Is a cellular car phone exempt from Texas sales tax if it was purchased under a doctor's prescription?

Subject

Cellular Phone — Prescribed By Physician — Telecommunications Services Are Not Exempt Under Doctor'S Prescription

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9407L1307E05

Plain-English Summary

A taxpayer asked the Texas Comptroller whether sales tax applies to a cellular car telephone purchased under a doctor's prescription. The Comptroller's answer was no exemption applies: the Texas Tax Code does not exempt a cellular car telephone from sales tax, regardless of a doctor's prescription.

The Comptroller pointed the taxpayer to two relevant (but ultimately inapplicable) authorities: Rule 3.284, which covers drugs, medicines, medical equipment, and devices, and Tax Code § 151.313, which addresses health care supplies. Neither provision extends its exemption to cellular telephones, even when a physician prescribes one. Telecommunications services and equipment are taxable in Texas, and a doctor's prescription does not convert an otherwise taxable device into exempt medical equipment.

What This Means For You

Individuals purchasing medical devices

Just because a doctor prescribes an item does not automatically make it exempt from Texas sales tax. Only items that fall within the specific categories defined by Rule 3.284 and Tax Code § 151.313 — such as certain drugs, medicines, and medical equipment or devices — qualify for the health-care-related exemption. General consumer electronics, including cellular telephones, remain taxable even with a prescription.

Retailers of cellular phones and telecommunications equipment

If a customer claims a sales tax exemption based on a doctor's prescription for a cellular phone, this ruling confirms that no such exemption exists under Texas law. Retailers should continue to collect sales tax on cellular phone sales regardless of any prescription presented by the customer.

Accountants and tax professionals

This ruling is a useful, narrow precedent for distinguishing genuine medical equipment/devices and health care supplies (covered by Rule 3.284 and § 151.313) from general-purpose consumer goods that happen to be prescribed for a patient's convenience or safety. The prescription itself is not the test — the nature and classification of the item is.

Q&A

Q: Does a doctor's prescription make a cellular phone exempt from Texas sales tax?
A: No. The Comptroller specifically ruled that the Tax Code does not provide an exemption for a cellular car telephone, even when purchased under a doctor's prescription.

Q: What Texas provisions govern exemptions for medical equipment and health care supplies?
A: Rule 3.284 (Drugs, Medicines, Medical Equipment, and Devices) and Tax Code § 151.313 (health care supplies) govern these exemptions, but neither one extends to cellular telephones.

Citations

• 34 Tex. Admin. Code Rule 3.284 (Drugs, Medicines, Medical Equipment, and Devices)
• Tex. Tax Code § 151.313 (health care supplies)

Original ruling text

July 1, 1994

Dear **:

Thank you for your letter dated June 28, 1994, regarding
sales tax as it applies to the purchase of a cellular car
telephone under a doctor's prescription.

I am sorry but the Tax Code does not provide an exemption
for a cellular car telephone.

I am sending you Rule 3.284, Drugs, Medicines, Medical
Equipment, and Devices. A copy of the Tax Code Section 151.313
regarding health care supplies is also enclosed.

This opinion is based on the facts you submitted. Other
facts, though similar, may yield different results.

You may call me toll free at 1-800-531-5441, ext. 5-0330.
The direct line is 512/475-0330. You may also write to Tax
Administration, Comptroller of Public Accounts.

Sincerely,

Bettie Peterson
Tax Administration Division

NOTE: Previous Accession Number 9407455L