Which dental-lab charges did SC Revenue Ruling 91-19 treat as exempt prosthetic production, taxable products, or services?

Plain-English summary

South Carolina Revenue Ruling 91-19 classified the stages and products of a dental laboratory under the historical sales-and-use-tax rules.

The ruling treated separately billed denture and crown production stages as parts of one exempt sale of a dental prosthetic device when the lab could show that the item was used to make the denture or crown. It reached different results for other products and procedures:

• surgical trays were taxable tangible personal property;
• night guards were taxable tangible personal property;
• relining an existing denture was a service, with the lab treated as consumer of the acrylic used; and
• etching performed in connection with an exempt veneer was not taxable.

Dental labs could also purchase qualifying component materials and materials used directly in manufacturing tax-free under the wholesale-sale exclusions.

Denture production stages

The ruling described a multistep process that could be divided among specialized labs. It treated these charges as staged billing for the final exempt denture:

• study casts;
• custom trays;
• master casts;
• working casts;
• occlusion rims or bite blocks;
• try-ins or diagnostic wax-ups; and
• attachment labor for dentures.

The exemption required the lab to demonstrate that the item was used in manufacturing dentures rather than another product.

Materials used to make working casts qualified as directly used in manufacturing because the casts contacted and helped physically change the dentures. Materials becoming ingredients or components of the dentures also qualified for wholesale treatment.

Crown production stages

The same staged-sale analysis applied to crowns. The exempt production charges listed by the ruling were:

• study casts;
• custom trays;
• master casts;
• working casts;
• epoxy casts;
• occlusion rims or bite blocks; and
• try-ins or trial wax-ups.

Again, the lab had to show that these items were used to manufacture crowns. Working-cast and epoxy-cast materials were directly used because the casts contacted and contributed to a physical change in the crowns. Component materials incorporated into crowns were also wholesale purchases.

Surgical trays and night guards

A surgical tray was a cast of the patient's tissue used by the dentist during surgery to help ensure fit. RR 91-19 said it was not a prosthetic device and treated the lab's sale to the dentist as taxable.

A night guard was worn over the patient's teeth to reposition the lower jaw and address effects of tooth grinding. The ruling likewise said it was not a prosthetic device and taxed the sale as tangible personal property.

Denture relines

When an existing denture was modified or rebuilt to restore fit, the ruling treated the lab's charge as a service rather than a sale of tangible personal property.

The lab was the user or consumer of the acrylic used for the reline. Because a lab also used acrylic as an exempt component of newly manufactured dentures, the ruling allowed the lab to purchase all acrylic tax-free and then pay tax based on the fair market value of acrylic consumed in relines.

Veneer etching

Etching was a chemical process applied to a laminate veneer so it would bond properly to the remaining tooth. A lab might separately state the etching charge or subcontract the process.

RR 91-19 treated etching as a service associated with the veneer sale. Because the veneer itself was an exempt prosthetic device, the etching charge was not subject to tax.

What this means for you

Dental laboratories

Tie each separately billed cast, tray, rim, wax-up, or other stage to the exempt denture or crown it helps manufacture. The ruling conditioned the staged-charge treatment on proof of that use.

Multilab workflows

Using several specialized labs did not by itself make the production stages taxable. The ruling viewed their charges collectively as the gross proceeds of the final prosthetic-device sale when the required connection was shown.

Purchasing teams

Separate component and direct-use manufacturing inputs from materials consumed in taxable or service activities. The reline-acrylic rule illustrates the need to account for tax-free purchases later consumed in a taxable manner.

Common questions

Q: Was a separately billed working cast taxable?

A: Not when the lab demonstrated that it was a stage in manufacturing an exempt denture or crown.

Q: Were surgical trays exempt dental prosthetics?

A: No. The ruling treated them as taxable tangible personal property used by dentists in surgery.

Q: Were night guards exempt?

A: No. RR 91-19 said night guards were not prosthetic devices.

Q: Was a denture reline taxable as a product sale?

A: No. It was treated as a service, but the lab owed tax on the acrylic it consumed.

Q: Could several labs each bill an exempt production stage?

A: Yes, when the charges were stages in manufacturing the exempt denture or crown and the labs could document that use.

Q: Was separately stated veneer etching taxable?

A: No. The ruling treated it as a service associated with the exempt veneer sale.

Citations and references

• S.C. Code Ann. § 12-36-2120(28) — historical dental-prosthetic-device exemption
• S.C. Code Ann. § 12-36-120(2) and (3) — component-part and direct-use manufacturing exclusions
• S.C. Reg. 117-174.30 — historical direct-use definition
• S.C. Code Ann. § 12-4-320 — ruling authority
• SC Revenue Ruling 90-1 — prosthetic-device definition applied by RR 91-19

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/RR91-19.pdf

Original ruling text

SC REVENUE RULING #91-19

SUBJECT:

Dental Prosthetic Devices - Dental Labs
(Sales and Use Tax)

TAX MANAGER:

John P. McCormack

EFFECTIVE DATE: July 1, 1990
SUPERSEDES:

All previous documents and any oral directives in conflict herewith.

REFERENCE:

S.C. Code Ann. Section 12-36-2120(28) (Supp. 1990)
S.C. Code Ann. Section 12-36-120 (Supp. 1990)

AUTHORITY:

S.C. Code Section 12-4-320 (Enacted June, 1991)
SC Revenue Procedure #87-3

SCOPE:

A Revenue Ruling is the Commission's official interpretation of how tax
law is to be applied to a specific set of facts. A Revenue Ruling is public
information and remains a permanent document until superseded by a
Regulation or is rescinded by a subsequent Revenue Ruling.

Question:
What guidelines can the Commission provide with respect to sales and use tax and the
procedures used by dental laboratories in the manufacture of dental prosthetic devices and
certain other tangible personal property?
Facts:
There are approximately 110 dental labs in the state, with only 4 or 5 of these considered "full
service" labs. A full service lab is one that performs all the functions of a lab. Today, most labs
specialize in one of three main areas: ceramics, dentures, or crowns and bridges.
Not only do labs specialize in these areas, but a dentist may "subcontract" the various stages of
production to several labs. The average dentist uses the services of 4 or 5 different labs due to
their specialties and due to a lab's abilities with respect to various stages of production within a
specialized area.

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Also, due to the nature of the business, most labs bill the various stages of production of a
prosthetic device because the dentist may use another lab to finish the job or the dentist's patient
may not return to complete the procedure. In addition, there is a cash flow concern; in that, the
patient may not re-visit the dentist for months.
DENTURES:
The following outlines the process of manufacturing dentures (prosthetic devices):

1. The dentist takes an impression of the patient's teeth and sends the impression to the lab.
2. The impression is then used by the lab to create a study cast. The study cast may be
   created by the dentist. In either case, the study cast is used by the dentist to evaluate the
   proper tooth preparation and the design of the prosthetic device to be constructed. The
   dentist may ask the lab for a suggested design of the prosthetic device.
3. The dental lab will then create a custom trays using the study cast. This enables the
   dentist to make an accurate impression of the patient's tissue and teeth.
4. Once it is determined how the prosthetic device will be designed, the impression taken by
   the dentist is used by the lab to create a master cast. The master cast impression is taken
   after the dentist has prepared the teeth for the prosthetic device. The design for the
   prosthetic device was based on the evaluation of the study cast. The master cast is also
   used for quality assurance.
5. A working cast is then made by the lab from the master cast. The working cast is used to
   create the prosthetic device.
6. The lab, at the request of the dentist, will create occlusion rims. Occlusion rims (also
   known as bite blocks) are wax blocks mounted on base plates used to establish the
   relationship between the patient's upper and lower jaws. Also, these wax blocks are used
   to determine the proper amount of jaw separation. The occlusion rim is marked by the
   dentist to show the lab how to cut out the wax from the blocks and insert the artificial
   teeth. This procedure creates a try-in.
7. A try-in (also known as the "diagnostic wax-up") is a wax mock-up wherein the lab sets
   the artificial teeth in wax. The try-in is sent to the dentist by the lab so that it may be
   inserted in the patient's mouth to be evaluated for fit, function, and aesthetics.
8. Using what is known as the "lost wax procedure", the lab uses the try-in to create the
   final dentures. This procedure essentially replaces the wax with an acrylic.
   The lab may also bill the dentist for "attachment labor - denture". This is usually a more labor
   intensive design of a denture which is billed as such to the dentist.
   Again, the lab usually bills the dentist at each stage of production.

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Dental labs also manufacture surgical trays. A surgical tray is a cast of the patient's tissue (made
from an impression taken by the dentist). It is used by the dentist in surgery, with respect to the
tissue, to ensure a proper fit.
CROWNS:
With respect to crowns (prosthetic devices), the above steps used in manufacturing dentures are
followed, except on a more limited scale. However, two other steps need to be addressed:

1. An epoxy cast or model is created from an impression and used to create a crown. Casts
   are made from many material (gypsum, metal); however, epoxy is used in some cases
   because of its hardness, stability, and easy usage. It is usually billed separately due to its
   cost. Epoxy is much more expensive than gypsum.
2. A trial wax-up is the same as the try-in (dentures) except it is the term usually associated
   with crowns.
   RELINE:
   If, over time, the patient's dentures become loose due to the supporting bone and tissues
   changing shape or shrinking, the existing denture may be refitted. This procedure is known as
   reline, rebase, reline jig or soft reline ("reline").
   Essentially the existing denture's acrylic is modified or rebuilt for a proper fit. The procedure is
   an economical method to restore fit and function. Impressions and models must still be used to
   ensure a proper fit.
   NIGHT GUARDS:
   Also, labs construct night guards. These are clear items worn over the patient's teeth to re-open
   or re-position the lower jaw. At first, night guards were only worn at night, but now they are
   usually worn 24 hours a day. Night guards are used by patients who have worn down tooth
   structure by grinding their teeth, and who have pain resulting from the change in the lower jaw's
   position as a result of worn teeth.
   ETCHING:
   Etching is a chemical process whereby the lab etches the laminate veneer (prosthetic device) that
   will be affixed to a tooth. The dentist performs the same process on the remaining portion of the
   tooth in the patient's mouth. This process ensures proper bonding of the veneer to the tooth
   structure. Some labs break this process out on the bill to the dentist when manufacturing the
   veneer. This break out of the process on the bill may be because the lab does not specialize in
   etching and sub-contracts the work to another lab.
   Discussion:
   Code Section 12-36-2120 exempts from the sales and use tax the gross proceeds of sales, or sales
   price of:
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(28) medicine and prosthetic devices sold by prescription; hypodermic needles, insulin,
alcohol swabs, and blood sugar testing strips sold to diabetics under the authorization and
direction of a physician; and dental prosthetic devices;
SC Revenue Ruling #90-1 defined the term "dental prosthetic device" to mean "an artificial
device or part which replaces a missing part of the body. The term does not include devices
which straighten or support a part of the body." The ruling held that crowns, bridges, veneers
and dentures were dental prosthetic devices.
In addition, dental labs have long been considered manufacturers and are therefore entitled to
various exemptions and exclusions afforded manufacturers under the sales and use tax law.
Code Section 12-36-120 defines the terms "wholesale sale" and "sale at wholesale" to mean a
sale of:

(2) tangible personal property to a manufacturer or compounder as an ingredient or
component part of the tangible personal property or products manufactured or
compounded for sale;
(3) tangible personal property used directly in manufacturing, compounding, or
processing tangible personal property into products for sale;

The term "used directly", as used in Code Section 12-36-120, is defined in Regulation 117174.30 to mean "that the materials or products so used come in direct contact with and contribute
to bring about some chemical or physical change in the ingredient or component properties
during the period in which the fabricating, converting or processing takes place."
In summary, with respect to the procedures addressed in the Facts, dental labs may purchase taxfree the ingredients and component parts of the tangible personal property they manufacture for
sale and those items "used directly" in the manufacturing process.
Conclusion:
The guidelines that the Commission can provide with respect to sales and use tax and the
procedures used by dental laboratories in the manufacture of dental prosthetic devices and
certain other tangible personal property, are as follows:
DENTURES:
A review of the Facts indicates dental labs are merely billing the various stages of producing
dentures (prosthetic devices). In other words, a lab's invoicing of the study cast, master cast,
occlusion rims, etc. constitute the total gross proceeds charged in the sale of the end product - an
exempt prosthetic device.

4

Charges by dental labs to dentists for the following constitute one charge, made in stages by one
or several labs, for dentures which are exempt from the sales and use tax under Code Section 1236-2120(28). Therefore, the following charges, by one or several dental labs when
manufacturing dentures, are not subject to the sales and use tax:
1.
2.
3.
4.
5.
6.
7.

Study casts
Custom trays
Master casts
Working casts
Occlusion rims (Bite blocks)
Try-ins
Attachment labor - dentures

Dental labs must demonstrate that these items are used in the manufacture of dentures, and not in
the manufacture of other items.
It should be noted that purchases by labs of the materials to make working casts are excluded
from the tax as items "used directly" in manufacturing. Working casts come in direct contact
with and contribute to bring about a physical change in the dentures. In addition, all materials
purchased by labs which become an ingredient or component part of the dentures sold are
excluded from the tax. (See Code Section 12-36-120 and Regulation 117-174.30.)
Charges by dental labs to dentists for surgical trays constitute sales of tangible personal property
subject to the tax, as such are not prosthetic
devices and are used by dentists in surgery.
CROWNS:
Again, a review of the Facts indicates the dental labs are merely billing for the various stages of
producing crowns (prosthetic devices). In other words, a lab's invoicings of the study cast,
master cast, occlusion rims, etc. constitute the total gross proceeds charged in the sale of the end
product - an exempt prosthetic device.
Charges by dental labs to dentists for the following constitute one charge, made in stages by one
or several labs, for crowns which are exempt from the sales and use tax under Code Section 1236-2120(28). Therefore, the following charges, by one or several dental labs when
manufacturing crowns, are not subject to the sales and use tax:
1.
2.
3.
4.
5.
6.
7.

Study casts
Custom trays
Master casts
Working casts
Epoxy casts
Occlusion rims (Bite blocks)
Try-ins or Trial wax-ups

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Dental labs must demonstrate that these items are used in the manufacture of crowns, and not in
the manufacture of other items.
It should be noted that purchases by labs of the materials to make working casts and epoxy casts
are excluded from the tax as items "used directly" in manufacturing. These casts come in direct
contact with and contribute to bring about a physical change in the crowns. In addition, all
materials purchased by labs which become an ingredient or component part of the crowns are
excluded from the tax. (See Code Section 12-36-120 and Regulation 117-174.30.)
RELINE:
Charges by dental labs to dentists for relines do not constitute sales of tangible personal property
to dentists, but constitute sales of services. The labs are considered the users or consumers of the
acrylic used to reline the dentures.
Note: Since labs purchase acrylic also as an ingredient or component part of the dentures they
manufacturer, the labs may purchase all acrylic tax-free and pay the tax on the acrylic used in
relines based upon the fair market value of the acrylic used. Acrylic used in the manufacture of
dentures, as previously stated, is not subject to the sales and use tax as an ingredient or
component part. (See section on "DENTURES".)
NIGHT GUARDS:
Charges by dental labs to dentists for night guards constitute sales of tangible personal property
subject to the tax, as such are not prosthetic devices.
ETCHING
Charges by dental labs to dentists for etching constitutes a service associated with the sale of
tangible personal property (veneer).
However, the sales of veneers are exempt from the tax as prosthetic devices and charges for
etching would therefore not be subject to the tax.
SOUTH CAROLINA TAX COMMISSION

s/S. Hunter Howard, Jr.
S. Hunter Howard, Jr., Chairman
s/A. Crawford Clarkson, Jr.
A. Crawford Clarkson, Jr. Commissioner
s/T.R. McConnell
T. R. McConnell, Commissioner
Columbia, South Carolina
, 1991
October 16
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