Are feeding tube systems (gastrostomy, jejunostomy, and related enteral/parenteral supplies) and closed tracheal suction system products (TRACH CARE) exempt from Texas sales and use tax as prosthetic devices?

Plain-English summary

A taxpayer sent the Texas Comptroller's Tax Policy Division brochures on two categories of medical products and asked whether they were subject to sales and use tax.

Feeding tube products — including Gastrostomy Tube, Bolus Gastrostomy Tubes, Percutaneous Endoscopic Gastrostomy Kits (removable), Transgastric Jejunal Feeding Tube, Gastro-Enteric Tube, Jejunal Tubes, Jejunostomy Tubes, Bowel Management Kit, MIC-KEY Skin Level Gastrostomy Kits, and MIC-KEY Accessories — alleviate malfunctions of the digestive tract. The Comptroller's response: nasal gastric and gastrointestinal (enteral and parenteral) devices and related supplies are "systems" that qualify as exempt prosthetic devices, with or without a doctor's prescription.

Closed tracheal suction system products (TRACH CARE) — used to suction the lungs of a patient on a ventilator, resting within the closed circuit of the respirator — received the same answer: they qualify for the same prosthetic-device exemption as the feeding systems, subject to the same restrictions.

The letter stresses that the exemption is not unlimited. Supplies and equipment are exempt only when directly related to, and forming part of, the exempt enteral/parenteral or tracheal-suction "system." The same type of product might be used for other purposes or as part of other systems that don't qualify as prosthetic devices, so because of this restricted scope, any exemption certificate provided on the purchase of these items must state the specific reason for the exemption rather than making a general reference to Rule 3.284. The letter quotes Rule 3.284's definition that a prosthetic device must be understood as "acting as a replacement for the vital organ which is inoperative or damaged in some manner," and confirms that a "system" — including replacement parts designed specifically for such devices and appliances — is exempt only when used to replace missing, damaged, or non-functioning vital organs or appendages of the human body.

Finally, the exemption does not apply to certain accessory items appearing on the same hospital price list: BAK Cath 140 and 141, Manual Percussor 110, and Safety Shield 162, 163, 164, 165, 456, and 457.

What this means for you

Medical suppliers and hospitals selling these products in Texas

Feeding tube systems (gastrostomy, jejunostomy, and related enteral/parenteral devices and supplies) and closed tracheal suction system (TRACH CARE) products can be sold tax-exempt as prosthetic devices, with or without a prescription — but only the components that are directly related to and part of the exempt "system." Don't assume every item on a related price list qualifies; this letter specifically excludes named accessory items (BAK Cath 140/141, Manual Percussor 110, and Safety Shield 162, 163, 164, 165, 456, and 457) from the exemption.

Accountants and tax professionals advising healthcare providers

When preparing or reviewing exemption certificates for these products, make sure the certificate states the specific reason the item qualifies as a prosthetic device — a generic citation to Rule 3.284 is not sufficient given how narrowly the Comptroller construes this exemption. Confirm which specific SKUs or components are part of the exempt "system" versus accessory items that remain taxable.

Patients and caregivers purchasing these items

These products can generally be purchased tax-free in Texas as prosthetic devices because they replace or support a malfunctioning digestive tract or respiratory function, whether or not you have a doctor's prescription. Confirm with the seller that any specific accessory you're buying isn't one of the excluded items.

Common questions

Q: Do feeding tube systems like gastrostomy and jejunostomy tubes require a doctor's prescription to be tax-exempt in Texas?
A: No. The letter states these systems are exempt from tax "with or without a doctor's prescription."

Q: Are TRACH CARE closed tracheal suction system products treated the same as feeding tube systems for tax purposes?
A: Yes. The Comptroller ruled they "qualify for the same prosthetic exemption described above for the feeding systems," with the same restrictions on scope.

Q: Is everything on the hospital price list associated with these systems exempt?
A: No. The exemption does not apply to BAK Cath 140 and 141, Manual Percussor 110, and Safety Shield 162, 163, 164, 165, 456, and 457.

Q: What has to be on the exemption certificate for these purchases?
A: The exemption certificate must state the exact reason for the exemption specific to the item purchased, rather than a general reference to Rule 3.284, because of the restricted nature of the exemption.

Q: What is the legal test for whether something counts as an exempt prosthetic device here?
A: Per Rule 3.284, as quoted in the letter, a prosthetic device must be understood as "acting as a replacement for the vital organ which is inoperative or damaged in some manner," and the exemption covers a system (including replacement parts designed specifically for such devices) only when used to replace missing, damaged, or non-functioning vital organs or appendages of the human body.

Citations and references

Regulations:

• 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/9507L1361A09

Original ruling text

July 25, 1995

Dear *****:

Thank you for your letter dated July 20, 1995 concerning the taxability of
certain medical products. Thank you for providing brochures on the products.

The products are restated below with the Tax Division's response.

Feeding tube products identified below alleviate the malfunction of various
parts of the digestive tract. The products are listed in the Hospital
Price List, dated March 15, 1995.

Gastrostomy Tube
Bolus Gastrostomy Tubes
Percutaneous Endoscopic Gastrostomy Kits (removable)
Transgastric Jejunal Feeding Tube
Gastro - Enteric Tube
Jejunal Tubes
Jejunostomy Tubes
Bowel Management Kit
MIC-KEY Skin Level Gastrostomy Kits
MIC-KEY Accessories

RESPONSE: Nasal gastric and gastrointestinal (enteral and parenteral) devices
and related supplies are "systems" that qualify as prosthetic devices. These
systems are exempt from tax when sold with or without a doctor's prescription.

It is important to note that supplies and equipment are exempt only when
directly related to and become a part of the enteral and parenteral "system."
It may be possible that these same type(s) of products can be used for other
purposes or as parts of other systems that do not qualify as prosthetic
devices. Because of the restricted nature of this exemption, the exemption
certificate provided on the purchase of these items or "systems" must state
the exact reason for the exemption, rather than the general reference to Rule
3.284.

In Rule 3.284, "...the definition of a prosthetic device must be read with
the basic understanding that the device is acting as a replacement
for the vital organ which is inoperative or damaged in some manner."

The products or "system" including replacement parts designed specifically
for such devices and appliances are considered exempt as prosthetic devices
only when they are used to replace missing, damaged, or non-functioning
vital organs or appendages of the human body.

Closed tracheal suction system products (TRACH CARE). These product are
used to suction out the lungs of a patient who is on a ventilator. The
closed TRACH CARE system actually rests within the closed circuit of the
respirator. The various TRACH CARE catheters are included in the Hospital
Price List.

RESPONSE: The tracheal suction system products qualify for the same prosthetic
exemption described above for the feeding systems. The same restrictions for
their specific use also applies.

The exemption does not apply to the following items on the price list: BAK
Cath 140 and 141, Manual Percussor 110, and Safety Shield 162, 163, 164, 165,
456, and 457.

This opinion is based on the facts presented and current law.
Different facts although similar, may result in different answers.

If you have any questions or need more information, you may
call me toll free at 1-800-531-5441, ext. 50330. 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 9507389L