Is a surgical laser used to create LASIK flaps, and its single-use interface (a milled glass part, like the blade in the traditional method), exempt from Colorado sales or use tax?

Plain-English summary

A provider asked whether two items are subject to Colorado sales or use tax: a surgical laser used to create "bladeless" LASIK flaps (to treat nearsightedness, farsightedness, and astigmatism), and the single-use "interface" integral to making the flap — a milled glass part in a precision housing, which plays the role the surgical blade plays in the traditional method.

The Department concluded both are taxable. Colorado taxes sales, use, storage, or consumption of tangible personal property (§ 39-26-104(1)(a), § 39-26-204). There's a medical exemption for "all sales of drugs or materials when furnished by a doctor as part of professional services provided to a patient," plus corrective eyeglasses, contact lenses, and hearing aids (§ 39-26-717(1)(a)). But not all medical materials are exempt, and the Department drew a bright line by who keeps the item:

• Exempt — materials that are transferred to, and leave with, the patient: bandages, catheters, casting material, and similar supplies.
• Taxable — materials used and consumed by the doctor that don't leave with the patient: X-ray film and supplies, masks, surgical scalpels, and the like.

The LASIK laser and its glass interface fall in the second group: they're used and consumed by the doctor and don't go home with the patient. So no exemption applies, and the company must pay sales tax when it buys the equipment — or use tax if it buys it out of state.

What this means for you

Surgical practices, clinics, and equipment vendors

The exemption for doctor-furnished materials is about what the patient takes home, not how medical or expensive the item is. Capital equipment and the disposables a surgeon uses up during a procedure — lasers, blades, single-use surgical interfaces, films, masks — are taxable purchases. You owe sales tax buying them in Colorado, or use tax if you bring them in from out of state. Bake that tax into your equipment budgeting.

The "leaves with the patient" test

When deciding if a supply is exempt, ask: does the patient walk out with it? A cast, a bandage, a catheter — exempt. A scalpel or a surgical laser the doctor keeps and reuses (or a single-use part consumed in the procedure but discarded, not given to the patient) — taxable. That contrast is the whole analysis here.

LASIK specifics

A laser that corrects vision is still equipment consumed by the provider, not corrective eyewear handed to the patient. The statute's separate exemption for corrective eyeglasses, contact lenses, and hearing aids doesn't reach surgical equipment that achieves a similar end.

Common questions

Q: Is surgical equipment like a LASIK laser tax-exempt in Colorado because it's medical?
A: No. The medical exemption is for drugs and materials a doctor furnishes that leave with the patient. Equipment the doctor uses and keeps (or consumables used up in the procedure) is taxable.

Q: What medical items are exempt, then?
A: Materials that transfer to and leave with the patient — bandages, catheters, casting material — plus corrective eyeglasses, contact lenses, and hearing aids.

Q: The interface is single-use — doesn't 'disposable' make it exempt?
A: No. What matters is whether it leaves with the patient. It's consumed by the doctor during the procedure and doesn't go home with the patient, so it's taxable — like a scalpel.

Q: Sales tax or use tax?
A: Sales tax if you buy the equipment in Colorado; use tax if you acquire it out of state and bring it in for use here.

Q: Can we rely on this letter?
A: No. It's a General Information Letter — general guidance, not binding on the Department, and the Executive Director did not formally review it.

Citations and references

Statutes and publications:
- § 39-26-104(1)(a), C.R.S. — imposition of Colorado sales tax on retail sales
- § 39-26-204, C.R.S. — imposition of use tax
- § 39-26-717(1)(a), C.R.S. — exemption for drugs/materials furnished by a doctor to a patient; corrective eyeglasses, contact lenses, hearing aids
- Department FYI Sales 68 (Medical and Dental Equipment and Supplies)

Related Colorado medical-exemption letters:
- [[gil-08-006]] — injectable dermal filler EXEMPT under § 39-26-717(a) as a material a doctor furnishes to a patient (the contrast: it leaves with/in the patient)
- [[gil-08-013-taxability-of-name-products]] — visco-elastic mattresses/pillows not exempt therapeutic devices
- [[gil-08-004-taxability-of-motorized-scooters-boot-walker-and-soft-shoe]] — scooters and orthopedic boots/shoes taxable
- [[gil-09-022-medical-equipment-sales-tax]]

Source

• Landing page: https://tax.colorado.gov/sales-use-tax-letter-rulings
• Original PDF: https://tax.colorado.gov/sites/tax/files/documents/GIL-08-014.pdf

Original ruling text

Office of Tax Policy
P.O. Box 17087
Denver, CO 80217-0087
[email protected]

GIL-2008-14

XXXXXXXXXXXXX
Attn: XXXXXXXXXX
XXXXXXXXXXXXX
XXXXXXXXXXXXX
January 16, 2008

Re: taxability of medical equipment
Dear XXXXXXXXXX,
This letter is in response to your letter to the Colorado Department of Revenue, dated December 18,
2007, re: the taxability of medical equipment.
Issues
You ask for guidance regarding whether the following two items are subject to sales or use tax.
[Product A] medical Laser for surgical creation of bladeless LASIK flaps, which treat/cures the
disabilities of nearsightedness, farsightedness, and astigmatism. In the operation of creating flaps,
both with the [Product A] and traditional [Product B], there is a one-time “interface” that is integral to
the delivery (in the case of a [Product B], it is a surgical blade, in the case of the [Product A], it is a
milled glass in a precision housing).
Discussion
Colorado imposes sales and use tax on the sale, use, storage, or consumption of tangible personal
property. §39-26-104(1)(a) and 204, C.R.S. Colorado provides a variety of exemptions which are
related to medical equipment. Specifically, and insofar as relevant to your products, Colorado
exempts, “all sales of drugs or materials when furnished by a doctor as part of professional services
provided to a patient, and all sales of corrective eyeglasses, contact lenses, or hearing aids.” See,
generally, §39-26-717(1)(a), C.R.S.
However, not all medical materials are exempt. In general, medical materials that are transferred to,
and leave with, the patient are exempt from sales tax. For example, exempt medical supplies include
bandages, catheters, casting material and similar items. Medical materials that are used and
consumed by the doctor are not exempt. For example, taxable medical materials include X-ray film,
X-ray supplies, mask, surgical scalpels and other similar materials.

The medical materials you identified do not appear to be exemptions for the equipment you identified.
These are items that are used and consumed by the doctor and do not leave with the patient. In the
absence of an exemption, the company must pay sales tax when it acquires the equipment, or use
tax if it acquires the equipment out-of-state.
For a general discussion of exemptions related to medical equipment, see Department publication
FYI Sales 68 (Medical and Dental equipment and Supplies). You can view this and other valuable
tax information relating to sales and use tax by visiting our web site at: www.revenue.state.co.us and
go to Taxation > FYIs > Sales Tax.
Finally, the Department makes a good faith effort to provide accurate and complete answers to
questions posed to it by taxpayers. However, the information and answers provided here are not
binding on the Colorado Department of Revenue, nor do they replace, alter, or supersede Colorado
law and regulations. The Executive Director, who by statute is the only person having authority to
bind the Department, has not formally reviewed and/or approved this response.
Respectfully,

Office of Tax Policy
Colorado Department of Revenue