Does a chiropractor collect sales tax from patients for therapeutic devices used in treatment, and can a practitioner buy prescribed dietary supplements/vitamins tax-free?

Plain-English summary

This STAR entry actually bundles two letters: an October 19, 1999 original and a November 18, 1999 follow-up correcting an error in it -- both about how sales tax applies to a chiropractor's therapeutic devices.

Under Comptroller's Rule 3.284, a "therapeutic appliance or device" is any item designed to alleviate pain or treat human sickness, disease, suffering, or deformity. The corrected rule: a licensed practitioner of the healing arts (like a chiropractor) must pay sales tax itself on the purchase price of therapeutic appliances or devices used in a practice -- but does NOT collect sales tax from the patient for those devices, because the charge to the patient is treated as part of the nontaxable medical service being provided.

The November follow-up letter also clarifies a separate point from a phone conversation: dietary supplements and vitamins dispensed to a patient under a licensed practitioner's oral prescription can be purchased by the practitioner tax-free, by issuing an exemption certificate instead of paying sales tax on them.

What this means for you

Chiropractors and other licensed healing-arts practitioners

You owe sales tax yourself when you buy therapeutic devices used in your practice -- but you should NOT be separately charging your patients sales tax on those devices, since that charge is folded into your (nontaxable) medical service billing.

Practitioners dispensing supplements/vitamins by prescription

If you dispense dietary supplements or vitamins to a patient under your own oral prescription, you can buy those items tax-free using an exemption certificate rather than paying sales tax upfront.

Anyone relying on informal or prior Comptroller correspondence

This letter is a reminder that even official written letters sometimes contain errors that get corrected in a follow-up -- always check for the most current version of guidance on a topic.

Common questions

Q: Does a chiropractor charge patients sales tax on therapeutic devices used during treatment?
A: No, per this letter -- the charge for the device is part of the nontaxable medical service. The practitioner pays sales tax itself when it buys the device.

Q: Can a chiropractor buy prescribed vitamins/supplements tax-free?
A: Yes, per this letter, by issuing an exemption certificate for supplements/vitamins dispensed to a patient under the practitioner's own oral prescription.

Citations and references

Rules:

• 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/9911801L

Original ruling text

November 18, 1999

Dear **:

Let me take this opportunity to correct an error in my letter of October 19,
1999. The second paragraph of the letter should read:

In Comptroller's Rule 3.284, a therapeutic appliance or device is defined as
any item designed to alleviate pain or designed for use during the treatment or
cure of human sickness, disease, suffering, or deformity. A licensed
practitioner of the healing arts must pay sales tax on the purchase price of
therapeutic appliances or devices that he or she uses in his or her practice.

In our subsequent telephone conversation, we had discussed dietary supplements
and vitamins dispensed on the oral prescription of a licensed practitioner of
the healing arts. The licensed practitioner of the healing arts may purchase
dietary supplements and vitamins that are dispensed by prescription to a
patient by issuing an exemption certificate in lieu of paying the sales tax.

I hope the error in my first letter has not created an inconvenience for you.
Please accept my apology.

Sincerely,

Elizabeth Grieder
Tax Policy Division

October 19, 1999

Dear **:

Thank you for your request for information on therapeutic devices provided by a
chiropractor to his patients.

In Comptroller's Rule 3.284, a therapeutic appliance or device is defined as
any item designed to alleviate pain or designed for use during the treatment or
cure of human sickness, disease, suffering, or deformity. A licensed
practitioner of the healing arts must pay sales tax on the purchase price of
therapeutic appliances and devices that are transferred to patients. The
charge to the patient for the therapeutic device is considered a part of the
medical service provided, and the medical service provider does not collect
sales tax on the charge to the patient.

I have enclosed a copy of Comptroller's Rules 3.284 concerning drugs,
medicines, medical equipment.

This opinion is based on the facts presented. Different though similar facts
could produce a different response.

If you have additional questions or need more information, you may call me at
1-800-531-5441, extension 3-4634. My regular Austin number is 512/463-4634,
and my fax number is 512/475-0900. Written correspondence may be addressed to
Tax Policy Division, Capitol Station, Austin, Tx 78774.

Yours very truly,

Elizabeth Grieder
Tax Policy Division