LR 8282
Taxability of Medical Devices
January 04, 2024
Dear Applicant:
This is a letter ruling issued by the Director of Revenue under Section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your letter dated November 9, 2023.
The facts as presented in your letter ruling request are summarized as follows:
Applicant sells medical neurostimulators ("The Device"). The Device is a dual-channel stimulator capable of delivering bilateral stimulation. The device contains a rechargeable battery and microelectric circuitry to deliver a controlled pulse to precisely targeted areas of the brain. The Device is typically implanted subcutaneously near the clavicle, and connected to an extension and leads, which are implanted in the brain. Deep brain stimulation using the Device is approved for the treatment of symptoms due to motor symptoms of advanced Parkinson's disease and essential tremor. Moreover, the device is also used to treat epilepsy and depression. Absent the need for treatment of one of these ailments there would be no need for the implantation of the Device.
ISSUE:
Are Applicant's sales of the Device exempt from sales tax as a prosthetic device?
RESPONSE:
No. Applicant's sales of the Device are not exempt as a prosthetic device.
Section 144.020.1(1) RSMo, provides a tax:
"Upon every retail sales in this state of tangible personal property....a tax equivalent to four percent of the purchase price paid or charged, or in case such sale involves the exchange of property exchanged at the time and place of the exchanged, except as otherwise provided in section 144.025"
However, section 144.030.2(18) RSMo, exempts from tax sales of 'prosthetic devices.'
According to the Applicant, the Device does not replace a function of an internal organ. Therefore, sales of the Device are not exempt from sales tax as a prosthetic device.
This letter ruling is binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of this letter and is subject only to statutory changes by the General Assembly and to changes in the interpretation of law by the courts or administrative tribunals. If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change. For this reason, the interpretation set forth above should be reviewed on a regular basis. Please note that any change in or deviation from the facts as presented will render this ruling inapplicable.
Should additional information be needed, please contact Legal Counsel J. Ross Shelton General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.
Sincerely,
Wayne Wallingford