treatment of rheumatoid arthritis, cancer, lymphoma,
leukemia, or related diseases, or used to relieve the effects of any such treatment to
prescription medicines used to treat rheumatoid arthritis, cancer, lymphoma, leukemia,
and other cancer diseases or prescription medicines used to relieve the effects of any such
treatment of rheumatoid arthritis, cancer, lymphoma, leukemia, and other cancer diseases.
The principles established in Associated Medical, also apply to prosthetic devices. The
exemption does not exempt prosthetic devices. It only exempts “prosthetic devices sold
by prescription.” Therefore, in order for the prosthetic devices to be exempt, the retail
sale must be one in which a prescription is used to purchase the prosthetic device. In
addition, the statute specifically exempts “dental prosthetic devices.” This provision
would have been unnecessary if the exemption for “prosthetic devices sold by
prescription” exempted dental prosthetic devices purchased by dentists from dental labs
for the benefit of a particular patient of the dentist. However, the exemption only applies
to prosthetic devices when sold by prescription.
Therefore, sales of prosthetic devices, other than dental prosthetic devices, to a hospital,
nursing home, or a similar institution or doctor are not exempt since such sales do not
require a prescription and are not sold by prescription.
In addition, in Home Medical Systems, Inc. v. South Carolina Department of Revenue,
Opinion No. 26638 (April 20, 2009) the South Carolina Supreme Court upheld the
Department’s longstanding definition of a “prosthetic device,” as set forth in SC
Regulation 117-332, as “an artificial device to replace a missing part of the body.” A
device that merely replaces a missing function is not exempt.

9

Finally, Code Section 12-36-2120(63) exempts from the tax, effective June 7, 2005,
“prescription and over-the-counter medicines and medical supplies, including diabetic
supplies, diabetic diagnostic equipment, and diabetic testing equipment, sold to a health
care clinic that provides medical and dental care without charge to all of its patients.”
Again, the “prescription medicine” portion of this exemption would have been
unnecessary if the exemption for “medicine … sold by prescription” exempted all
prescription medicines purchased by doctors or hospitals or similar institutions for the
benefit of a patient of the doctor, hospital or institution. On the contrary, all prescription
medicines purchased by hospitals, similar institutions or doctors are not exempt, and an
interpretation of the statute in such a way would cause subsection (63) to become
superfluous. It is well settled law in this state that all provisions in a statute must be given
meaning. See, SC Coastal Conservation League v. SC Department of Health and
Environmental Control, 380 SC 349, 3698, 669 S.E.2d 899, 909 (Ct. App. 2008) [The]
court must presume the legislature intended to accomplish something with an enacted
statute and did not intend for a section or provision to by purposeless or futile.

10

SUMMARY OF EXEMPTIONS FOR MEDICINES,
PROSTHETIC DEVICES, AND OTHER SUPPLIES UNDER
CODE SECTION 12-36-2120(28):
Based on the above statutes and regulations, it is the opinion of the Department that the
application of the above exemptions for medicines is as follows:
Medicine sold by prescription. In order for this exemption to be applicable, the
medicine must be of a type that requires a prescription, the sale must require a
prescription, and must actually be sold by prescription. 13 As such, sales of
medicine to a hospital, nursing home, or a similar institution or doctor are not
exempt since such sales do not require a prescription.
Prescription medicines used to prevent respiratory syncytial virus. In order
for this exemption to be applicable, the medicine must be of a type that requires a
prescription; however, the medicine does not need to be sold by prescription. As
such, sales of these medicines (to be used for the above purposes) to a hospital,
nursing home, or a similar institution or doctor are exempt.
Prescription medicines and therapeutic radiopharmaceuticals used in the
treatment of rheumatoid arthritis, cancer, lymphoma, leukemia, or related
diseases. In order for this exemption to be applicable, the medicine must be of a
type that requires a prescription (other than therapeutic radiopharmaceuticals);
however, the medicine does not need to be sold by prescription. As such, sales of
these medicines and therapeutic radiopharmaceuticals (to be used for the above
purposes) to a hospital, nursing home, or a similar institution or doctor are
exempt. (The provisions of this exemption applicable to rheumatoid arthritis
became effective on July 1, 2005.)
Prescription medicines used to relieve the effects of the treatment of
rheumatoid arthritis, cancer, lymphoma, leukemia, or related diseases. In
order for this exemption to be applicable, the medicine must be of a type that
requires a prescription; however, the medicine does not need to be sold by
prescription. As such, sales of these medicines (to be used for the above purposes)
to a hospital, nursing home or doctor are exempt. (The provisions of this
exemption applicable to rheumatoid arthritis became effective on July 1, 2005.)
Free samples of prescription medicine distributed by its manufacturer and
any use of these free samples. In order for this exemption to be applicable, the
medicine must be of a type that requires a prescription.

13

See Home Medical Systems, Inc. v. South Carolina Department of Revenue, 382 S.C. 556, 677 S.E. 2d
582 (2009).

11

Medicine donated by its manufacturer to a public institution of higher
education for research or for the treatment of indigent patients. This
exemption applies to all types of medicines, not just prescription medicines.
Hypodermic needles, insulin, alcohol swabs, blood sugar testing strips,
monolet lancets, dextrometer supplies, blood glucose meters, and other
similar diabetic supplies. While a prescription is not required, in order for this
exemption to be applicable, these items must be sold to a diabetic under the
written authorization and direction of a physician.
Disposable medical supplies. In order for this exemption to be applicable,
disposable medical supplies such as bags, tubing, needles, and syringes, must be
dispensed by a licensed pharmacist in accordance with an individual prescription
written for the use of a human being by a licensed health care provider, must be
used for the intravenous administration of a prescription drug or medicine, and
must come into direct contact with the prescription drug or medicine. This
exemption applies only to supplies used in the treatment of a patient outside of a
hospital, skilled nursing facility, or ambulatory surgical treatment center. The
exemption applies to "disposable" medical supplies sold on or after August 17,
2000 and does not apply to items that are reusable such as electronic pumps and
other medical equipment. In addition, the exemption does not apply to supplies,
such as gauze, that do not require a prescription in order to be sold to the patient.
Prosthetic devices sold by prescription. In order for this exemption to be
applicable, the sale must require a prescription and the device must actually be
sold by prescription and the device must replace a missing part of the body. A
device that merely replaces a missing function is not exempt. 14 As such, sales of
prosthetic devices to a hospital, nursing home, or a similar institution or doctor
are not exempt since such sales do not require a prescription.
Dental prosthetic devices. In order for this exemption to be applicable, the
device must pertain to dentistry and must replace a missing part of the body. A
device that merely replaces a missing function is not exempt.15 The sale does not
require a prescription.
Medicines and medical supplies, including diabetic supplies, diabetic
diagnostic equipment, and diabetic testing equipment, sold to a free
clinic. In order for this exemption to be applicable, the health care clinic
must provide both medical care and dental care without charge to all of its
patients. (This exemption became effective July 1, 2004.)

14

See Home Medical Systems, Inc. v. South Carolina Department of Revenue, 382 S.C. 556, 677 S.E. 2d
582 (2009 wherein the Court held that devices that did not replace missing parts of body but only replaced
functions did not meet the approved regulatory definition of prosthetic device.
15
See Home Medical Systems, Inc. v. South Carolina Department of Revenue, 382 S.C. 556, 677 S.E. 2d
582 (2009).

12

Prescription drugs dispensed to Medicare Part A patients residing in
a nursing home. In order for this exemption to be applicable, the
medicine must be of a type that requires a prescription (however, the
medicine does not need to be sold by prescription), the medicine must be
dispensed to a Medicare Part A patient, and the Medicare Part A patient
must be residing in a nursing home. (This exemption became effective
July 1, 2007.)

SUMMARY OF OTHER RELEVANT EXEMPTIONS:
The statute also provides several other exemptions that may or may not apply. Code
Section 12-36-2120 also exempts from the sales ands use tax:
Durable medical equipment and related supplies as defined under federal
and state Medicaid and Medicare laws. In order for the purchase of the durable
medical equipment and related supplies to be exempt, the purchase must be paid
directly by funds of South Carolina or the United States under the Medicaid or
Medicare programs, state or federal law or regulation authorizing the payment
must prohibit the payment of the sale or use tax, and the durable medical
equipment and related supplies must be sold by a provider who holds a South
Carolina retail sales license and whose principal place of business is located in
South Carolina.
Note: This exemption is being phased-in over several years. Sales of durable
medical equipment meeting the requirements of this exemption that are made on
or after January 1, 2013 are fully exempt. A list of phase-in tax rates for July 1,
2007 to December 31, 2012 are provided earlier in this advisory opinion.
Sales to the federal government. Code Section 12-36-2120(2) exempts sales of
“tangible personal property … to the federal government. Commission Decision

93-2 held that sales paid for via Medicare or Medicaid are not sales to the federal

government.
Sales to charitable hospitals. Code Section 12-36-2120(47) exempts sales of
tangible personal property to charitable hospitals that are exempt from property
taxation under Section 12-37-220; predominantly serve children; and where the
care is provided without charge to the patient.
Sales of hearing aids. Code Section 12-36-2120(38) exempts sales of “hearing
aids, as defined by Section 40-25-20(5).” Hearing aid batteries and cords are
excluded from the definition of “hearing aid;” therefore, sales of these items are
mot exempt from the tax.
Sales during the sales tax holiday. Code Section 12-36-2120(57) exempts from
the sales and use tax:

13

(a) sales taking place during a period beginning 12:01 a.m. on the first
Friday in August and ending at twelve midnight the following Sunday
of:
(i)
(ii)

clothing;
clothing accessories including, but not limited to, hats,
scarves, hosiery, and handbags;
(iii) footwear;
(iv) school supplies including, but not limited to, pens, pencils,
paper, binders, notebooks, books, bookbags, lunchboxes,
and calculators;
(v) computers, printers and printer supplies, and computer
software;
(vi) bath wash clothes, blankets, bed spreads, bed linens, sheet
sets, comforter sets, bath towels, shower curtains, bath
rugs and mats, pillows, and pillow cases.
(b) The exemption allowed by this item does not apply to:
(i) sales of jewelry, cosmetics, eyewear, wallets, watches;
(ii) sales of furniture;
(iii) a sale of an item placed on layaway or similar deferred
payment and delivery plan however described;
(iv) rental of clothing or footwear;
(v) a sale or lease of an item for use in a trade or business.
(c) Before July tenth of each year, the department shall publish and make
available to the public and retailers a list of those articles qualifying for
the exemption allowed by this item.
Note: Since the sales tax holiday applies to clothing and footwear, the exemption
may apply to certain clothing and footwear worn for medical reasons.

14

QUESTIONS AND ANSWERS:
A. Sales to Federal Government Hospitals and Charitable Hospitals Predominantly
Serving Children Where Care Is Provided Without Charge To The Patient:

1. Are sales of non-prescription and prescription medicines by a pharmaceutical supplier
   to a charitable hospital predominantly serving children where care is provided without
   charge to the patient exempt from the sales and use tax?
   Sales of non-prescription and prescription medicines by a pharmaceutical supplier to a
   charitable hospital predominantly serving children where care is provided without charge
   to the patient are exempt from the sales and use tax under Code Section 12-36-2120(47),
   provided the hospital is exempt from property taxes under Section 12-37-220.
2. Are sales of non-prescription and prescription medicines by a pharmaceutical supplier
   to a federal government hospital (e.g., Veterans Administration hospital) exempt from the
   sales and use tax?
   Sales of non-prescription and prescription medicines by a pharmaceutical supplier to a to
   a federal government hospital (e.g., Veterans Administration hospital) are exempt from
   the sales and use tax under Code Section 12-36-2120(2).
3. Are sales by a pharmaceutical or medical equipment supplier of hypodermic needles,
   insulin, alcohol swabs, blood sugar testing strips, monolet lancets, dextrometer supplies,
   blood glucose meters, and other similar supplies for use in treating diabetics to a
   charitable hospital predominantly serving children where care is provided without charge
   to the patient exempt from the sales and use tax?
   Sales by a pharmaceutical or medical equipment supplier of hypodermic needles, insulin,
   alcohol swabs, blood sugar testing strips, monolet lancets, dextrometer supplies, blood
   glucose meters, and other similar supplies for use in treating diabetics to a charitable
   hospital predominantly serving children where care is provided without charge to the
   patient are exempt from the sales and use tax under Code Section 12-36-2120(47),
   provided the hospital is exempt from property taxes under Section 12-37-220.
4. Are sales by a pharmaceutical or medical equipment supplier of hypodermic needles,
   insulin, alcohol swabs, blood sugar testing strips, monolet lancets, dextrometer supplies,
   blood glucose meters, and other similar supplies for use in treating diabetics to a federal
   government hospital (e.g., Veterans Administration hospital) exempt from the sales and
   use tax?
   Sales by a pharmaceutical or medical equipment supplier of hypodermic needles, insulin,
   alcohol swabs, blood sugar testing strips, monolet lancets, dextrometer supplies, blood
   glucose meters, and other similar supplies for use in treating diabetics to a federal
   government hospital (e.g., Veterans Administration hospital) are exempt from the sales
   and use tax under Code Section 12-36-2120(2).
   15

5. Are sales of tangible personal property to a federal government hospital (e.g., Veterans
Administration hospital) exempt from the sales and use tax?
Sales of tangible personal property to a federal government hospital (e.g., Veterans
Administration hospital) are exempt from the sales and use tax under Code Section 1236-2120(2).

6. Are sales of tangible personal property to a charitable hospital predominantly serving
   children where care is provided without charge to the patient exempt from the sales and
   use tax?
   Sales of tangible personal property to a charitable hospital predominantly serving
   children where care is provided without charge to the patient are exempt from the sales
   and use tax under Code Section 12-36-2120(47), provided the hospital is exempt from
   property taxes under Section 12-37-220.
7. Are sales of prescription medicines, over-the-counter medicines and medical supplies,
   including diabetic supplies, diabetic diagnostic equipment, and diabetic testing
   equipment, sold to a charitable health care clinic exempt from the sales and use tax?
   Sales of prescription medicines, over-the-counter medicines and medical supplies,
   including diabetic supplies, diabetic diagnostic equipment, and diabetic testing
   equipment, sold to a charitable health care clinic are subject to the sales and use tax
   unless the charitable health care clinic is one that provides both medical care and dental
   care without charge to all of its patients or unless such prescription medicines are used by
   the doctor, nursing home, hospital or similar institution (a) to prevent respiratory
   syncytial virus; (b) in the treatment of rheumatoid arthritis, cancer, lymphoma, leukemia,
   or related diseases; (c) to relieve the effects of any such treatment of rheumatoid arthritis,
   cancer, lymphoma, leukemia, or related diseases; or (d) are dispensed to a Medicare Part
   A patient residing in a nursing home.
   The phrase “related diseases” limits the exemption for medicines used in the treatment of
   rheumatoid arthritis, cancer, lymphoma, leukemia, or related diseases, or used to relieve
   the effects of any such treatment to prescription medicines used to treat rheumatoid
   arthritis, cancer, lymphoma, leukemia, and other cancer diseases or prescription
   medicines used to relieve the effects of any such treatment of rheumatoid arthritis,
   cancer, lymphoma, leukemia, and other cancer diseases.
   B. Sales to “Free Clinics:”
8. Are sales of prescription medicines, over-the-counter medicines and medical supplies,
   including diabetic supplies, diabetic diagnostic equipment, and diabetic testing
   equipment, sold to a health care clinic that provides both medical care and dental care
   without charge to all of its patients exempt from the sales and use tax?

16

Sales of prescription medicines, over-the-counter medicines and medical supplies,
including diabetic supplies, diabetic diagnostic equipment, and diabetic testing
equipment, sold to a health care clinic that provides both medical care and dental care
without charge to all of its patients are exempt from the sales and use tax under Code
Section 12-36-2120(63).
If the health care clinic does not provide both medical and dental care, or charges any of
its patients for its medical care or dental care (or both), then sales of prescription
medicines, over-the-counter medicines and medical supplies, including diabetic supplies,
diabetic diagnostic equipment, and diabetic testing equipment, to the health care clinic
are subject to the sales and use tax unless otherwise exempt as discussed in Section C
below.

2. Are sales of tangible personal property, other than those listed in Question #1 of this
   Section B, to a health care clinic that provides both medical care and dental care without
   charge to all of its patients subject to the sales and use tax?
   Yes, unless otherwise exempt under the law.
   C. Sales to Doctors, Nursing Homes, Hospitals and Similar Institutions (Not
   Discussed in Section “A” or Section “B” Above):
3. Are sales of prescription medicines by a pharmaceutical supplier to a doctor, nursing
   home, hospital or similar institution for use in treating their patients exempt from the
   sales and use tax?
   Sales of prescription medicines by a pharmaceutical supplier to a doctor, nursing home,
   hospital or similar institution for use in treating their patients are not sales “by
   prescription” (because these transactions do not require prescriptions) and do not qualify
   for the exemption found in Code Section 12-36-2120(28) , unless such prescription
   medicines are used by the doctor, nursing home, hospital or similar institution (a) to
   prevent respiratory syncytial virus; (b) in the treatment of rheumatoid arthritis, cancer,
   lymphoma, leukemia, or related diseases; (c) to relieve the effects of any such treatment
   of rheumatoid arthritis, cancer, lymphoma, leukemia, or related diseases; or (d) are
   dispensed to a Medicare Part A patient residing in a nursing home.
   The phrase “related diseases” limits the exemption for medicines used in the treatment of
   rheumatoid arthritis, cancer, lymphoma, leukemia, or related diseases, or used to relieve
   the effects of any such treatment to prescription medicines used to treat rheumatoid
   arthritis, cancer, lymphoma, leukemia, and other cancer diseases or prescription
   medicines used to relieve the effects of any such treatment of rheumatoid arthritis,
   cancer, lymphoma, leukemia, and other cancer diseases.
4. Are sales of prescription medicines by a pharmaceutical supplier to a doctor, nursing
   home, hospital or similar institution for use in preventing respiratory syncytial virus or in
   the treatment of rheumatoid arthritis, cancer, lymphoma, leukemia, or related diseases, or
   used to relieve the effects of any such treatment of rheumatoid arthritis, cancer,
   lymphoma, leukemia, and other cancer diseases exempt from the sales and use tax?
   17

Sales of prescription medicines by a pharmaceutical supplier to a doctor, nursing home,
hospital or similar institution for use in preventing respiratory syncytial virus or in the
treatment of rheumatoid arthritis, cancer, lymphoma, leukemia, or related diseases, or
used to relieve the effects of any such treatment of rheumatoid arthritis, cancer,
lymphoma, leukemia, and other cancer diseases are exempt from the sales and use tax
The phrase “related diseases” limits the exemption for medicines used in the treatment of
rheumatoid arthritis, cancer, lymphoma, leukemia, or related diseases, or used to relieve
the effects of any such treatment to prescription medicines used to treat rheumatoid
arthritis, cancer, lymphoma, leukemia, and other cancer diseases or prescription
medicines used to relieve the effects of any such treatment of rheumatoid arthritis,
cancer, lymphoma, leukemia, and other cancer diseases.

3. Are sales of non-prescription medicines by a pharmaceutical supplier to a doctor,
   nursing home, hospital or similar institution for use in treating their patients exempt from
   the sales and use tax?
   Sales of non-prescription medicines by a pharmaceutical supplier to a doctor, nursing
   home, hospital or similar institution for use in treating their patients do not qualify for the
   exemption found in Code Section 12-36-2120(28), and are subject to the tax because
   sales to these persons do not require a prescription and the medicines are not medicines
   for which a prescription is required. 16
   Therefore, sales of non-prescription medicines to a doctor, nursing home, hospital or
   similar institution are subject to the tax.
4. Are sales of hearing aids to a doctor, nursing home, hospital or similar institution for
   use in treating their patients exempt from the sales and use tax?
   Sales of hearing aids to a doctor, nursing home, hospital or similar institution for use in
   treating their patients are exempt from the sales and use tax under Code Section 12-362120(38), provided such hearing aids meet the definition found in Code Section 40-2520(5).
   Note: Sales of hearing aid batteries and cords are not exempt.
5. Are sales of prosthetic devices, other than a dental prosthetic device, to a doctor or
   hospital that will be surgically implanted in a patient exempt from the sales and use tax?
   No, since the sale to the doctor or hospital does not require a prescription and the device
   is not actually being sold by prescription, the sale of the device to the doctor or hospital
   does not qualify for the exemption, and is therefore subject to the tax.

16

See Home Medical Systems, Inc. v. South Carolina Department of Revenue, 382 S.C. 556, 677 S.E.2d
582 (2009) (“In our opinion, …the current statutory language-“medicine ... sold by prescription”-clearly
evidences a legislative intent that the exemption be only for those medicines requiring a prescription.”)

18

6. Are sales of dental prosthetic devices to a doctor or hospital that will be surgically
implanted in a patient exempt from the sales and use tax?
Yes, provided the dental prosthetic device is a dental “prosthetic device” as defined in SC
Regulation 117-332.

7. Are sales of enteral nutrition formulas to a doctor, nursing home, hospital or similar
   institution for use in treating their patients exempt from the sales and use tax?
   Sales of enteral nutrition formulas to a doctor, nursing home, hospital or similar
   institution for use in treating their patients do not qualify for the exemption found in
   Code Section 12-36-2120(28), because sales to these persons or entities do not require a
   prescription and the formulas are not medicines for which a prescription is required.
8. Are sales of total parenteral nutrition (“TPN”) solutions to a doctor, nursing home,
   hospital or similar institution for use in treating their patients exempt from the sales and
   use tax?
   Sales of total parenteral nutrition (“TPN”) solutions to a doctor, nursing home, hospital or
   similar institution for use in treating their patients do not qualify for the exemption found
   in Code Section 12-36-2120(28), unless such medicines are of a type that requires a
   prescription and are used by the doctor, nursing home, hospital or similar institution (a) to
   prevent respiratory syncytial virus; (b) in the treatment of rheumatoid arthritis, cancer,
   lymphoma, leukemia, or related diseases; (c) to relieve the effects of any such treatment
   of rheumatoid arthritis, cancer, lymphoma, leukemia, or related diseases; or (d) are
   dispensed to a Medicare Part A patient residing in a nursing home.
   The phrase “related diseases” limits the exemption for medicines used in the treatment of
   rheumatoid arthritis, cancer, lymphoma, leukemia, or related diseases, or used to relieve
   the effects of any such treatment to prescription medicines used to treat rheumatoid
   arthritis, cancer, lymphoma, leukemia, and other cancer diseases or prescription
   medicines used to relieve the effects of any such treatment of rheumatoid arthritis,
   cancer, lymphoma, leukemia, and other cancer diseases.
9. Are sales of oxygen sold in cylinders and oxygen concentrators to a doctor, nursing
   home, hospital or similar institution for use in treating their patients exempt from the
   sales and use tax?
   Sales of oxygen sold in cylinders and oxygen concentrators to a doctor, nursing home,
   hospital or similar institution for use in treating their patients do not qualify for the
   exemption found in Code Section 12-36-2120(28), unless such medicines (oxygen sold in
   cylinders and oxygen concentrators) are of a type that requires a prescription and are used
   by the doctor, nursing home, hospital or similar unless such medicines are of a type that
   requires a prescription and are used by the doctor, nursing home, hospital or similar
   institution (a) to prevent respiratory syncytial virus; (b) in the treatment of rheumatoid
   arthritis, cancer, lymphoma, leukemia, or related diseases; (c) to relieve the effects of any
   such treatment of rheumatoid arthritis, cancer, lymphoma, leukemia, or related diseases;
   or (d) are dispensed to a Medicare Part A patient residing in a nursing home.
   19

The phrase “related diseases” limits the exemption for medicines used in the treatment of
rheumatoid arthritis, cancer, lymphoma, leukemia, or related diseases, or used to relieve
the effects of any such treatment to prescription medicines used to treat rheumatoid
arthritis, cancer, lymphoma, leukemia, and other cancer diseases or prescription
medicines used to relieve the effects of any such treatment of rheumatoid arthritis,
cancer, lymphoma, leukemia, and other cancer diseases.
Sales of masks, tubing, regulators, and tank holders do no come within the exemption and
are subject to the sales and use tax.

10. Are sales of disposable medical supplies such as bags, tubing, needles, and syringes
    to a doctor, nursing home, hospital or similar institution for use in treating their patients
    exempt from the sales and use tax?
    Since sales of disposable medical supplies such as bags, tubing, needles, and syringes to a
    doctor, nursing home, hospital or similar institution for use in treating their patients do
    not meet the requirements of the exemption under Code Section 12-36-2120(28), such
    sales are not exempt from the sales and use tax.
11. Are sales of wheelchairs to a doctor, nursing home, hospital or similar institution for
    use in treating their patients exempt from the sales and use tax?
    No.
    Note: See Section F for information on durable medical equipment.
12. Are sales by a pharmaceutical or medical equipment supplier to a doctor, nursing
    home, hospital or similar institution of hypodermic needles, insulin, alcohol swabs, blood
    sugar testing strips, monolet lancets, dextrometer supplies, blood glucose meters, and
    other similar supplies for use in treating diabetics exempt from the sales and use tax?
    Sales by a pharmaceutical or medical equipment supplier to a doctor, nursing home,
    hospital or similar institution of hypodermic needles, insulin, alcohol swabs, blood sugar
    testing strips, monolet lancets, dextrometer supplies, blood glucose meters, and other
    similar supplies for use in treating diabetics are not sales “to diabetics” and do not qualify
    for the exemption found in Code Section 12-36-2120(28)(b).
13. Are sales of ostomy bags, catheters, and drainage units to a doctor, nursing home,
    hospital or similar institution for use in treating their patients exempt from the sales and
    use tax?
    No, since the sale to the doctor or hospital does not require a prescription and the items
    are not actually being sold by prescription, sales of ostomy bags, catheters, and drainage
    units to the doctor or hospital for use in treating their patients do not qualify for the
    exemption, and are therefore subject to the tax.

20

14. Are sales of prescription medicine to a nursing home for use in treating a Medicare
Part A patient who is residing in the nursing home exempt from the sales and use tax?
Yes. Code Section 12-36-2120(28)(f) exempts from the sales and use tax “prescription
drugs dispensed to Medicare Part A patients residing in a nursing home.”

D. Sales to Individuals (Not A Doctor, Nursing Home, Hospital, Clinic Or Similar
Institution For Use In Treating Their Patients):

1. Are sales of prescription medicines by a pharmacy to an individual who provides the
   pharmacy a prescription from a doctor exempt from the sales and use tax?
   Yes, since the medicine is of a type that requires a prescription, the sale requires a
   prescription, and is actually be sold by prescription, the sale is exempt from the sales and
   use tax.
2. Are sales of non-prescription medicines (i.e., over-the-counter medicines) by a
   pharmacy to an individual who provides the pharmacy a prescription from a doctor
   exempt from the sales and use tax?
   No, since the medicine is of a type that does not require a prescription, the sale is not
   exempt from the sales and use tax.
3. Are sales of oxygen sold in cylinders and oxygen concentrators by a pharmacy or a
   medical supply dealer to an individual exempt from the sales and use tax?
   Yes, when such sales require a prescription under the law and are actually sold by
   prescription to an individual, oxygen sold in cylinders and oxygen concentrators have
   been held exempt as medicines sold by prescription.
   Note: Sales of masks, tubing, regulators, and tank holders do no come within the
   exemption and are subject to the sales and use tax.
4. Are sales of enteral nutrition formulas by a pharmacy or a medical supply dealer to an
   individual exempt from the sales and use tax?
   Sales of enteral nutrition formulas to individuals are subject to the sales and use tax.
5. Are sales of total parenteral nutrition (“TPN”) solutions by a pharmacy or a medical
   supply dealer to an individual who provides the pharmacy a prescription from a doctor
   exempt from the sales and use tax?
   Sales of total parenteral nutrition (“TPN”) solutions to individuals are exempt from the
   sales and use tax under Code Section 12-36-2120(28)(a) as medicines sold by
   prescription since federal law requires that total parenteral nutrition (“TPN”) solutions be
   sold by prescription when sold to the patient.
   21

6. Are sales by medical equipment and supply dealers to an individual of the following
items exempt during the “sales tax holiday?”
orthopaedic shoes
mastectomy and nursing bras
latex and vinyl gloves worn by a caregiver in the home (usually a family member)
hospital-type gowns worn in the home by a patient
diabetic shoes worn by a person with diabetes
compression hosiery
incontinent underwear
dresses worn by nurses or in-home caregivers paid for by the individual
Sales by medical equipment and supply dealers of the above items during the “sales tax
holiday” are taxed or exempt as follows:
orthopaedic shoes
exempt during the “sales tax holiday”
mastectomy and nursing bras
exempt during the “sales tax holiday”
latex and vinyl gloves worn by a caregiver in the home (usually a family member)
exempt during the “sales tax holiday” when used by a family member
taxable during the “sales tax holiday” when used by a paid caregiver since
it would constitute safety clothing for use in a trade or business.
hospital-type gowns worn in the home by a patient
exempt during the “sales tax holiday”
diabetic shoes worn by a person with diabetes
exempt during the “sales tax holiday”
compression hosiery
exempt during the “sales tax holiday”
incontinent underwear
exempt during the “sales tax holiday”
dresses worn by nurses or in-home caregivers paid for by the individual
exempt during the “sales tax holiday” provided the nurse or caregiver is
not required by her employer to wear a specific type of uniform. If the
nurse or caregiver is merely required to wear a nurse-style dress, but not a
specific style or make, then the exemption is applicable. If the nurse is
required to wear a specific style or make, then the dress constitutes an
employee uniform and the exemption is not applicable.
Note: Rentals of the above items do not qualify for the “sales tax holiday”
exemption since Code Section 12-36-2120(57)(b) specifically states that the
exemption does not apply to the “rental of clothing or footwear.”

7. Are sales of wheelchairs to an individual exempt from the sales and use tax?
   No.
   Note: See Section F for information on durable medical equipment.
   22

8. Are sales of hearing aids to an individual exempt from the sales and use tax?
Sales of hearing aids to an individual are exempt from the sales and use tax under Code
Section 12-36-2120(38), provided such hearing aids meet the definition found in Code
Section 40-25-20(5).
Note: Sales of hearing aid batteries and cords are not exempt.

9. Are sales of hypodermic needles, insulin, alcohol swabs, blood sugar testing strips,
   monolet lancets, dextrometer supplies, blood glucose meters, and other similar diabetic
   supplies to an individual exempt from the sales and use tax?
   Sales of hypodermic needles, insulin, alcohol swabs, blood sugar testing strips, monolet
   lancets, dextrometer supplies, blood glucose meters, and other similar diabetic supplies to
   an individual are exempt from the sales and use tax under Code Section 12-362120(28)(b), provided the individual purchasing such items is a diabetic and the sale is
   pursuant to the written authorization and direction of a physician. See SC Regulation
   117-332.
   Note: The exemption does not apply to sales of clothing or footwear specifically designed
   for diabetics (e.g., diabetic shoes). Sales (not including rentals) of clothing and footwear
   specifically designed for diabetics are only exempt from the tax during the “sales tax
   holiday,” provided such items are not used in a trade or business. See Question #6 above.
10. Are sales of ostomy bags, catheters, and drainage units to an individual exempt from
    the sales and use tax?
    Sales of ostomy bags, catheters, and drainage units to an individual are only exempt from
    the sales and use tax if such items are used to replace a missing part of the body (e.g., a
    missing part of the intestines) and if sold by prescription. If the ostomy bags, catheters,
    and drainage units are used to replace a missing function of the body (i.e., the part of the
    body remains, but it is not functioning or is not functioning properly), then sales of such
    items to an individual are not exempt and subject to the tax. See Commission Decision

90-39.

23

E. Medicare and Medicaid:

1. Are sales at retail of tangible personal property that are reimbursed or paid in whole or
   part by Medicare or Medicaid considered sales to the federal government?
   No. Commission Decision #93-2 held that sales paid for via Medicare or Medicaid are
   not sales to the federal government.
2. Are sales at retail of tangible personal property, not otherwise exempt as discussed
   above in Sections “A” through “D,” subject to the sales and use tax if reimbursed or paid
   in whole or part by Medicare or Medicaid?
   Yes, however, only the net amount reimbursed by Medicare and Medicaid is subject to
   the tax if the vendor is prohibited by law from charging the purchaser the difference
   between the retail sale and the amount reimbursed. If the vendor is not prohibited by law
   from charging the purchaser the difference between the retail sale and the amount
   reimbursed by Medicare or Medicaid, then the full amount charged the purchaser (“gross
   proceeds of sales” or “sales price” as defined in Code Sections 12-36-90 and 12-36-130)
   is subject to the sales and use tax.

F. Durable Medical Equipment and Related Supplies

1. Are sales at retail of durable medical equipment and related supplies exempt from the
   sales and use tax?
   Yes, but this exemption is being phased-in over the next several years. Sales of durable
   medical equipment meeting the requirements of this exemption that are made on or after
   January 1, 2013 are fully exempt. The rate of tax imposed on the gross proceeds of sales
   of qualifying durable medical equipment and related supplies from July 1, 2007 and
   thereafter is listed below.
   Date of Sale
   July 1, 2007 to June 30, 2011
   July 1, 2011 to June 30, 2012
   July 1, 2012 to December 31, 2012
   January 1, 2013 and thereafter

State Tax Rate
5.5%
3.5%
1.75%
0%

24

Local Tax Rate
Applies; rate varies by county
Applies; rate varies by county
Applies; rate varies by county
0%

2. What are the requirements that must be met for a sale at retail of durable medical
equipment and related supplies to qualify for the exemption?
In order for the purchase of the durable medical equipment and related supplies to be
exempt from sales tax the following conditions must be met:
(a) The durable medical equipment and related supplies must fall within the
definitions of durable medical equipment and related supplies under federal and
state Medicaid and Medicare laws.
(b) The purchase must be paid directly by funds of South Carolina or the United
States under the Medicaid or Medicare programs.
(c) State or federal law or regulation authorizing the payment must prohibit the
payment of the sale or use tax.
(d) The durable medical equipment and related supplies must be sold by a
provider who holds a South Carolina retail sales license and whose principal place
of business is located in South Carolina.

3. Are sales at retail of durable medical equipment and related supplies that meet the
   requirements for the sales tax exemption as outlined in Question #2 above subject to local
   sales and use taxes administered and collected by the Department on behalf of local
   jurisdictions?
   Sales of durable medical equipment and related supplies are subject to the local sales and
   use tax until sales are fully exempt from the state tax as set forth in Questions #1 and #2
   above. Beginning January 1, 2013, such sales will also be exempt from any local sales
   and use taxes administered and collected by the Department on behalf of local
   jurisdictions.
   SOUTH CAROLINA DEPARTMENT OF REVENUE

s/James F. Etter
James F. Etter, Director
December 15
, 2011
Columbia, South Carolina

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