Is Texas sales tax due on motorized braces and orthotics sold or rented to patients on a doctor's prescription?

Plain-English summary

A company asked the Comptroller's office whether Texas imposes sales tax on orthopedic rehabilitation products sold or rented to patients under a doctor's prescription and billed to the patient's insurance company. The products at issue — described as motorized braces or orthotics — are available only by prescription under the treatment program of a licensed physician, surgeon, or podiatrist, and are externally applied to the body, typically after surgery, as part of a rehabilitation program intended to help cure, mitigate, or treat a condition and speed recovery of motion. They are sold through a network of independently contracted representatives.

The Comptroller pointed to Rule 3.284 (Drugs, Medicines, Medical Equipment, and Devices), which provides that sales tax is not due on the sale, lease, or rental of medical equipment meeting the definition of a corrective lens, hearing aid, orthopedic appliance, prosthetic device, or dental device, nor on replacement parts designed specifically for such devices — and that, except for corrective lenses, no prescription is required for the exemption to apply.

Under the rule, a "brace" is any device used on or attached to the body to give rigidity or support for correcting a physical ailment or defect, and an "orthopedic appliance" is any appliance or device designed specifically to correct or prevent human deformities, defects, or chronic diseases of the skeleton, joints, or spine. The Comptroller concluded that the motorized braces or orthotics described qualify as orthopedic appliances and are exempt from Texas sales tax whether sold, leased, or rented.

What this means for you

Sellers and lessors of orthopedic braces and orthotics

If you sell, lease, or rent motorized braces or orthotics that are used on or attached to the body to give rigidity or support for correcting a physical ailment, defect, deformity, or chronic disease of the skeleton, joints, or spine, those transactions can qualify as exempt orthopedic appliances under Rule 3.284 — and, apart from corrective lenses, the exemption does not depend on a prescription being required.

Accountants and tax professionals

This letter illustrates how the Comptroller applies the Rule 3.284 definitions of "brace" and "orthopedic appliance" to a specific product line. It's a useful reference point when evaluating whether a rehabilitation or support device qualifies for the medical equipment exemption, but keep in mind it applies to the facts presented and cannot be relied on by other taxpayers as precedent.

Patients and insurers being billed for these products

The letter confirms that Texas does not add sales tax on top of the cost of qualifying orthopedic appliances like the motorized braces and orthotics described, when sold, leased, or rented in Texas.

Common questions

Q: Is Texas sales tax due on motorized braces or orthotics sold or rented to patients?
A: No, if the product qualifies as an orthopedic appliance under Rule 3.284 — the sale, lease, or rental is exempt from Texas sales tax.

Q: Does the exemption require a doctor's prescription?
A: The rule doesn't require a prescription for the exemption to apply, except in the case of corrective lenses. The products described in this letter happen to be available by prescription only, but that is not what makes them exempt.

Q: What makes a device an "orthopedic appliance" under Rule 3.284?
A: It must be an appliance or device designed specifically for use in the correction or prevention of human deformities, defects, or chronic diseases of the skeleton, joints, or spine.

Q: Does this ruling apply to any brace or orthotic regardless of how it's sold?
A: This opinion is based on the specific facts presented — a network of independently contracted representatives selling motorized braces and orthotics used in post-surgical rehabilitation. The Comptroller noted that other, similar facts may produce a different result.

Citations and references

• 34 Tex. Admin. Code Rule 3.284 (Drugs, Medicines, Medical Equipment, and Devices)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9410L1328A11

Original ruling text

October 12, 1994

Dear *****:

This in response to your fax of August 17, 1994, seeking a formal response to a
question posed to you by a **. ** wanted to know
if Texas imposes a tax on orthopedic rehabilitation products sold or rented to
patients on a doctor's prescription and billed to the patient's insurance
company. You had asked for a response by September 30, 1994. I apologize for the
delay in responding.

The products in question are provided by prescription only under the treatment
program of a licensed physician, surgeon, or podiatrist. The products are
externally applied to the human body usually following surgery as part of an
extensive rehabilitation program to help cure, mitigate, treat, and in order to
enhance early recovery of motion. These products, best described as motorized
braces or orthotics, have been shown to help prevent arthritic disease, aid in
healing following surgery, and to help alleviate pain.

The braces or orthotics are sold through a network of independently contracted
representatives.

Response: Subsection (c) of Rule 3.284 - Drugs, Medicines, Medical Equipment,
and Devices, provides:

(1) Sales tax is not due on the sale, lease, or rental of medical
equipment meeting the definition of a corrective lens, hearing aid,
orthopedic appliance prosthetic device, or dental device. Sales tax is
not due on replacement parts designed specifically for such devices and
appliances. With the exception of corrective lenses, a prescription is
not required.

Emphasis added.

For purposes of this rule a brace is defined as "any device used on or attached
to the human body, giving rigidity or support for the purpose of correcting a
physical ailment or defect." An orthopedic appliance is defined as "any appliance
or device designed specifically for use in the correction or prevention of human
deformities, defects, or chronic diseases of the skeleton, joints, or spine."

The motorized braces or orthotics described in ****'s letter, qualify as
orthopedic appliances and are exempt from sales tax when sold, leased or rented
in Texas.

This opinion is based on the facts presented. Other facts though similar may
provide a different reset.

You may call me toll-free at 1-800-531-5441, extension 3-4502. The direct
line is 512/463-4402. You may also write to Tax Administration, Comptroller
of Public Accounts.

Sincerely,

Gilbert Zamora
Tax Administration Division

NOTE: Previous Accession Number 9410776L