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

Plain-English summary

A company asked about sales tax on infusion pumps used for post-operative pain management by patients at home. The pump was described as provided to the patient as part of a surgeon's professional services and disposed of at home. The Department discussed two exemptions that appeared relevant but expressly made no specific determination.

The first discussion concerns medical and disposable supplies for infusion dispensed pursuant to a prescription under § 39-26-717(1)(h). The second concerns material furnished by a licensed provider as part of professional services, which must be furnished to the patient, leave the provider's office, and be primarily used by the patient under § 39-26-717(1)(k). The GIL lists the requirements; it does not find that the company's pump satisfies them.

The Department also discusses durable medical equipment and its conditions. The availability of any exemption depends on the facts and required documentation.

What this means for you

An infusion pump is not unconditionally exempt under this GIL. The possible prescription and provider-furnished routes each have requirements, and the Department did not determine whether the company's product met them.

Common questions

Q: Does this letter give an unconditional answer that an infusion pump is exempt?
A: No. It says two exemptions appear relevant, then describes their conditions and makes no specific determination.

Q: What condition does the prescription route have?
A: The letter discusses § 39-26-717(1)(h), which covers qualifying medical or disposable infusion supplies dispensed pursuant to a prescription.

Q: What condition does the provider-furnished route have?
A: The material must be furnished by the licensed provider, leave the provider's office with the patient, and be primarily used by the patient. The GIL does not decide whether the described pump meets those conditions.

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

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§§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.

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