Is a BiPAP breathing machine (face mask, head strap, and air-compressing pump) exempt from Texas sales tax as a prosthetic device?

Subject

Breathing Unit (Bipap Std) — Face Mask Strap Around Patient'S Head Connected To Pump That Compresses Air Into Patient'S Lungs — Not A Prosthetic Device

Plain-English summary

A seller asked the Comptroller whether a BIPAP STD breathing unit is exempt from Texas sales tax. The device consists of a face mask held on with a head strap, connected by a hose to a pump that compresses air and forces it into the patient's lungs at regular intervals. It performs a similar function to a ventilator, but the Comptroller noted two key differences: it's used for less serious cases than a ventilator, and none of its parts go inside the patient's body (unlike a ventilator, which requires a hose inserted into the larynx). The unit is mainly used to support the breathing of patients weakened by illness or surgery, and is also commonly used at night for people with Sleep Apnea.

The Comptroller ruled that the BIPAP STD does not qualify for exemption as a prosthetic device, because it doesn't perform the function of a vital organ or appendage itself -- citing Rule 3.284(a)(10). However, the device can still qualify for exemption as a therapeutic device when sold to an individual with a doctor's prescription. If sold instead to a hospital, nursing home, clinic, or similar institution, the sale is taxable.

What this means for you

Medical equipment sellers

Whether you charge sales tax on a BIPAP unit depends on both the buyer and the paperwork: a sale to an individual patient who has a doctor's prescription can be exempt as a therapeutic device, but a sale to a hospital, nursing home, or clinic is taxable regardless of prescription. Don't treat the device as automatically exempt as a "prosthetic" -- the Comptroller specifically rejected that category here.

Accountants and tax professionals

The distinction drawn in this letter is between a prosthetic device (which replaces or performs the function of a vital organ or appendage) and a therapeutic device (which treats a condition but doesn't replace a body function). A BIPAP unit falls into the latter category because it assists breathing externally rather than functioning as, or being inserted into, the body the way a ventilator is.

Patients and consumers

If you're buying a BIPAP machine for home use with a doctor's prescription, it may be exempt from sales tax as a therapeutic device -- ask your seller whether they need a copy of the prescription or an exemption certificate.

Common questions

Q: Is a BiPAP machine exempt from Texas sales tax as a prosthetic device?
A: No. The Comptroller ruled it does not qualify as a prosthetic device because it doesn't perform the function of a vital organ or appendage.

Q: Can a BiPAP machine still be tax-exempt in Texas?
A: Yes, potentially -- as a therapeutic device, but only when sold to an individual patient with a doctor's prescription.

Q: Is a BiPAP machine sold to a hospital or nursing home taxable?
A: Yes. Per this letter, sales to hospitals, nursing homes, clinics, etc. are taxable.

Q: Why isn't a BiPAP treated like a ventilator for tax purposes?
A: The Comptroller distinguished the two because a ventilator's hose is inserted into the patient's larynx (inside the body), while none of the BiPAP unit's parts go inside the patient's body.

Citations and references

Rules:

• 34 Tex. Admin. Code Rule 3.284(a)(10) (prosthetic device exemption)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9604L1410G03

Original ruling text

April 29, 1996

Dear ****:

This is in response to your letter dated April 22,
1996, concerning the taxability of a medical product called a BIPAP STD. Thank
you for providing the manufacturer's brochure.

Facts Presented: The unit consists of a face mask
secured to the patient with a strap around the head and a hose that connects to
a pump that compresses air and forces it into the patient's lungs at regular
intervals. The unit performs the same function as a ventilator except for two
differences: 1) The BIPAP STD is considered a less extreme measure than a
ventilator and is used on less serious cases, and 2) there are no parts of the
BIPAP that are placed inside the body of the patient, unlike the ventilators
that require a hose to be inserted into the larynx.

The major uses of the BIPAP STD machine is to force the
breathing of patients who are weakened by illness or surgery but who are not
necessarily in need of a ventilator. Often the unit is used to force the
nighttime breathing of individuals suffering from Sleep Apnea, a disorder that
can cause patients to quit breathing during deep sleep cycles.

Comptroller Response: The BIPAP STD machine does not
qualify for exemption as a prosthetic device. It does not perform the function
of a vital organ or appendage. Rule 3.284(a)(10).

The device could qualify for exemption as a therapeutic
device when sold to an individual with a doctor's prescription. The device is
taxable when sold to hospitals, nursing homes, clinics, etc.

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 Policy Division, Comptroller of Public
Accounts.

Sincerely,

Bettie Peterson
Tax Policy Division

NOTE: Previous Accession Number 9604224L