Were plastic bowls used in automated blood-plasma collection units exempt from Texas sales and use tax?

Plain-English summary

Texas plasmapheresis centers began using automated blood-collection units whose plastic bowls replaced multiple blood bags used in the earlier manual process. The Tax Division had already treated the blood bags as exempt under a manufacturing exemption.

The Comptroller concluded that the plastic bowls were also exempt because they served the same function as the already-exempt bags. The attached request explained that the bowl's centrifuge separated plasma from whole blood and returned red blood cells to the donor, but the operative answer rested on the replacement function.

What this means for you

The letter extended an existing exemption to a newer component that performed the same exempt role in an updated automated process. It did not broadly decide the tax treatment of every part of the automated collection unit.

Common questions

Were the automated-system plastic bowls exempt? Yes.

Why? They replaced exempt blood bags and served the same exempt function.

Did the letter exempt the entire automated machine? It expressly decided the plastic bowls, not every machine component.

Citations and references

• No numbered statute or rule was cited in the letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9008L1034F09

Original ruling text

August 9, 1990

Dear **:

I am writing in response to your letter of June 18, 1990, regarding a
manufacturer's exemption for automated blood collection units used in
plasmapheresis centers in Texas.

Your description of the process confirms your contention that the plastic bowls
in the new automated procedure simply replace blood bags already exempted by
the Tax Division. Since the plastic bowls serve the same exempt function, they
too are exempt from the Texas sales and use tax.

This opinion is based on the facts presented. Different facts might result in a
different answer. If you have further questions feel free to write or call me
at 1-800-531-5441, ext. 3889.

Sincerely,

John Christian
Taxability Section
Legal Services Division

June 18, 1990

Re: **
Taxpayer No. **

Dear **:

This letter is being written subsequent to our telephone conversation of
Wednesday, June 13, 1990. As I indicated to you, during 1990 ** has
started using automated blood collection units in some of the plasmapheresis
centers located in Texas.

The original decision that granted a manufacturing exemption for the blood bags
or materials used to manufacture the blood bags only considered the manual
blood collection units. Prior to 1990, only the manual blood collection units
were used in Texas.

The automated system was developed as a result of changes in medical
technology. The automated system uses plastic bowls in lieu of multiple blood
bags. The plastic bowls each contain a centrifuge which separates the plasma
from the whole blood. The bowl sits in a recessed area of a machine which spins
the bowl, monitors blood flow, checks for the presence of air or obstruction in
the tubing and monitors the donor's vital signs. The plasma is spun off to the
pool in a bag containing citrate. When the bowl fills with red blood cells, the
machine stops the centrifuge inside the bowl. A small amount of citrate is
added to the red blood cells and the machine then reverses the centrifuge and
returns the red blood cells to the donor. This process takes about ten minutes.
When the programmed weight of plasma has been collected in the pooling bag or
the donor's vital signs deviate from normal limits, the machine shuts off
automatically and signals the attendant.

The automated bowls simply replace the blood bags in the blood collection unit.
The processing or manufacturing still takes place in the same manner and the
end product is the same. For the reasons stated above, **, requests
a determination that the plastic bowls used in the automated blood collection
units are exempt from tax.

If you need any additional information or have any questions, please feel free
to give me a call at 415-349-2177.

Sincerely,

Senior Consultant

cc: **