Are enteral feeding pumps, their disposable supplies (tubing, syringes, connectors), and the enteral nutrition food used with them all exempt from Tennessee sales and use tax?

Subject

Whether enteral feeding systems and enteral nutrition food are exempt from Tennessee sales and use tax.

Plain-English summary

The Tennessee Department of Revenue split the tax treatment of an enteral feeding system into two categories, exempting the hardware but taxing the food.

Enteral feeding pumps and their disposable supplies are exempt as prosthetic devices. An enteral feeding system introduces pre-mixed nutritional formulas directly into a patient's stomach or intestine through a tube, bypassing the mouth and esophagus for patients who can digest food but can't swallow it normally. Tennessee's prosthetic device exemption covers items that substitute for a missing or non-functioning bodily part (citing Cordis v. Taylor). Because the pump — and its disposable components (feeding containers, tubing, needles, syringes, connectors, adaptors) — functionally substitutes for the mouth and esophagus, both the reusable pump and the disposable supplies qualify as exempt prosthetics.

The enteral nutrition food itself is taxable, despite requiring a doctor's prescription. Tennessee's separate prescription drug/medicine exemption only covers items that are actually a "drug" or "medicine" — substances used in the diagnosis, treatment, or prevention of disease. The Department found that the enteral nutrition food doesn't diagnose, treat, or prevent any disease; it simply provides nutrition to patients who can't eat normally, the same reasoning a Tennessee court applied in Feldman v. Huddleston to deny the drug exemption for dietary supplements that combatted starvation side-effects rather than attacking obesity itself. Being prescribed by a physician doesn't change this outcome — the exemption requires the item to actually be a drug or medicine, and "food that a doctor tells you to eat" doesn't meet that bar just because a prescription is involved.

What this means for you

Medical supply companies selling feeding systems and nutritional products

Don't assume that "prescribed by a doctor" automatically qualifies a product for Tennessee's prescription drug exemption — that exemption is reserved for actual drugs/medicines that diagnose, treat, or prevent disease. Nutritional products, even medically necessary and physician-prescribed ones, are taxed as food/tangible personal property unless they independently meet the drug/medicine definition. Meanwhile, the hardware delivering that nutrition (pumps, tubing, and other disposable components that substitute for a bodily function) has a much more favorable path to exemption as a prosthetic device.

Accountants and tax professionals

This ruling illustrates the functional-substitution test for prosthetic devices from Cordis v. Taylor applied to a delivery system rather than a traditional prosthesis, plus the "actually treats/prevents disease" line drawn in Feldman v. Huddleston that separates true drugs/medicines from nutritional or dietary products regardless of prescription status. Useful template whenever a client sells a device-plus-consumable combination where the device qualifies for one exemption category and the consumable needs its own independent analysis.

Common questions

Q: Does a doctor's prescription automatically make a product tax-exempt in Tennessee?
A: No. The prescription drug/medicine exemption requires the product to actually be a drug or medicine used to diagnose, treat, or prevent disease — a prescription alone (for something like nutritional food) doesn't satisfy that requirement.

Q: Are disposable medical supplies (tubing, syringes, connectors) automatically taxable since they're consumed rather than reused?
A: Not necessarily. Here, disposable supplies were exempt alongside the reusable pump because they're all part of the same prosthetic system that substitutes for a bodily function — reusability wasn't the deciding factor.

Q: What is the legal test for whether something counts as a "prosthetic device" in Tennessee?
A: Whether it substitutes for a missing, non-functioning, or reduced-function bodily part, per Cordis v. Taylor — not whether it looks like a traditional artificial limb or implant.

Q: Does this ruling apply to other medical/nutritional product sellers?
A: No. A Tennessee letter ruling binds the Department only for the specific taxpayer and facts addressed and cannot be relied on by others, though the prosthetic-device and drug/medicine tests it applies are of general use. Note also the ruling flags that a statutory definition of "drug" was set to be added via Streamlined Sales Tax Agreement conforming legislation effective July 1, 2007 — verify current law.

Citations and references

Statutes and cases:

• Tenn. Code Ann. § 67-6-314(5) (prosthetic device sales tax exemption)
• Tenn. Code Ann. § 67-6-320(a)-(b) (prescription drug/medicine exemption)
• Cordis v. Taylor, 762 S.W.2d 138 (Tenn. 1988) (prosthetic device substitutes for missing/non-functioning bodily part)
• Feldman v. Huddleston, 912 S.W.2d 161 (Tenn. Ct. App. 1995) (dietary supplements not treating disease don't qualify as drugs/medicines)

Source

• Landing page: https://www.tn.gov/revenue/tax-resources/legal-resources/tax-rulings.html
• Original PDF: https://www.tn.gov/content/dam/tn/revenue/documents/rulings/sales/06-14.pdf

Original ruling text

TENNESSEE DEPARTMENT OF REVENUE
LETTER RULING #06-14
WARNING
Letter rulings are binding on the Department only with respect to the individual
taxpayer being addressed in the ruling. This presentation of the ruling in a redacted
form is informational only. Rulings are made in response to particular facts
presented and are not intended necessarily as statements of Department policy.

SUBJECT
Whether enteral feeding systems and enteral nutritional products are exempt from sales
and use tax.
SCOPE
This letter ruling is an interpretation and application of the tax law as it relates to a
specific set of existing facts furnished to the department by the taxpayer. The rulings
herein are binding upon the Department and are applicable only to the individual
taxpayer being addressed.
This letter ruling may be revoked or modified by the Commissioner at any time.
Such revocation or modification shall be effective retroactively unless the following
conditions are met, in which case the revocation shall be prospective only:
(A) The taxpayer must not have misstated or omitted material facts
involved in the transaction;
(B) Facts that develop later must not be materially different from the facts
upon which the ruling was based;
(C) The applicable law must not have been changed or amended;
(D) The ruling must have been issued originally with respect to a
prospective or proposed transaction; and

(E) The taxpayer directly involved must have acted in good faith in relying
upon the ruling; and a retroactive revocation of the ruling must inure to the
taxpayer's detriment.
FACTS
The Taxpayer sells a variety of pharmaceuticals and medical products, including enteral
feeding systems and enteral nutrition food. An enteral feeding system introduces premixed formulas into the stomach or intestines via a tube for patients who cannot ingest
food through their mouth. This system is used for a patient who cannot ingest, but can
digest food. Enteral pumps push the food from the feeding container through a tube into
the patient’s stomach or intestine. The enteral system replaces the mouth and the
esophagus by allowing the food to bypass these organs. Special nutritional formulas are
developed to be administered through the enteral feeding system. The feeding system is
composed of an enteral pump, feeding containers, tubing, needles, syringes, connectors,
and adaptors. The pumps can be used over and over again; however, the other
components are disposable.
The products are sold by the Taxpayer to wholesalers, government institutions, home
health care companies, nursing homes and hospitals. The use of the enteral nutrition
feeding systems and food is prescribed by a doctor and employed to introduce food to a
patient who is unable to swallow or digest food normally.

ISSUES
1.

Are the enteral feeding pumps sold by the Taxpayer exempt from sales and
use tax as prosthetic devices?

2.

Are the disposable supplies sold by the Taxpayer exempt from sales and use
tax as prosthetic devices?

3.

Is the enteral nutrition food sold by the Taxpayer to health care professionals,
which can only be used when prescribed by a doctor, exempt from sales and
use tax?

RULINGS
1.

Yes. The enteral feeding pumps are exempt from sales and use tax as
prosthetic devices.

2.

Yes. The disposable supplies are exempt from sales and use tax as prosthetic
devices.

3.

No. The enteral nutrition food is subject to sales and use tax.

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ANALYSIS
1.

Enteral Feeding Pumps are Exempt from Sales and Use Tax as Prosthetic Devices

Tenn. Code Ann. § 67-6-314(5) exempts from sales and use tax medical corrective and
support appliances and devices, including prosthetics. A device is prosthetic if it
substitutes for the missing function of a bodily part, whether the part is missing, nonfunctioning, or has reduced function. Cordis v. Taylor, 762 S.W.2d 138, 139 (Tenn.
1988). The enteral pump, as part of an enteral nutrition system, substitutes for the mouth
and esophagus of a patient and is therefore, exempt from sales tax as a prosthetic
pursuant to Tenn. Code Ann. § 67-6-314(5).
2.

The Disposable Supplies are Exempt from Sales and Use Tax as Prosthetic
Devices

The disposable supplies consist of feeding containers, feeding tubes, needles, syringes,
connectors, and adaptors. The disposable supplies are an essential part of the enteral
nutrition system which temporarily replaces the mouth and the esophagus, and in some
cases, the stomach. When these supplies are used as part of an enteral feeding system,
they are exempt as a prosthetic under Tenn. Code Ann. § 67-6-314(5).
3.

Enteral Nutrition Food that is used to Treat a Disease and is Prescribed by a
Doctor, is Subject to Sales and Use Tax

Tenn. Code Ann. § 67-6-320(a) and (b) provides an exemption from sales and use tax for
prescription drugs and medicines:
(a) There is exempt from the tax imposed by this chapter any prescription
drug or medicine issued by a licensed pharmacist in accordance with an
individual prescription written for the use of a human being by a
practitioner of the healing arts licensed by the state of Tennessee.
(b) There is also exempt from the tax imposed by this chapter any
prescribed drug or medicine sold to a practitioner of the healing arts
licensed by the state of Tennessee or issued by a licensed pharmacist for
use in the treatment of a human being.
To fall under this exemption, the item must be a drug or medicine and must be either (a)
sold to a physician or (b) issued by a pharmacist to an individual in accordance with a
physician’s prescription.
Under the facts provided, the enteral nutrition food produced by the Taxpayer is
prescribed by a physician. Therefore, the question is whether the enteral nutrition food is

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a drug or a medicine. There is no definition of either a drug or a medicine1 in the sales
and use tax code; therefore, the ordinary meanings of the terms must be used. A drug is
defined as a “substance used in the diagnosis, treatment, or prevention of a disease or as a
component of a medication.” The American Heritage Dictionary, 4th Edition, 2000.
Medicine is defined as “a substance or preparation used in treating disease.” MerriamWebster's Medical Dictionary, 2002. The question then becomes whether the enteral
nutrition food is used in the diagnosis, treatment, or prevention of a disease. In Feldman
v. Huddleston, 912 S.W.2d 161 (Tenn. Ct. App. 1995), the Court of Appeals found that
because dietary supplements did not attack obesity and were actually used to combat the
side effects of starvation, they did not qualify for the exemption in Tenn. Code Ann. §
67-6-320. Similarly, in this situation, the Taxpayer’s nutritional products are not used to
diagnose, nor are they used to either treat or prevent disease; rather, they simply provide
nutrition for patients who cannot ingest food through their mouths. Because the
Taxpayer’s nutritional products constitute food rather than a drug or medicine, they are
subject to sales and use tax.

Deborah A. Toon
Tax Counsel

APPROVED: Loren L. Chumley
Commissioner

DATE:

5/4/06

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The definition of a drug will be added to the Code as part of the Streamlined Sales Tax Agreement and
will go into effect on July 1, 2007.

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