Is a computer, software, and adaptive communication equipment exempt from Texas sales tax when purchased on a doctor's prescription and paid for by a state agency's family support program?

Plain-English summary

This 1993 Texas Comptroller letter addresses sales tax on a package purchase of a computer, software, and adaptive equipment for facilitated communication. In Home Family Support, a service of MHMR (the state mental health/mental retardation agency), had agreed to pay for the computer, but by writing a check to the individual rather than paying the vendor directly.

The Comptroller drew two separate lines:

• Because the state agency reimbursed the person instead of paying the vendor directly, the purchase could not be treated as an exempt purchase by the state agency itself.
• The software and adaptive equipment could be purchased tax free, but only because they were bought with a prescription from a licensed practitioner of the healing arts.
• The computer, screen(s), printer, and any modem remained taxable even though they were sold on the same doctor's prescription, because the Comptroller viewed that general-purpose hardware as usable "for other purposes" beyond the prescribed medical/communication need.

The letter closes with the Comptroller's standard caveat that the opinion is based on the facts presented and could change if the facts are different.

What this means for you

Individuals and caregivers buying adaptive equipment

If you buy adaptive equipment and software with a prescription from a licensed practitioner of the healing arts, those items can be purchased tax free. But don't assume the same prescription covers the general-purpose computer hardware (computer, monitor/screen, printer, modem) that runs the software — this letter says that hardware stays taxable because it could be used for other purposes.

Recipients of state-agency (e.g., MHMR) purchase assistance

If a state agency is helping pay for equipment, how the payment flows matters. In this case, the agency wrote a reimbursement check to the individual rather than paying the vendor directly, and the Comptroller said that structure means the purchase cannot be treated as an exempt purchase by the state. If you want a purchase treated as an exempt state-agency purchase, the agency generally needs to pay the vendor directly.

Common questions

Q: Is adaptive communication equipment exempt from Texas sales tax?
A: Per this letter, yes — adaptive equipment (and related software) purchased with a prescription from a licensed practitioner of the healing arts can be bought tax free.

Q: Does the exemption extend to the computer, monitor, printer, or modem needed to run the software?
A: No. The letter specifically states that computers, screens, printers, or modems do not qualify for the exemption even when sold on a doctor's prescription, because they could be used for other purposes. Sales tax is due on those items.

Q: If a state agency like MHMR is paying for the equipment, is the purchase automatically tax exempt?
A: Not necessarily. In this letter, the agency (through In Home Family Support) paid by check made out to the individual rather than paying the vendor directly, and the Comptroller held that this structure means the purchase cannot be considered an exempt purchase by the state.

Q: Can I rely on this letter for my own purchase?
A: This letter is based on the specific facts presented to the Comptroller in 1993 and states that the opinion may change if the facts are different. It can only be the basis of a detrimental reliance claim for the taxpayer to whom it was issued.

Citations and references

No statutes or rules are cited in this 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/9303998L

Original ruling text

March 8, 1993

Dear **:

Thank you for your letter regarding sales tax applicable to a computer,
software, and adaptive equipment for facilitated communication.

As I understand, In Home Family Support, a service of MHMR, has agreed to pay
for the computer and will write a check to you, not to the vendor. Since the
state agency does not pay the vendor direct, the purchase cannot be considered
an exempt purchase by the state.

The software and adaptive equipment can be purchased tax free with a
prescription from a licensed practitioner of the healing arts. Unfortunately,
computers, screens, printers, or any modems (which could be used for other
purposes) do not qualify for exemption even when they are sold on a doctor's
prescription. Therefore, the sales tax is due on these items.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need additional information, you may call me at
463-4666, or write to Tax Administration Division.

Sincerely,

Jo Ann Dieck
Tax Administration Division