Ezel / Tax Rulings / CO
CO GIL 08-032 Sales & Use Tax 2008-12-11

Are medical diagnostic test kits—a flu A+B test, an RSV test, and an hCG urine test—subject to Colorado sales or use tax?

Short answer: The Department gave the framework, not a firm answer. Colorado taxes tangible personal property unless exempt (§39-26-104), and several medical exemptions can apply to diagnostic products—prescription drugs, urine test kits, and drugs/materials furnished to a patient by a doctor as part of medical services are among the exempt items (FYI Sales 68). That suggests the One Step hCG urine test could fall under the urine-test-kit exemption, while the influenza and RSV tests would need to fit one of the exempt categories to qualify. The Department treated the request as general guidance and didn't determine the status of the specific products. (General Information Letter: general guidance only, not binding on the Department.)
Currency note: this ruling is from 2008
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is a Colorado Department of Revenue General Information Letter (GIL) — a general discussion of the tax law that represents the good-faith opinion of Department personnel. A GIL is NOT binding on the Department and CANNOT be relied upon as a ruling by any taxpayer. It does not address sales or use taxes administered by self-collected home-rule cities and counties. This summary is informational only and is not legal or tax advice. Consult a licensed Colorado tax professional about your situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked at the bottom of this page, or PDF in the sidebar) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

A seller asked whether three medical diagnostic test kits are subject to Colorado sales or use tax: a Binax Now Influenza A+B test, a Binax Now RSV test, and a One Step hCG Urine test.

The Department gave the framework rather than a product-by-product ruling. Colorado imposes sales tax on tangible personal property unless it is exempt (§ 39-26-104), and several medical exemptions can reach diagnostic items — the Department specifically listed prescription drugs, urine test kits, and drugs and materials furnished to a patient by a doctor as part of medical services as among the exempt items (FYI Sales 68). It treated the request as general guidance and pointed the seller to FYI Sales 68 without formally determining each product's status.

Reading the framework against the products: the One Step hCG urine test appears to line up with the urine test kit exemption, while the influenza and RSV tests would need to fit one of the listed exempt categories (e.g., furnished by a doctor as part of professional services) to qualify. A binding answer would require a private letter ruling.

What this means for you

Sellers of diagnostic and test-kit products

Colorado's medical exemptions aren't limited to drugs and devices — they expressly include urine test kits and materials a doctor furnishes to a patient. So some diagnostic products are exempt while others may not be, depending on which category they fall in. Don't assume the whole catalog is taxable or exempt; match each product to a specific exemption in FYI Sales 68.

Channel can matter

A test that's exempt as a doctor-furnished material depends on it being furnished as part of a doctor's professional service to a patient. The same item sold over the counter or business-to-business may be analyzed differently. Track how and to whom you sell.

Get a PLR for certainty

Because the Department declined to classify the specific kits, a seller wanting a binding determination should submit a private letter ruling describing each product and how it's sold.

Common questions

Q: Are medical test kits taxable in Colorado?
A: It depends on the kit. Colorado exempts prescription drugs, urine test kits, and materials a doctor furnishes to a patient. A product fitting one of those categories can be exempt; others are taxable.

Q: Is a urine pregnancy (hCG) test exempt?
A: The Department listed urine test kits among exempt items, which points toward exemption for an hCG urine test — but it didn't formally rule on the specific product.

Q: What about flu or RSV tests?
A: They'd need to fit an exempt category (such as being furnished by a doctor as part of professional services). The Department didn't determine their status here.

Q: Can I rely on this letter?
A: No. It's a General Information Letter — general guidance, not binding on the Department, and not a determination on the specific products. Consider a private letter ruling.

Citations and references

Statutes and publications:
- § 39-26-104, C.R.S. — Colorado imposes sales tax on tangible personal property unless exempt
- Department FYI Sales 68 (Medical and Dental Equipment and Supplies) — exemptions include prescription drugs, urine test kits, and doctor-furnished materials

Related Colorado medical-exemption letters:
- [[gil-08-026-sales-tax-exemption]] — doctor-furnished-materials exemption (orthopedic implants)
- [[gil-08-014-taxability-of-medical-equipment]] — items consumed by the doctor are taxable

Source

Original ruling text

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

GIL-2008-032
December 11, 2008
XXXXXXXXXXXXXXXX
Attn: XXXXXXXXXXXX
XXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXX
Dear XXXXXXXXXX,
This letter is in response to your inquiry of August 1, 2008 regarding the taxability of
Binas Now Influenza A+B, Binax Now RSV Test, and One Step hCG Urine Class Test.
The department issues both general information letters and private letter rulings.
General information letters provide general advice and are not binding on the
department. Private letter rulings provide determinations on specific set of facts, are
binding on the department, and require the payment of a fee. For more information
about these letters and rulings, please take a moment to review Department Regulation
24-35-103.5, which is available on the Department’s web site at:
www.revenue.state.co.us and click on Taxation > Publications/Resources> Regulations

Final Regulations > Procedures and Administration
I will initially treat your company’s request as one for a general information letter.
Please let me know if you would like to request a private letter ruling.
Issue
1. Are Binas Now Influenza A+B, Binax Now RSV Test, and One Step hCG Urine
Class Test subject to sales or use tax?
Discussion
Colorado imposes sales tax on the sale of tangible personal property, unless it is
otherwise exempt. §39-26-104, C.R.S. There are a number of exemptions that apply to
the sale of medically-related items. Prescription drugs, urine test kits, and the sale of
drugs and materials furnished to a patient by a doctor as part of his or her medical
services are among the items that are exempt. You can find more information about

these and other exemptions in our FYI Sales 68. This is available on our web site noted
above (Go to Taxation > FYIs > Sales Tax > Sales 68.
Please note that the Department does not administer local sales taxes for home-rule
cities and the taxes they levy may be different than those levied by the State of
Colorado. Please contact these home-rule cities for more information about their taxes.
Finally, the Department must publish on its web site redacted versions of its general
information letters. Your letter requesting this letter is not published. I enclose a
redacted version of this letter. Please let me know within 60 days of the date of this
letter whether you have any suggested changes to the redacted version.
Respectfully,

Office of Tax Policy
Colorado Department of Revenue

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