Were aesthetic injectable implants used to treat facial wrinkles exempt from Virginia sales and use tax?

Subject

Cosmetic wrinkle-treatment injectables were taxable medical devices

Plain-English summary

Virginia upheld use tax on aesthetic injectable implants used to treat facial wrinkles. The prescription medicine and drug exemption did not apply because the Food and Drug Administration classified the implants as medical devices, and the Virginia Board of Pharmacy agreed with that classification.

The prosthetic-device exemption also did not apply. Under the cited regulation, a prosthetic device replaces a missing body part or function. Cosmetic facial-wrinkle treatment did not meet that requirement, consistent with P.D. 09-4.

What this means for you

• A Schedule VI medical device was not treated as an exempt prescription drug.
• Cosmetic use did not satisfy the cited prosthetic-device requirements.
• Product classification and actual use both mattered to the exemption analysis.

Citations and references

• Va. Code §§ 58.1-609.10(9), 58.1-609.10(10), and 54.1-3455.
• 23 VAC 10-210-940.
• P.D. 09-4.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 09-40

Original ruling text

April 27, 2009

Re: § 58.1-1821 Application: Retail Sales and Use Tax

Dear *:

This will reply to your letter in which you seek correction of the retail sales and use tax assessment issued to * (the "Taxpayer") for the period June 2005 through March 2008. I apologize for the delay in responding to your letter.

FACTS

The Taxpayer operates a dermatology and surgery center. The Taxpayer was audited and assessed use tax on purchases of aesthetic injectable implants for the treatment of facial wrinkles. The Taxpayer contests the assessment and states the aesthetic injectable implants are exempt prescription medications under Schedule VI of the Va. Code § 54.1-3455.

DETERMINATION

Virginia Code § 58.1-609.10 9 provides an exemption from the sales and use tax for medicines and drugs dispensed by or sold on prescriptions or work orders of licensed physicians and other licensed practitioners. The exemption does not apply in this instance because the aesthetic injectable implant is not considered a drug by the Federal Food and Drug Administration, but instead is classified as a medical device. The Virginia Board of Pharmacy concurs with the federal classification and deems the device as a Schedule VI medical device under the Virginia Drug Control Act found in Va. Code § 54.1, Chapter 34.

Virginia Code § 58.1-609.10 10 provides an exemption for "prosthetic devices and . . . other durable medical equipment and devices, and related parts and supplies specifically designed for those products . . . when such items or parts are purchased by or on behalf of an individual for use by such individual. Prosthetic devices are defined in Title 23 of the Virginia Administrative Code 10-210-940 to mean "devices which replace a missing part or function of the body and shall include any supplies physically connected to such devices."

The Tax Commissioner recently addressed the taxability of aesthetic injectable implants in Public Document (P.D.) 09-4 (2/4/09). The Tax Commissioner ruled that aesthetic injectable implants used for cosmetic purposes, specifically facial wrinkles, do not meet the mandatory requirements set out in Va. Code § 58.1-609.10 10, and therefore do not qualify for exemption from the tax, regardless of whether they are purchased by or on behalf of an individual.

In this instance, the aesthetic injectable implants for the treatment of facial wrinkles are used for cosmetic purposes. Consistent with P.D. 09-4, the Taxpayer's purchases of the aesthetic injectable implants for cosmetic purposes do not qualify as an exempt medical device. Accordingly, the auditor correctly assessed the tax on purchases of the aesthetic injectable implants.

CONCLUSION

Based on the foregoing, the assessment is correct. An updated bill, with interest accrued to date, will be sent to the Taxpayer. No additional interest will accrue provided the updated bill is paid within 30 days from the date indicated on the bill statement.

The Code of Virginia , regulation and public document cited are available on-line at www.tax.virginia.gov in the Tax Policy Library of the Department's web site. If you have any questions regarding this determination, you may contact * in the Office of

Tax Policy, Appeals and Rulings, at *.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-2547258250.T