Are ureteral catheters — used to inject contrast dye and guide instrumentation during diagnostic ureteroscopy procedures — exempt from Tennessee sales and use tax as prosthetic devices?

Subject

Whether ureteral catheters qualify for the prosthetic device sales tax exemption.

Plain-English summary

The Tennessee Department of Revenue ruled that ureteral catheters — devices used during ureteroscopy to inject contrast dye and guide a wire into the ureter for imaging purposes — do not qualify for Tennessee's sales tax exemption for prosthetic and orthotic devices.

Tennessee exempts "prosthetics, orthotics, special molded orthopedic shoes, walkers, crutches, surgical supports of all kinds, and other similarly medical corrective or support appliances and devices" from sales tax. Under the controlling test from Cordis Corp. v. Taylor, a device is a prosthetic only if it replaces a missing body part or augments the performance of a natural function — the Tennessee Supreme Court applied that test to find a cardiac pacemaker exempt (it augments the heart's stimulus function) and a hydrocephalus valve system exempt (it augments the natural flow of cerebral spinal fluid). Ureteral catheters don't do either: they're purely diagnostic tools that let a urologist see inside the ureters by delivering contrast dye and positioning a guidewire for subsequent instrumentation. They don't replace or enhance any bodily function — they just enable visualization for diagnosis. Because Tennessee has no general exemption for surgical or diagnostic instruments, the catheter (and the guidewire used with it) is fully taxable.

What this means for you

Medical device manufacturers and distributors

The prosthetic device exemption is narrowly limited to devices that functionally replace or augment a bodily function — not to every device used in a medical procedure, no matter how essential. A device that's purely diagnostic (enabling a physician to see or evaluate something) will not qualify, even if it's a necessary preliminary step for a therapeutic procedure. Don't assume a device is exempt just because it's classified as medical equipment or sold exclusively to hospitals and physicians.

Accountants and tax professionals

This ruling is a clean, direct application of the Cordis Corp. v. Taylor functional-replacement-or-augmentation test to a diagnostic instrument, reinforcing that Tennessee draws a firm line between therapeutic/corrective devices (exempt) and diagnostic/surgical tools (taxable, absent a specific exemption). Useful precedent whenever a client sells a device that assists a procedure but doesn't itself replace or enhance a bodily function.

Common questions

Q: What is the legal test for whether a medical device qualifies as an exempt "prosthetic"?
A: Whether it replaces a missing body part or augments the performance of a natural bodily function, per Cordis Corp. v. Taylor — not whether it's used in a medical setting or by medical professionals.

Q: Is there a general Tennessee sales tax exemption for surgical or diagnostic instruments?
A: No. Only devices that meet the prosthetic/orthotic functional test (or fall under one of Tennessee's other specific medical exemptions) qualify; diagnostic tools like ureteral catheters have no exemption to fall back on.

Q: Does a device being an essential preliminary step for a later therapeutic procedure make it exempt?
A: No. Being clinically necessary or foundational to a later procedure doesn't matter — the device itself must replace or augment a bodily function to qualify.

Q: Does this ruling apply to other diagnostic medical devices?
A: No. A Tennessee revenue ruling is advisory only and not binding on the Department, even for the taxpayer who requested it, though the functional test it applies is of general use for similar diagnostic-vs-prosthetic device questions.

Citations and references

Statutes and cases:

• Tenn. Code Ann. § 67-6-314(5) (prosthetic/orthotic device sales tax exemption)
• Cordis Corp. v. Taylor, 762 S.W.2d 138 (Tenn. 1988) (prosthetic device test: replaces or augments a missing/reduced bodily function; pacemaker and hydrocephalus valve system both qualified)

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/06-13.pdf

Original ruling text

TENNESSEE DEPARTMENT OF REVENUE
REVENUE RULING #06-13

WARNING
Revenue rulings are not binding on the Department. This presentation of the ruling
in a redacted form is information only. Rulings are made in response to particular
facts presented and are not intended necessarily as statements of Departmental
policy.
SUBJECT
Whether certain medical devices are exempt from sales and use tax as prosthetic devices.

SCOPE
Revenue rulings are statements regarding the substantive application of law and
statements of procedure that affect the rights and duties of taxpayers and other members
of the public. Revenue rulings are advisory in nature and are not binding on the
Department.

FACTS
Ureteroscopy is a common procedure performed by urologists. The most common
indication is to treat upper urinary tract calculi that are either unsuitable for
extracorporeal shockwave lithotripsy or are refractory to that form of treatment. Other
common indications include evaluation of an abnormal lesion noted on findings from less
invasive imaging tools (e.g., intravenous pyelography [IVP], MRI, CT scan) or localizing
a source of positive urine culture results or cytology results.
Company A (hereinafter the “Taxpayer”) is a manufacturer and distributor of medical
devices. The devices include different types of ureteral catheters that facilitate essential
preliminary procedural components of ureteroscopy. The Taxpayer’s products are
primarily sold to physicians, hospitals, and other medical facilities. Ureteral catheters are
designed in a variety of configurations. The human characteristics of the ureteral orifice
and urologist preference determine the choice of design in a specific clinical situation.
Once the choice of design is chosen, the catheter is positioned within the ureteral orifice
under direct vision. A catheter adaptor is secured to the ureteral catheter. Contrast
medium, a type of dye, is then injected through the ureteral catheter into the ureter. With
the contrast media in place the medical professional can visualize the ureter with
specialized uretoroscopic instrumentation.

After the contrast injection is complete, and while the ureteral catheter remains in the
ureter, the guidewire is inserted through the catheter and advanced into the ureter. A
coated guidewire within the ureter is essential to permit safe advancement of subsequent
instrumentation. After the wire is in place, the ureteral catheter may then be withdrawn,
or, if necessary, advanced further over the wire for delivery of additional contrast.

QUESTION
Are ureteral catheters exempt from sales and use tax as prosthetic devices?

RULING
No.
ANALYSIS
Under the Retailers’ Sales Tax Act, Tenn. Code Ann. § 67-6-101 et. seq., the sale of
tangible personal property is generally subject to sales and use tax unless an exemption
applies. Several specific exemptions apply to the sale of medical equipment and supplies
including the following exemption for orthotics and prosthetics:1
Tenn. Code Ann. § 67-6-314(5) provides as follows:
There is exempt from the sales tax imposed by the chapter. . .
(5) The sale or repair of prosthetics, orthotics, special molded orthopedic
shoes, walkers, crutches, surgical supports of all kinds, and other similarly
medical corrective or support appliances and devices.
A device is a prosthetic if it replaces a missing body part or augments the performance of
a natural function. Cordis Corp. v. Taylor, 762 S.W.2d 138, 139 (Tenn. 1988). The
court in Cordis held that an implantable cardiac pacemaker is a prosthetic because it
replaces or augments the missing or reduced body function of providing a stimulus for
the beating of a heart. Id. The court also held that a hydrocephalus valve system is a
prosthetic because it is an artificial device that augments the natural flow of cerebral
spinal fluid from the brain into the bloodstream. Id.
Ureteral Catheters are not prosthetic devices and do not qualify for any other medical
equipment exemption because they do not replace or augment a missing or reduced body
1

Legislation related to the Streamlined Sales and Use Tax Agreement, effective July 1, 2007, may result in changes regarding the
application of sales and use tax sales of certain items of tangible personal property. The Department of Revenue encourages you to
visit our website at www.tennessee.gov/revenue for updates.

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function. Ureteral catheters enable urologists to view the ureters from inside the body for
diagnostic purposes only. No exemption exists for surgical or diagnostic tools.
Accordingly, the guidewire used to insert the ureteral catheter is also not exempt from
sales and use tax.

Deborah A. Toon
Tax Counsel

APPROVED: Loren L. Chumley
Commissioner

DATE:

4/28/06

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