Was the complete prescription catheter-and-clip system used in a mitral-valve repair procedure exempt from Florida sales tax?

Plain-English summary

The taxpayer sold a prescription-only system for repairing a patient's mitral valve without open-heart surgery. The system combined a steerable guide catheter and a clip-delivery component in one per-procedure charge.

Both components were essential to implanting the device, had no independent use, and were used for one procedure. Florida ruled that the entire system was exempt as prescribed medical devices used to treat disease and temporarily or permanently incorporated into a patient by a licensed practitioner.

What this means for you

An integrated procedure system can be classified as a whole when its components are interdependent, sold together, and have no standalone market or function. Prescription status and patient incorporation supported the exemption.

Common questions

Was only the implanted clip exempt? No. The entire catheter-and-delivery system was exempt.

Why did the delivery components qualify? They were essential, interdependent, single-procedure devices with no independent use.

Was the system prescription-only? Yes.

Citations and references

• Fla. Stat. §§ 212.05, 212.055, and 212.08(2) and Fla. Admin. Code r. 12A-1.020(6), as quoted or discussed in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 10A-036

Original ruling text

SUMMARY
QUESTION: Is the sale of a System, which consists of a Steerable Guide Catheter and a
Clip Delivery System, specifically exempt from sales tax under the provisions of Section
212.08(2), F.S., and Rule 12A-1.020(6), F.A.C., as prescribed medical devices used in
the treatment of injury, disease, or incapacity of a patient that are temporarily or
permanently incorporated into a patient by a licensed medical practitioner?
ANSWER: Taxpayer’s sales of the entire System, which consists of a Steerable Guide
Catheter and a Clip Delivery System, are specifically exempt from sales tax under the
provisions of Section 212.08(2), F.S., and Rule 12A-1.020(6), F.A.C., as prescribed
medical devices used in the treatment of injury, disease, or incapacity of a patient that are
temporarily or permanently incorporated into a patient by a licensed medical practitioner.

August 4, 2010
XXX
XXX
XXX
Re:

Technical Assistance Advisement 10A-036
Florida Sales and Use Tax
Medical Products and Supplies
Sections 212.05, 212.055, 212.08(2), Florida Statute (F.S.)
Rule 12A-1.020, Florida Administrative Code (F.A.C.)
Petitioner: XXX (“Taxpayer”)

Dear XXX:
This letter is a response to your petition dated July 7, 2010, for the Department's issuance
of a Technical Assistance Advisement ("TAA") concerning the above referenced
petitioner and matter. Your petition has been carefully examined and the Department
finds it to be in compliance with the requisite criteria set forth in Chapter 12-11, F.A.C.
This response to your request constitutes a TAA and is issued to you under the authority
of Section (s.) 213.22, F.S.
FACTS
Taxpayer is engaged in the manufacture and sale of medical devices, including the
design, development, and manufacture of a medical device known as a XXX (“System”).
The System enables the repair of the mitral valve in the treatment of patients suffering
from the effects of functional and degenerative Mitral Regurgitation (MR). MR is the
most common type of heart valve disease in the U.S. and around the world, affecting
millions of people. Many high risk surgical patients and non-surgical patients continue to

be affected by the chronic volume overload caused by MR, which requires the heart to
work harder, and may ultimately lead to heart failure.
Using the System, the mitral valve is repaired without open heart surgery. Because the
less invasive procedure does not require an open chest incision or the use of a heart-lung
machine, patients may avoid the complications long associated with surgery.
The System consists of a Steerable Guide Catheter and a Clip Delivery System, which
includes the device. The System is sold by prescription only, on a price per procedure
basis for a single charge. The procedure fee includes the System, containing two
interdependent components: the Steerable Guide Catheter and the Clip Delivery System,
both of which are used for one procedure only (multiple devices may be utilized on a
single procedure where warranted). The Clip Delivery System and the Steerable Guide
Catheter are a device set that are essential to implanting the device and have no
independent use. As such, neither the Clip Delivery System nor the Steerable Guide
Catheter exists in the marketplace.
REQUESTED ADVISEMENTS
Is the entire sale of the System referenced above and cited in Taxpayer’s letter dated July
7, 2010, exempt from Florida sales and use tax?
ANALYSIS and DISCUSSION
Unless a specific exemption applies, Section 212.05, F.S., provides it is the legislative
intent that every person is exercising a taxable privilege that engages in the business of
selling tangible personal property at retail in this state. For exercising such a privilege, a
tax is levied on each taxable transaction or incident. The tax is due and payable at the
rate of 6 percent, plus any applicable surtaxes imposed under Section 212.055, F.S., on
the total consideration received for each item or article of tangible personal property
when sold at retail in this state.
Subsections 212.08(2)(a) and (b), F.S., provide that the sales of certain medical products
and supplies and certain prosthetic and orthopedic appliances are specifically exempt
from sales tax. The items are exempt if specifically identified by the referenced statute
and, if not identified, exempt if included on Form DR-46NT, Nontaxable Medical and
General Grocery List, as approved by the Department of Health. Such items will also be
exempt when sold pursuant to a written prescription from a qualifying medical
practitioner.
Rule 12A-1.020(6), F.A.C., concerning medical products provides, in part, as follows:
(a) “Medical products, supplies, or devices” are any products, supplies, or
devices that are intended or designed to be used for a medical purpose to
treat, prevent, or diagnose human disease, illness, or injury. The purpose is

assigned to a product, supply, or device by its label or its general
instructions for use.

(c)1. Medical products, supplies, or devices sold to hospitals, healthcare
entities, or licensed practitioners are exempt when:
a. The medical product, supply, or device must be dispensed under federal
or state law only by the prescription or order of a licensed practitioner; and
b. The medical product, supply, or device is intended for use on a single
patient and is not intended to be reusable.

(d)1. Medical products, supplies, and devices used in the cure, mitigation,
alleviation, prevention, or treatment of injury, disease, or incapacity of a
patient(s) that are temporarily or permanently incorporated into a
patient(s) by a licensed practitioner are exempt.

Medical products, supplies, and devices are defined as items that are intended or designed
to be used for a medical purpose to treat, prevent, or diagnose human disease, illness, or
injury. Sales of these items are specifically exempt from sales tax under the provisions of
Subsection 212.08(2), F.S., when sold pursuant to a written prescription from a
qualifying medical practitioner.
CONCLUDING STATEMENT
Taxpayer’s sales of the entire System are specifically exempt from sales tax under the
provisions of Subsection 212.08(2), F.S., and Rule 12A-1.020(6), F.A.C., as prescribed
medical devices used in the treatment of injury, disease, or incapacity of a patient that are
temporarily or permanently incorporated into a patient by a licensed medical practitioner.
This response constitutes a Technical Assistance Advisement under Section 213.22, F.S.,
which is binding on the Department only under the facts and circumstances described in
the request for this advice, as specified in Section 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., and are subject to disclosure to the public
under the conditions of Section 213.22, F.S. Confidential information must be deleted

before public disclosure. In an effort to protect confidentiality, we request you provide
the undersigned with an edited copy of your request for Technical Assistance
Advisement, the backup material, and this response, deleting names, addresses, and any
other details which might lead to identification of the taxpayer. Your response should be
received by the Department within 10 days of the date of this letter.
If you have any further questions with regard to this matter and wish to discuss them, you
may contact me directly at 850-488-8026.
Kind Regards,

Alan R. Fulton
Tax Law Specialist
Technical Assistance & Dispute Resolution
ARF\pb
Record ID:

86036