Were prescription-labeled surgical devices and tools exempt from Florida sales tax when sold for use by physicians and surgeons?

Plain-English summary

Florida exempted one-time-use medical devices and tools when federal law required them to carry a prescription legend, but it taxed reusable devices even when they carried the same legend. The seller's list included disposable blades, burrs, drill bits, probes, cannulas, guide wires, tubing, and tendon strippers used by physicians and surgeons.

Both prescription status and single use mattered

The qualifying product had to be intended for one-time use and required under federal law to bear either:

• “RX only,” or
• “CAUTION: Federal law restricts this device to sale (or use) by or on the order of a licensed physician.”

When those conditions were met, the Department treated the device or tool as exempt when dispensed on behalf of or for the benefit of a patient.

A prescription legend did not exempt reusable equipment

Florida expressly denied the exemption for a prescription-legend device intended to be reused by a healthcare practitioner or facility. The practitioner generally remained the taxable consumer of equipment and supplies used in providing professional services unless a specific exemption applied.

Medical use alone was insufficient

Rule 12A-1.020 stated that sales of medical products or supplies to physicians, dentists, veterinarians, and hospitals were taxable merely because they were used in treatment. The product still had to meet a stated exemption.

The ruling also said nonprescription consumable medical supplies were taxable absent another specific exemption.

Florida did not classify every listed item

The taxpayer said its products included both single-use and multi-use items. The Department gave a conditional rule rather than deciding the taxability of each blade, drill bit, probe, cannula, wire, tube, or stripper model.

What this means for you

Medical-device sellers

Maintain product-level documentation for required prescription labeling and intended number of uses. A catalog-wide “medical device” classification is too broad for the distinction Florida made.

Hospitals, physicians, and surgical centers

Do not assume a physician-order restriction makes reusable tools exempt. The ruling treated reusable practitioner or facility equipment as taxable.

Accountants and tax professionals

Check whether the item is dispensed for a patient, whether federal law requires the legend, and whether the item is truly single use. Then consider any separate exemption not addressed here.

Common questions

Q: Were all products marked “RX only” exempt?
A: No. Under the ruling, reusable prescription-legend devices remained taxable.

Q: Were all disposable medical supplies exempt?
A: No. The product also needed the required federal prescription legend or another specific exemption.

Q: Did use during surgery make an item exempt?
A: Not by itself. Florida required the exemption conditions to be met.

Q: Did the TAA decide whether each named product was single use?
A: No. It stated the rule conditionally because the seller's list included both single- and multi-use products.

Citations and references

• Fla. Stat. § 212.08(2)(a) — exemption for qualifying prescribed medical products and supplies
• Fla. Admin. Code r. 12A-1.002(1) — practitioners as consumers of property used in professional services
• Fla. Admin. Code r. 12A-1.020(6) — taxability and exemptions for medical products and supplies

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 04A-041

Original ruling text

SUMMARY
QUESTION: What is the taxable status of prescription medical devices and tools?

ANSWER - Based on facts below: Medical devices and tools that are intended for one-time use and that are
required under federal law to bear a prescription legend that reads either "RX only," or "CAUTION: Federal law
restricts this device to sale (or use) by or on the order of a licensed physician," are exempt from tax. Devices and
tools that are intended to be used more than once are taxable, regardless of the prescription legend.

July 19, 2004

Re: Technical Assistance Advisement 04A-041
XXX ["Company"]
Sales Tax
Medical Tools and Devices
Section 212.08(2), F.S.
Rules 12A-1.002(2), 12A-1.020(6), F.A.C.
Dear :
This is in response to your letter of June 8, 2004, requesting the issuance of a Technical Assistance Advisement
regarding the taxable status of certain medical products that your company sells in Florida. Your letter lists the follow
products:
Disposable blades
Burrs
Drill bits
Probes
Cannulas
Guide wires
Tubing
Tendon strippers
Your letter further provides:
The above-mentioned product does contain a caution "US federal Law restricts this product to sale by or on the order
of a physician" on the packaging. Primary uses of the products in question are by licensed Physician and Surgeon for

medical surgery. The products are single and multi use and considered a medical tool or supply.
Law
Section 212.08(2), F.S., provides in part:
(2) EXEMPTIONS; MEDICAL.
(a) There shall be exempt from the tax imposed by this chapter any medical products and supplies or medicine
dispensed according to an individual prescription or prescriptions written by a prescriber authorized by law to
prescribe medicinal drugs;....
Rule 12A-1.020, F.A.C., provides, in part:
(6)(a) Medical products and supplies used in the cure, mitigation, alleviation, prevention or treatment of injury, illness,
disease or incapacity are taxable, unless:

1. Temporarily or permanently incorporated into a patient or client by a practitioner of the healing arts licensed by the
   State of Florida.
2. Ordered and dispensed by or on the prescription of a duly licensed practitioner authorized by the laws of the state
   to prescribe medicinal drugs; or
3. Ordered and dispensed by a pharmacist pursuant to the established dispensing procedures determined by the joint
   committee of medical, osteopathic and pharmacy professions as created by section 465.186, F.S.
   (b) The sale of medical products or supplies to physicians, dentists, veterinarians and hospitals is taxable even though
   the medical products or supplies may be used in connection with medical treatment, unless the products and supplies
   are specifically exempt from tax under this rule or in Rule 12A-1.021, F.A.C....
   [Rule 12A-1.021, F.A.C., deals with certain exempt prosthetic and orthopedic appliances, which are not at issue here.]
   Rule 12A-1.002, F.A.C., dealing with "Practitioners of the Healing Arts," provides in part:
   (1) All licensed practitioners of the healing arts are the consumers of the various items of tangible personal property
   which they use in the rendition of their professional services and the tax will apply upon their purchases of items of
   tangible personal property, including equipment except such items as are exempt under Rule 12A-1.020.
   Conclusion
   Medical products dispensed to a patient pursuant to a doctor's prescription are generally exempt from tax. Also
   exempt are one time use medical products dispensed on behalf of or for the benefit of a patient when the medical
   products are required under federal law to bear a prescription legend that reads either "RX only," or "CAUTION:
   Federal law restricts this device to sale by or on the order of a licensed physician." Therefore, if any of the products

you have mentioned are in that category of one-time use prescription devices or tools, then they would be exempt
from tax. The exemption does not extend to prescription legend devices that are reusable by the health care
practitioner or facility. Non-prescription consumable medical supplies, absent a specific exemption, are taxable.
Closing Statement
This response constitutes a Technical Assistance Advisement under s. 213.22, F.S. which is binding on the
department only under facts and circumstances described in the request for this advice as specified in s. 213.22, F.S.
Our response is predicated on those facts and the specific situation summarized above. You are advised that
subsequent statutory or administrative rule changes or judicial interpretations of the statutes or rules upon which this
advice is based may subject similar future transactions to a different treatment than expressed in this response.
You are further advised that this response, your request and related backup documents are public records under
Chapter 119, F.S., which are subject to disclosure to the public under the conditions of s. 213.22, F.S. Your name,
address, and any other details which might lead to identification of the taxpayer must be deleted by the Department
before disclosure. In an effort to protect the confidentiality of such information, we request you provide the
undersigned with an edited copy of your request for Technical Assistance Advisement, backup material and response
within fifteen days of the date of this advisement.
Sincerely,
Jonathan E. Swift
Tax Law Specialist
Technical Assistance and Dispute Resolution
(850) 922-4840
Control #60538