CO GIL 14-012 Sales & Use Tax 2014-04-28

Is the sale of an infusion pump for at-home pain management subject to Colorado sales or use tax?

Short answer: It's exempt — by either of two routes. An infusion pump that delivers medication is exempt from Colorado sales and use tax as a medical/disposable 'infusion' supply when dispensed pursuant to a prescription (§ 39-26-717(1)(h); the Department's FYI Sales 68 lists infusion pumps by name), or — with no prescription needed — as material a licensed provider furnishes to the patient as part of the provider's professional services and that leaves the office with the patient for the patient's own use (§ 39-26-717(1)(k)). It is NOT exempt as durable medical equipment, because that exemption doesn't apply to equipment worn on the body, which the pump appears to be. Either way it comes out exempt. (This is a General Information Letter: general guidance only, not binding on the Department.)

Disclaimer: This is an official Colorado Department of Revenue General Information Letter (GIL). A GIL is a good-faith general overview of the tax law; it is NOT binding on the Department, makes no specific determination on the facts, and cannot be relied upon as a ruling. It does not address sales or use taxes administered by self-collected home-rule cities. This summary is informational only and is not legal or tax advice. Consult a licensed Colorado tax professional about your specific 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 company sells infusion pumps used for post-operative pain management for patients at home. The pump is provided to the patient as part of the surgeon's professional services and the patient throws it away at home once the pain therapy has run its course. The company asked whether selling the pump is subject to Colorado sales tax.

Colorado taxes tangible personal property, but it exempts a range of medical products, and the Department found two exemptions that appear to apply to the infusion pump — meaning it comes out exempt either way:

Prescribed infusion supply — § 39-26-717(1)(h). Colorado exempts "all sales of medical, feeding, and disposable supplies, including any related accessories, for incontinence, infusion, enteral nutrition, ostomy, urology, diabetic care, and wound care dispensed pursuant to a prescription." An infusion pump that administers medication through infusion is exempt if prescribed by a licensed provider. The Department noted that its FYI Sales 68 explicitly lists infusion pumps as exempt.
Material furnished by a licensed provider — § 39-26-717(1)(k). This exemption does not require a prescription, but the material must be furnished by the licensed provider, must leave the provider's office with the patient, and must be primarily used by the patient, not the provider. The at-home infusion pump fits.

What doesn't apply: Colorado also exempts durable medical equipment, but that exemption does not apply to equipment the patient wears on the body — which the Department says appears to be the case for an infusion pump. So the DME route is out, but it doesn't matter because the two routes above already make the pump exempt.

What this means for you

Medical suppliers

An infusion pump sold for patient infusion therapy is exempt in Colorado. The cleanest documentation is a prescription (which squarely fits § 39-26-717(1)(h), and the Department's own FYI Sales 68 names infusion pumps). Even without a prescription, a pump furnished by the provider that goes home with the patient for the patient's own use is exempt under § 39-26-717(1)(k).

Healthcare providers

If you furnish the pump to your patient as part of your professional services and the patient takes it home and uses it, that supports the provider-furnished exemption (§ 39-26-717(1)(k)) — no prescription required. Don't rely on the durable-medical-equipment exemption for body-worn devices; it's excluded for equipment worn on the body.

Accountants and tax professionals

Colorado's medical exemptions are keyed to how an item is dispensed, not just what it is. An infusion pump qualifies under the prescribed-infusion-supply route (§ 39-26-717(1)(h)) and/or the provider-furnished-material route (§ 39-26-717(1)(k)); the DME route (which the Department discusses elsewhere with the four-part test) fails for body-worn equipment. This is the same Rx-or-provider-furnished framework the Department applies across its medical letters. Watch the home-rule-city caveat below.

Common questions

Q: Is an infusion pump taxable in Colorado?
A: No. It's exempt either as a prescribed infusion supply (§ 39-26-717(1)(h)) or as material a licensed provider furnishes to the patient as part of professional services (§ 39-26-717(1)(k)).

Q: Does the pump have to be prescribed to be exempt?
A: Not necessarily. The prescription route (§ 39-26-717(1)(h)) requires one, but the provider-furnished route (§ 39-26-717(1)(k)) does not — it just requires that the provider furnish the pump, that it leave the office with the patient, and that the patient be the primary user.

Q: Isn't an infusion pump durable medical equipment?
A: The Department says the DME exemption doesn't apply here because that exemption excludes equipment worn on the body, which the pump appears to be. But the pump is exempt anyway under the two routes above.

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

Citations and references

Statutes and publications:
- §§ 39-26-104(1), 202, C.R.S. (sales/use tax on tangible personal property)
- § 39-26-717(1)(h), C.R.S. (prescribed medical/disposable infusion supplies exemption)
- § 39-26-717(1)(k), C.R.S. (material furnished by a licensed provider as part of professional services)
- Department publication FYI Sales 68 (lists infusion pumps as exempt)

Related rulings: [[gil-14-007-intrauterine-devices]] (same Rx / provider-furnished routes; DME limits), [[gil-14-014-hemodialysis-devices]] (durable medical equipment), [[gil-15-021-medical-equipment-and-supplies]], [[plr-16-008-material-furnished-by-a-licensed-provider]].

Source

Landing page: https://tax.colorado.gov/sales-use-tax-letter-rulings
Original PDF: https://tax.colorado.gov/sites/tax/files/documents/GIL-14-012.pdf

Original ruling text

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

GIL-14-012
April 28, 2014
XXXXXXXXXXXXXXX
Attn: EXXXXXXXXXX
XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX
Re: Infusion Pumps
Dear XXXXXXXXXXX,
You submitted on behalf of XXXXXXXXXXXXX (“Company”) a request for guidance on the
applicability of sales or use tax on infusion pumps.
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 Rule 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 Department Rule 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
Is the sale of an infusion pump subject to Colorado sales tax?
Background
Company is engaged in the sale of infusion pumps for post-operative pain management for patients
at home. The infusion pump is provided to the patient as part of the provision of the surgeon’s
professional services and is disposed of by the patient at their home after the pain therapy has run
its course.

Discussion

Colorado levies sales and use tax on the sale, use, storage, or consumption of tangible personal
property in Colorado.1 However, Colorado exempts a variety of medical products. There are two
exemptions that appear to apply to infusion pumps. One such exemption applies to “all sales of
medical, feeding, and disposable supplies, including any related accessories, for incontinence,
infusion, enteral nutrition, ostomy, urology, diabetic care, and wound care dispensed pursuant to a
prescription.”2 An infusion pump that administers medications through infusion is exempt from
Colorado sales and use tax if prescribed by a licensed provider.3
The second exemption applies to material furnished to the patient as part of the licensed provider’s
professional services.4 This exemption does not require a prescription but the material must be
furnished by the licensed provider and leave the licensed provider’s office with the patient, and the
material must be primarily used by the patient and not the provider.
Colorado law also exempts durable medical equipment, but this exemption does not apply if the
patient wears the equipment, as appears to be the case for the infusion pump.
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.
Sincerely,
Office of Tax Policy
Colorado Department of Revenue

1
2
3

§§39-26-104(1) and 202, C.R.S. You can view statutes on the Department’s Web site at
www.colorado.gov/revenue/tax > Tax Library > Statutes.
§39-26-717(1)(h), C.R.S.
§39-26-717(1)(h), C.R.S. and Department publication FYI Sales 68, which explicitly lists infusion pumps as
exempt from sales and use tax. To view this and other publications on the Department’s Web site, visit
www.colorado.gov/revenue/tax > Tax Library > FYI Publications > Sales > Sales 68.
§39-26-717(1)(k), C.R.S.