Are sutures and IV catheters used in a hospital procedure exempt from Colorado sales tax, and does it matter whether they leave with the patient?

Plain-English summary

A non-exempt hospital asked whether sutures and IV catheters used during procedures are exempt from Colorado sales/use tax. Licensed providers apply both as part of medical procedures. Sutures vary — some dissolve in the body, some stay permanently, some are removed after several days — and serve to aid healing, like a bandage. The IV catheters (a Becton Dickinson Insyte Autoguard) are removed and disposed of at the hospital after the procedure. Neither is separately billed to the patient.

The Department's answer turns on a single line: did the item leave with the patient?

• Colorado exempts a number of medical supplies (§ 39-26-717), and specifically "all sales of nonprescription drugs or materials when furnished by a licensed provider as part of professional services provided to a patient" (§ 39-26-717(1)(k)).
• The operative rule: medical materials that are transferred to and leave with the patient are exempt — e.g., bandages, catheters, casting material, and similar items.
• Sutures are exempt. They're similar to bandages and casts, they leave the hospital with the patient, and they're furnished by a licensed provider as part of professional service. It doesn't matter whether they dissolve, remain permanently, or are removed after several days — they leave with the patient, so they qualify.
• Materials used and consumed by the provider are NOT exempt — e.g., X-ray film and supplies, masks, surgical scalpels, and even the instruments used to remove sutures.
• The IV catheters are NOT exempt. They don't leave the facility with the patient (they're removed and disposed of at the hospital) and appear to be used and consumed by the provider. With no exemption, the hospital pays sales tax when it buys them (or use tax if acquired out of state).

What this means for you

Hospitals and clinics buying medical supplies

Sort your supplies by a simple question: does it leave with the patient? Items that go home in or on the patient — sutures, bandages, casts, catheters that remain — are typically exempt when a licensed provider furnishes them as part of care, regardless of whether they dissolve or are later removed. Items the provider uses up during the procedure and that stay at the facility — X-ray film, masks, scalpels, suture-removal instruments, and IV catheters that are removed and discarded — are taxable, and you owe sales or use tax on your purchase.

Medical-supply vendors

The exemption hinges on furnished-to-the-patient-and-leaves-with-them, not on the clinical importance of the item. Don't treat a product as exempt just because it's used in patient care; if it's consumed by the provider and disposed of on site, it's taxable to the facility.

Accountants and tax professionals

The governing exemption is § 39-26-717(1)(k) (provider-furnished materials). The bright line the Department applies is transferred-to-and-leaves-with-the-patient = exempt; used-and-consumed-by-the-provider = taxable, and the permanence/dissolution of a suture is irrelevant. This sits alongside the broader § 39-26-717 medical-exemption family — provider-furnished and prescription routes in [[gil-14-012-infusion-pumps]], DME in [[gil-14-014-hemodialysis-devices]], and the narrow-construction holding in [[gil-13-005-tear-serum-testing-modules]]. Watch the home-rule-city caveat below.

Common questions

Q: Are sutures exempt from Colorado sales tax?
A: Yes. Sutures are like bandages and casts, they leave the hospital with the patient, and they're furnished by a licensed provider as part of professional services — so they're exempt under § 39-26-717(1)(k), whether they dissolve, stay permanently, or are removed later.

Q: Why are the IV catheters taxable?
A: Because they're removed and disposed of at the hospital after the procedure — they don't leave with the patient and are used and consumed by the provider, so no exemption applies. The hospital owes sales tax (or use tax) on its purchase.

Q: What's the dividing line?
A: Whether the item is transferred to and leaves with the patient (exempt) or is used and consumed by the provider at the facility (taxable). X-ray film, masks, scalpels, and suture-removal instruments are taxable examples.

Q: Does it matter that the items aren't separately billed to the patient?
A: No. The analysis turns on whether the material leaves with the patient and is provider-furnished, not on how it's billed.

Q: Can I rely on this letter?
A: No. A General Information Letter is general guidance, not binding on the Department, and makes no determination on specific facts. It also doesn't cover self-collected home-rule city taxes.

Citations and references

Statutes:
- § 39-26-717, C.R.S. (exemptions for medical supplies)
- § 39-26-717(1)(k), C.R.S. (nonprescription drugs or materials furnished by a licensed provider as part of professional services to a patient)

Source

• Landing page: https://tax.colorado.gov/sales-use-tax-letter-rulings
• Original PDF: https://tax.colorado.gov/sites/tax/files/documents/GIL-13-012.pdf

Original ruling text

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

GIL-13-012
April 18, 2013
XXXXXXXXXXXXXXX
ATTN: XXXXXXXXXX
XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX
Re: Sutures and IV Catheters
Dear XXXXXXXXXX,
You submitted on behalf of your client (“Company”) a request for guidance to determine
whether sutures and IV catheters that may not leave a hospital with a patient are exempt from
Colorado sales and use tax.
The Department issues general information letters and private letter rulings. A general information
letter provides a general overview of the relevant tax issues and is not binding on the Department.
A private letter ruling provides a specific determination for a specific set of facts, is binding on the
Department but not on the taxpayer, and requires payment of a fee. For more information about
general information letters and private letter rulings, please see Department regulation 24-35-103.5
at www.colorado.gov/revenue/tax > Tax Library > Rulings.
The Department initially treats your request as one of a general information letter. If you would like
the Department to issue a private letter ruling on the issues you raise, you can resubmit a request
and fee in compliance with regulation 24-35-103.5. It is important to remember that general
information letters, such as this one, are general discussions of tax law and are not a determination
of the tax consequence of any particular action or inaction.
Issue
Are sutures and IV catheters that do not leave the hospital with a patient exempt from Colorado
sales and use tax?
Background
Company is a non-exempt hospital. Licensed providers who work at Company apply sutures and
IV catheters as part of certain medical procedures. Some sutures dissolve in the body, some
remain permanently in the body and others are removed after several days. The suture’s primary
purpose is to aid in the healing process, similar to a bandage. The Insyte Autoguard Shielded IV
Catheter by Becton Dickinson is used on patients during procedures. After the procedure, the IV

catheters are removed and disposed of at the hospital. Neither sutures nor IV catheters are
separately billed on patient invoices.
Discussion
Colorado exempts a number of medical supplies from state and state-administered sales and use
taxes.1 Specifically, and insofar as relevant to your products, Colorado exempts “all sales of
nonprescription drugs or materials when furnished by a licensed provider as part of professional
services provided to a patient.”2
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. The sutures outlined in the ruling
request appear to be similar in nature to bandages and casts because they leave the hospital with
the patient and are furnished by a licensed provider as part of their professional service. Whether
the sutures dissolve in the body, remain permanently or are removed after several days does not
change the outcome that the sutures leave with the patient and, therefore, qualify for the exemption.
Medical materials that are used and consumed by the licensed physician are not exempt from
Colorado sales or use tax. For example, taxable medical materials include X-ray film, X-ray
supplies, mask, surgical scalpels and other similar materials. As a further example, the materials
used to remove sutures are not exempt from Colorado sales and use tax because those
instruments are used and consumed by the licensed physician during the procedure to remove the
sutures.
Additionally, the IV catheters you identified do not appear to qualify as material furnished by a
licensed provided because the IV catheters do not leave the facility with the patient, and the IV
catheters appear to be used and consumed by the licensed physician as part of their professional
service to the patient. In the absence of an exemption, Company must pay sales tax when it
acquires the equipment, or use tax if it acquires the equipment out-of-state.
Miscellaneous
This letter represents the good faith opinion of Department personnel who are knowledgeable on
state taxes issues. However, the Department does not make a specific determination here on any
of the issues raised and the Department is not bound by this general information letter.
The Department administers state and state-administered local sales and use taxes. This letter
does not address sales and use taxes administered by home-rule cities and home-rule counties.
You may wish to consult with local governments which administer their own sales or use taxes
about the applicability of those taxes. Visit our web site at www.colorado.gov/revenue/tax for more
information about state and local sales taxes.
Enclosed is a redacted version of this letter. Pursuant to statute and regulation, this redacted letter
will be made public within 60 days of the date of this letter. Please let me know in writing within that
60 day period whether you have any suggestions or concerns about this redacted letter.
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2

§39-26-717, C.R.S.
§39-26-717(1)(k), C.R.S.

2

Sincerely,

Office of Tax Policy
Colorado Department of Revenue

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