Are balloon angioplasty catheters and stents taxable when sold to doctors or hospitals, including when used in clinical studies, and what happens if they're sold together as a package?

Plain-English summary

A medical device seller asked about the sales tax treatment of two related cardiac devices: balloon angioplasty catheters and stents. A stent is a small metal prosthesis that's inserted and expanded against the inside of a vessel wall and left in place permanently.

The Comptroller drew a clear line: balloon angioplasty catheters are taxable when sold to doctors or hospitals — even when they're used in clinical studies rather than routine patient care. Stents are exempt, because they qualify as a prosthetic device under Rule 3.284(a)(10)(C) — makes sense given a stent is a permanent metal implant that replaces/supports body function, unlike the catheter, which is a temporary delivery tool.

If the two devices are sold together as one package (a common real-world scenario, since the catheter is typically used to deliver the stent), the Comptroller applies a predominant-cost test to the whole package: whichever item's cost is greater determines the tax treatment of the ENTIRE package. If the catheter's cost predominates, the whole sale is taxable; if the stent's cost predominates, the whole charge is exempt.

What this means for you

Medical device sellers and hospital suppliers

Track catheter and stent costs separately, even when bundling them for a single procedure sale — because if you sell them as one package, the predominant-cost item determines the tax treatment of the WHOLE package, not just its own portion.

Hospitals and clinics purchasing these devices

Expect sales tax on catheters purchased alone, and no tax on stents purchased alone. If purchased together as a package, check which item's cost is greater to know whether the whole purchase is taxed.

Accountants and tax professionals

This is a clean example of the Comptroller's predominant-cost/purpose test for bundled medical device sales — a recurring analytical tool across TX Comptroller rulings when a taxable and an exempt item are sold together as a single package rather than separately.

Common questions

Q: Are balloon angioplasty catheters taxable in Texas?
A: Yes, when sold to doctors or hospitals, including for clinical study use.

Q: Are stents taxable?
A: No — stents qualify as an exempt prosthetic device under Rule 3.284(a)(10)(C).

Q: What if a catheter and stent are sold together as one package?
A: The taxability of the whole package depends on which item's cost predominates — the catheter's cost predominating makes the whole package taxable; the stent's cost predominating makes the whole package exempt.

Q: Can I rely on this letter for my own device sales?
A: No — a Texas letter ruling can be the basis of a detrimental reliance claim only for the taxpayer it was issued to.

Citations and references

• 34 Tex. Admin. Code Rule 3.284(a)(10)(C) (exemption for prosthetic devices — covers stents)

Subject

Balloon Angioplasty Catheters

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9711064L

Original ruling text

November 13, 1997

FAX **

Dear **

This is in response to your letter dated November 4, 1997, regarding the
taxability of balloon angioplasty catheters and stents.

The stent is a small metal prostheses and is inserted and expanded against the
inside of the vessel wall and left in place.

The balloon angioplasty catheters are taxable when sold to doctors or hospitals
(even when used in clinical studies).

The stent qualifies for exemption as a prosthetic device. Rule
3.284(a)(10)(C).

If the two devices were sold together as a package, the taxability would be
determined by the predominant cost of the package, e.g., if the cost of the
catheter is the predominant cost, the total sale is taxable and if the cost of
the stent is the greater, the total charge would be exempt.

Comptroller Rules are available on the Internet
http://www.sos.state.tx.us/tac/34/I/3/O/index.html

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

If you have any questions or need more information, you may call me toll free
at 1-800-531-5441, extension 5-0330. 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