What prescription and documentation must a retailer collect to sell massage chairs, hot tubs, and similar therapeutic appliances tax-exempt in Texas, and does a chiropractor's prescription count?

Plain-English summary

The Texas Comptroller clarified exactly what documentation a retailer needs to sell "therapeutic appliances" — massage chairs, adjustable mattresses, exercise equipment, hot tubs, and spas — tax-exempt under the health care supplies exemption, and confirmed that a chiropractor's prescription qualifies, while a plain nurse's prescription does not (though a nurse practitioner's does).

Texas exempts therapeutic appliances "dispensed or prescribed by a licensed practitioner of the healing arts." For most items (massage chairs, adjustable mattresses, exercise equipment), the retailer needs only a written prescription — signed, identifying the practitioner's name, address, license number and type of license, and identifying the item — kept on file; no exemption certificate is required. For hot tubs, spas, or similar appliances, the bar is higher: the retailer also needs an exemption certificate and a signed statement of medical necessity from the practitioner (which can be combined with the prescription in one document). A prescription doesn't need to be written on prescription-pad paper to count.

The key legal question was who counts as a "licensed practitioner of the healing arts." That term is tied to Texas Occupations Code § 104.003, which requires the professional to be entitled to use the title "doctor" — covering medical doctors, osteopaths, dentists, chiropractors, optometrists, podiatrists, and veterinarians, plus (by a separate statutory cross-reference) nurse practitioners and physician's assistants acting under a licensed practitioner's authority. It explicitly excludes acupuncturists, licensed massage therapists, nutritionists, and ordinary registered/licensed nurses, none of whom are entitled to the "doctor" title. So a prescription from a chiropractor satisfies the exemption's documentation rule, but a prescription from a regular nurse (as opposed to a nurse practitioner) does not.

What this means for you

Medical equipment and wellness-product retailers

Build your exemption-documentation process around the item type: a signed, properly identified prescription is enough for most therapeutic appliances, but hot tubs/spas require the added exemption certificate and signed medical-necessity statement. Verify that the prescribing professional is actually entitled to use the "doctor" title (or is a nurse practitioner/physician's assistant) — a prescription from a non-qualifying provider like a registered nurse, massage therapist, or nutritionist won't support the exemption.

Chiropractors and their patients

A chiropractor's prescription is valid documentation for the therapeutic-appliance exemption — chiropractors are licensed practitioners of the healing arts under Texas Occupations Code § 104.003(e).

Accountants and tax professionals advising retailers

The controlling rule is 34 Tex. Admin. Code § 3.284(d)(11), split into subsection (A) (general therapeutic appliances — prescription only) and subsection (B) (hot tubs/spas — prescription + exemption certificate + signed medical-necessity statement). "Licensed practitioner of the healing arts" is defined by reference to the "doctor" title requirement in Tex. Occ. Code § 104.003, not by general medical licensure.

Common questions

Q: Does a prescription from a registered nurse support the therapeutic-appliance sales tax exemption in Texas?
A: No. Ordinary nurses are not entitled to use the "doctor" title and don't qualify as a "licensed practitioner of the healing arts." Nurse practitioners are a specific exception and DO qualify.

Q: Is a chiropractor's prescription valid for this exemption?
A: Yes. Chiropractors are licensed practitioners of the healing arts and required to use the "doctor" title under Texas law.

Q: Do I need anything beyond a prescription to sell a hot tub or spa tax-exempt?
A: Yes — for hot tubs, spas, and similar appliances you also need an exemption certificate and a signed statement from the practitioner specifying the medical requirements for the item (which can be combined with the prescription).

Q: Does a prescription need to be on official prescription-pad paper?
A: No. Any written document meeting the content requirements (signature, practitioner identification, item identified) qualifies, whether or not it's on prescription pad paper.

Q: Can another retailer rely on this ruling for its own exemption practices?
A: No. It binds the Comptroller only as to the requesting taxpayer and the facts presented, and cannot be relied on by any other taxpayer.

Citations and references

Statutes and rules:

• Tex. Tax Code § 151.313(a)(6) (Health Care Supplies — therapeutic appliance exemption)
• Tex. Tax Code §§ 151.010, 151.051, 151.054 (taxable item; imposition; presumption of taxability)
• 34 Tex. Admin. Code § 3.284(d)(11)(A)-(B) (prescription and documentation requirements)
• Tex. Occ. Code § 104.003 (Required Identification — "doctor" title); § 104.004 (nurse practitioners/physician's assistants); § 801.252 (veterinarians)
• Comptroller's Decision No. 29,776 (1993) (prescription content requirements)
• Comptroller's Decision No. 41,782 (2005); Comptroller's Decision No. 33,457 (1996) (chiropractors as licensed practitioners of the healing arts)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/201807014L

Original ruling text

July 10, 2018

RE: Private Letter Ruling No. 2017010138

*, Taxpayer No. *

Dear ***:

We issue this private letter ruling in accordance with Rule 3.1 (Private Letter Rulings and General Information Letters). [ENDNOTE: 1] We are responding to your request dated April 4, 2017. Detrimental reliance relief is provided in accordance with Rule 3.10 (Taxpayer Bill of Rights).

You requested guidance on the documentation requirements for members who purchase therapeutic appliances exempt from sales and use tax, including requirements for prescriptions and the signed statement from the licensed practitioner under Rule 3.284(d)(11) (Drugs, Medicines, Medical Equipment, and Devices (Tax Code § 151.313 (Health Care Supplies)).

Facts Presented

*** (Taxpayer) is a membership-based retailer that sells a variety of products throughout Texas. Members often request sales and use tax exemptions on purchases of massage chairs, adjustable mattresses, exercise equipment, hot tubs, spas, and similar appliances. To prove that their purchases qualify for the exemption for therapeutic appliances, members provide a medical prescription issued by a licensed medical practitioner for the particular item. To ensure it has the necessary documentation to support the members’ claimed exemptions, Taxpayer requires members to pay sales tax at the time of purchase and then request a refund through its Corporate Tax Department. Most of Taxpayer’s exemption requests derive from prescriptions issued by chiropractors.

Taxpayer has strictly construed the documentation requirements under Rule 3.284(d)(11)(B) when determining the documentation a member must provide to validly claim the exemption. Nevertheless, Taxpayer’s members often rely on the advice of medical practitioners who, being unaware of the agency’s rules, tell their patients that all they need is the prescription.

Questions, Rulings, and Analysis

Our restatement of your questions is shown below, followed by our responses and analysis.

Question One: What are the requirements of a written prescription?

Ruling One: A written prescription must be (1) signed by a licensed practitioner of the healing arts; (2) identify the practitioner’s name, address, license number, and type of license; and (3) identify the type of appliance prescribed. There is no requirement that a prescription be written on prescription pad paper.

Question Two: When is the signed statement describing the medical requirements for a therapeutic appliance necessary and may the licensed practitioner of the healing arts write the medical requirements on the prescription document itself?

Ruling Two: A signed statement describing the medical requirements for the item is only necessary when the purchased item is a hot tub, spa, or similar appliance. The statement may be included on the prescription document itself. For other therapeutic appliances, the licensed practitioner only has to issue a written prescription for the item and does not need to identify the medical requirements.

Question Three: Is a prescription from a chiropractor for a therapeutic appliance acceptable?

Ruling Three: Yes, a prescription from a chiropractor for a therapeutic appliance may satisfy the documentation requirement of a prescription from a licensed practitioner of the healing arts.

Question Four: What must a taxpayer obtain from a customer to support an exemption claim under Rule 3.284(d)(11)?

Ruling Four: When the item purchased is a hot tub, spa, or similar appliance, Taxpayer must obtain the exemption certificate, a copy of the prescription, and a signed statement from the licensed practitioner of the healing arts, which specifies the medical requirements for the item. For all other therapeutic appliances, including adjustable mattresses, massage chairs, and exercise equipment, Taxpayer must obtain only a copy of the prescription.

Analysis:

Texas imposes a sales tax on each sale of a taxable item in this state. Section 151.051 (Sales Tax Imposed). The term “taxable item” includes tangible personal property and taxable services. Section 151.010 (Taxable Item). A seller’s gross receipts are presumed to be subject to sales tax unless the seller accepts a valid resale or exemption certificate from the purchaser. Section 151.054 (Gross Receipts Presumed Subject to Tax).

Section 151.313(a)(6) exempts from tax certain health care supplies purchased under a licensed health practitioner’s prescription. Specifically, the statute exempts the sale of:

[A] therapeutic appliance, device, and any related supplies specifically designed for those products, if dispensed or prescribed by a licensed practitioner of the healing arts, when those items are purchased and used by an individual for whom the items listed in this subdivision were dispensed or prescribed.

Rule 3.284(d)(11) contains similar language regarding exempt therapeutic appliances. It also identifies the documentation required to prove a purchase qualifies for the exemption:

(A) An individual purchasing, leasing, or renting therapeutic appliances, devices, and related supplies under a prescription must either provide the seller a written prescription or allow the seller to receive the prescription directly from the licensed practitioner of the healing arts. The seller may exempt the sale, lease, or rental by keeping a copy of the individual's prescription in the seller's records. An exemption certificate from the purchaser is not required.

(B) A hot tub, spa, or similar appliance qualifies as a therapeutic appliance when prescribed for the purchaser by a licensed practitioner of the healing arts. The patient must provide the seller of the hot tub, spa, or similar appliance with a prescription, an exemption certificate, and a signed statement on letterhead from the licensed practitioner. The signed statement should specify the medical requirements for the hot tub, spa, or similar appliance.

Under Rule 3.284(d)(11)(A), when claiming the exemption for a therapeutic appliance, the prescription document must be in writing or received by the seller directly from the licensed practitioner. As to the content of a prescription, the Comptroller’s office has imposed requirements on the types of prescriptions that are valid in other contexts. For example, the prescription document must be signed by a licensed practitioner of the healing arts and identify the practitioner’s name, address, license number, and type of license. See Comptroller’s Decision No. 29,776 (1993).

The document should also specify the type of treatment or appliance needed for treating the person’s condition. See Rule 3.298(g)(7) (Amusement Services) and STAR Accession Nos. 9403195L (March 11, 1994) and 8510L0667E07 (October 7, 1985). The prescription does not need to be written on prescription pad paper to be sufficient proof that a licensed practitioner of the healing arts prescribed the item to the patient. See STAR Accession No. 8504L0642A06 (Apr. 29, 1985). The purchaser must provide the conforming prescription to the seller before or at the time of sale. See Comptroller’s Decision No. 29,776 (1993).

Rule 3.284(d)(11)(B) contains two additional documentation requirements for the purchase of a hot tub, spa, or similar appliance to qualify for exemption—an exemption certificate and a signed statement from the licensed practitioner specifying the medical requirements for the item.

The rule does not require the prescription document and the signed statement to be separate documents. A single signed document may contain the prescription information and the medical requirements for the item. For example, if the prescription pad paper includes the medical requirements for the item, it is not necessary for a patient to provide a separate signed statement. For other therapeutic appliances, Rule 3.284(d)(11)(A) only requires a prescription document, as described above, to support the exemption.

A “licensed practitioner of the healing arts” is a person licensed to practice the healing arts and who uses the title “doctor” as a manner of professional identification required by Texas Occupations Code, Section 104.003 (Required Identification), or a person licensed to practice veterinary medicine under Texas Occupations Code, Section 801.252 (Eligibility Requirements for License to Practice Veterinary Medicine). The term includes medical doctors, osteopaths, dentists, chiropractors, optometrists, and podiatrists. See Comptroller’s Decision No. 41,782 (2005). The term also includes nurse practitioners and physicians’ assistants under the authority of a licensed practitioner of the healing arts. See Texas Occupations Code, Section 104.004 (Other Persons Using Title “Doctor”). The term does not include acupuncturists, licensed massage therapists, nutritionists, nurses, or other persons engaged in similar professions who are not entitled to use the title “doctor” under Texas Occupations Code, Section 104.003.

A chiropractor is a “licensed practitioner of the healing arts.” They are licensed to practice chiropractic, a healing art, and they are required to use the title “doctor” under Texas Occupations Code, 104.003(e). See Comptroller’s Decision Nos. 41,782 (2005) and 33,457 (1996). Therefore, a prescription issued by a chiropractor will satisfy the requirement of a prescription under Rule 3.284(d)(11)(A) and (B).

Finally, when a member purchases a hot tub, spa, or similar appliance, Taxpayer must obtain an exemption certificate, a prescription, and a signed statement specifying the medical requirements for the hot tub, spa, or similar appliance. The prescription and the signed statement may be combined into one document. A prescription should be signed by the licensed practitioner, contain the identifying information of the licensed practitioner of the healing arts as described above, and specify the type of therapeutic appliance needed for treatment.

For other therapeutic appliances, Taxpayer must obtain a prescription. Under Rule 3.284(d)(11)(A), a signed statement specifying the medical requirements is not necessary for other therapeutic appliances nor is an exemption certificate required. For example, the purchaser does not need to provide the medical requirements or an exemption certificate for adjustable mattresses, massage chairs, or exercise equipment.

Comptroller’s Decisions and STAR documents cited can be found on the Comptroller’s State Tax Automated Research (STAR) system. The Texas Tax Code, Texas Administrative Code, and the STAR system are accessible at www.comptroller.texas.gov/taxes/.

If you have questions about this private letter ruling, please email us through our website at https://comptroller.texas.gov/web-forms/tax-help/ and reference Private Letter Ruling No. 2017010138.

Sincerely,

Tax Policy Division – Indirect Taxes

Texas Comptroller of Public Accounts

ENDNOTE:

1. Unless otherwise indicated, all references to “Section” are to the Texas Tax Code, and all references to “Rule” are to Title 34 of the Texas Administrative Code