Are replacement batteries for electric wheelchairs exempt from Colorado sales tax as repair/replacement parts for mobility enhancing equipment, and what documentation must the retailer keep?
Plain-English summary
A battery retailer sells a general-purpose battery (used in both medical and non-medical devices) that can also serve as a replacement battery for electric wheelchairs — though it's frequently used in other devices too. It asked whether these batteries qualify as repair/replacement parts for mobility enhancing equipment, and what documentation it needs to keep.
Are they exempt? Yes — as parts of mobility enhancing equipment. Colorado exempts a number of medical devices, including all sales of mobility enhancing equipment (§ 39-26-717(1)(j)). "Mobility enhancing equipment" is defined to include repair and replacement parts, and to cover wheelchairs and wheelchair components/accessories, motorized carts, and scooters (§ 39-26-717(2)(b), (2)(b)(II)). Since those devices are electrically powered, batteries are component parts of them — so the sale of the battery is exempt from sales and use tax as a replacement part or component.
The catch: it must be dispensed under a prescription. To qualify, the mobility enhancing equipment must be purchased pursuant to a prescription — a written order by a licensed physician, physician's assistant, or advanced nurse practitioner with prescriptive authority, bearing the name and address of the patient. For audit purposes the prescription must describe the equipment, but it can be general (a prescription for a "wheelchair" is enough — it needn't say "electric/motorized"), and it need not specifically call out the repair/replacement part, so long as the part is for equipment the prescription covers.
Documentation the retailer should keep. The Department would likely find a good-faith determination if the retailer:
- keeps a copy of the prescription;
- has evidence the buyer is the patient or acting on their behalf (e.g., the purchaser's surname on a driver's license matches the prescription); and
- confirms the battery is suitable as a replacement part for the equipment described in the prescription.
If the customer can't provide a prescription and show they're the patient (or acting for them), the retailer should charge tax and tell the customer they can request a refund from the Department. The Department also accepts a signed affidavit that the batteries will be used in a wheelchair as a good-faith basis — but the retailer must still use judgment (e.g., accepting an affidavit for someone buying numerous batteries on one prescription would not be good faith). A retailer selling many wheelchair batteries could develop a standard acknowledgment form.
What this means for you
Battery and medical-equipment retailers
A general-purpose battery can be sold exempt when it's a replacement for a prescribed electric wheelchair, cart, or scooter — but the exemption rides on the prescription and your documentation. Keep the prescription on file, tie the buyer to the patient, and confirm the battery fits the prescribed equipment. If you can't, collect the tax and point the customer to a Department refund. Use affidavits cautiously — don't rubber-stamp suspicious quantities.
Patients and caregivers
To buy a wheelchair battery tax-free, bring the prescription for the equipment (a general "wheelchair" prescription works) and be ready to show you're the patient or buying for them. If you pay tax because you didn't have the paperwork at purchase, you can seek a refund from the Department.
Accountants and tax professionals
The exemption is § 39-26-717(1)(j) (mobility enhancing equipment), with the definition in § 39-26-717(2)(b) extending to repair/replacement parts and naming wheelchairs/carts/scooters. The prescription requirement and the "good-faith determination" documentation standard are the operative compliance points; affidavits are acceptable but bounded by reasonableness. The prescription need not name the specific part nor the "electric" nature of the device.
Common questions
Q: Are electric-wheelchair replacement batteries taxable in Colorado?
A: No, when sold as a replacement part for prescribed mobility enhancing equipment (electric wheelchairs, motorized carts, scooters). Without a qualifying prescription and documentation, the sale is taxable.
Q: Does the prescription have to mention the battery specifically?
A: No. It must describe the equipment (a "wheelchair" prescription suffices and need not say "electric"), and it need not call out the repair/replacement part, as long as the part is for the prescribed equipment.
Q: What records does the retailer need?
A: A copy of the prescription, evidence the buyer is the patient or acting for them (e.g., matching surname on a driver's license), and confirmation the battery fits the prescribed equipment.
Q: What if the customer has no prescription?
A: Charge sales tax, and advise the customer they can request a refund from the Department once they can document the exemption.
Q: Can I just take an affidavit?
A: An affidavit that the batteries are for a wheelchair can support a good-faith determination, but the retailer must still exercise judgment — e.g., a single affidavit for numerous batteries wouldn't qualify as good faith.
Q: Can I rely on this letter?
A: No. A General Information Letter is general guidance and is not binding on the Department; it makes no determination on any specific facts. It also doesn't cover self-collected home-rule city taxes.
Citations and references
Statutes and rules:
- § 39-26-717, C.R.S. (medical device/supply exemptions)
- § 39-26-717(1)(j), C.R.S. (mobility enhancing equipment exemption)
- § 39-26-717(2)(b), C.R.S. (definition; includes repair/replacement parts; prescription requirement)
- § 39-26-717(2)(b)(II), C.R.S. (wheelchairs, motorized carts, scooters)
- Department Rule 24-35-103.5 (GIL / PLR procedure)
Related rulings in this library:
- [[gil-17-007-fluoride-varnish]] (materials furnished by licensed providers; medical exemptions under § 39-26-717)
- [[gil-17-020-taxability-of-orthodontic-supplies]] (medical-materials exemption documentation)
Source
- Landing page: Colorado Sales & Use Tax Letter Rulings
- Original PDF: GIL-15-017.pdf
Original ruling text
Office of Tax Policy, P.O. Box 17087, Denver, CO 80217-0087 ([email protected])
GIL-15-017 — June 8, 2015
Re: Replacement Batteries in Electric Wheelchairs
You submitted on behalf of the Company a request for guidance to determine whether replacement batteries in electric wheelchairs qualify as repair or replacement parts for a medical device. […] The Department treats this request as one for a general information letter.
Issue
- Do replacement batteries in electric wheelchairs qualify as repair or replacement parts for mobility enhancing equipment?
- If so, what are the documentation requirements for the retailer?
Background
Company is a retailer who sells a wide variety of batteries. One of the batteries sold is a general purpose battery (medical and non-medical use) that can be used as a replacement battery for electric wheelchairs. However, these batteries are frequently used in devices other than wheelchairs.
Discussion
Colorado exempts a number of medical supplies from state and state-administered sales and use taxes. [§ 39-26-717, C.R.S.] Specifically, Colorado exempts, among other medical devices and equipment, all sales of mobility enhancing equipment. [§ 39-26-717(1)(j), C.R.S.] Mobility enhancing equipment means equipment, including repair and replacement parts for such equipment, dispensed pursuant to a prescription. [§ 39-26-717(2)(b), C.R.S.] The statute defines mobility enhancing equipment to include wheelchairs and wheelchair components or accessories, motorized carts, and scooters. [§ 39-26-717(2)(b)(II), C.R.S.] Batteries are component parts to these types of equipment if they are powered by electricity. Therefore, the sale of batteries is exempt from sales tax and use tax as a replacement part or component to the wheelchair, motorized cart, and scooter.
In order to qualify for the exemption, the mobility enhancing equipment must be purchased pursuant to a prescription. A prescription is a written order by a licensed physician, physician's assistant, advanced nurse practitioner, with prescriptive authority, and on which is the name and address of the person receiving the prescription. For auditing purposes, the prescription must describe the mobility enhancing equipment. For example, a prescription for a "wheelchair" is a sufficient description and need not state that it is an electric or motorized wheelchair. The prescription also need not be for the repair or replacement part so long as the part is for equipment for which the prescription is issued.
When making exempt sales, a retailer must properly document such sales to substantiate the exemption. In cases such as this, the Department would likely conclude that the retailer has made a good faith determination if the retailer maintained a copy of the prescription, had evidence that the person making the purchase is the person to whom the prescription is made or is making the purchase on behalf of such person (e.g., purchaser's surname on driver's license is same as person who received the prescription), and that the battery was suitable as a replacement part of the equipment described in the prescription. If a customer cannot provide a copy of the prescription and document that purchaser is the patient or acting on behalf of the patient, then the retailer should advise the customer that tax must be collected but that the customer can request a refund from the Department.
The Department also generally views an affidavit signed by the customer stating that the batteries are going to be used in a wheelchair as the retailer making a good faith determination. However, the retailer must still exercise good judgment in accepting affidavits. For example, if a retailer accepted an affidavit from someone purchasing numerous batteries for one prescription, the Department would likely not view such acceptance of the affidavit as being a good faith determination. Lastly, if the retailer sells numerous batteries for wheelchairs, it could develop some type of standard form that the customers sign to acknowledge that the batteries are being used for an exempt purpose.
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.
(Condensed from the official PDF; see the linked source for the complete text and footnotes.)