Was a single-patient bone-marrow needle labeled for use only by or on a physician's order exempt from Florida sales tax?

Plain-English summary

The taxpayer sold a needle used with a syringe to aspirate a patient's bone marrow during surgery. Its label stated that it was for a single patient and limited by federal law to use by or on the order of a physician.

Florida ruled that the needle was exempt from sales tax. The medical-device rule exempted products sold to healthcare providers when federal or state law required dispensing by a licensed practitioner's prescription or order and the product was intended for one patient, not reuse.

The result applied both before and after July 12, 2010. The ruling also explained that sellers did not need an exemption certificate for a qualifying labeled product, but they had to retain records showing the required label.

What this means for you

For this medical-device exemption, the product's label and intended single-patient use are central evidence. A general medical purpose alone does not establish the exemption.

Common questions

Why was the needle exempt? It was nonreusable, intended for one patient, and bore the federally required prescription-order legend.

Did the July 12, 2010 date change the result? No. The needle was exempt on both sides of that date.

Was a purchaser's exemption certificate required? No, but the seller had to retain evidence of the qualifying label.

Citations and references

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

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 11A-008

Original ruling text

SUMMARY
QUESTION: Whether the sale of a needle would be exempt from Florida sales tax when
the needle bears the following label: “For single patient use only. . . . RX USE ONLY –
Limited by Federal Law to use by or on the order of a physician.”
ANSWER: The sale of a needle which bears the following label: “For single patient use
only. . . . RX USE ONLY – Limited by Federal Law to use by or on the order of a
physician,” would be exempt from Florida sales tax.
April 15, 2011
XXX
Re:

Technical Assistance Advisement 11A-008
Florida Sales and Use Tax
Sales and Use Tax - Medical Products
Section: 212.08, Florida Statute (F.S.)
Rule: 12A-1.020, Florida Administrative Code (F.A.C.)
Petitioner: XXX (“Taxpayer”)
FEI#: XXX
Sales and Use Tax Number: XXX
Business Partner Number: XXX

Dear XXX:
This letter is a response to your petition dated February 11, 2011, 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 1211, 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 manufactures and sells orthobiologic products (products for the fusion,
regeneration, and fixation of human bone) and biosurgery products (products that
incorporate advanced biosurgical materials to help control bleeding during surgeries).
Taxpayer’s two product platforms are XXX (“A”) and XXX (“B”). The A product
platform is a family of synthetic bone graft substitutes. The B product platform is a
family of disposable products (i.e., nonreusable instruments) designed to harvest a
patient’s bone marrow in order to add an osteogenic (or bone producing) and
ostenoinductive (or bone formation stimulation) component to an A synthetic bone graft
substitute, as well as to assist in the delivery of an A synthetic bone graft substitute to a
surgical site where bone grafting is needed (i.e., a bone fracture that is complex, poses a

Technical Assistance Advisement
Page 2
significant health risk, or fails to heal properly). Included within the B product platform
is the B needle and syringe. The B needle and syringe are used in combination with one
another to aspirate bone marrow – a surgical procedure by which a patient’s bone marrow
is obtained by application of suction through, in this case, a B needle attached to a B
syringe.
The B needle is called an XXX (“IBMA”) needle. The label affixed to the B needle is
printed with the following language: “For single patient use only. . . . RX USE ONLY –
Limited by Federal Law to use by or on the order of a physician.”
REQUESTED ADVISEMENT
Taxpayer is seeking guidance on whether the sale of a B needle would be exempt from
Florida sales tax when the needle bears the following label: “For single patient use only
. . . . RX USE ONLY – Limited by Federal Law to use by or on the order of a physician”,
both before and after July 12, 2010.
APPLICABLE LAW AND DISCUSSION
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(6), F.A.C., provides in pertinent part:
(6) MEDICAL PRODUCTS, SUPPLIES, OR DEVICES.
(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.
(b) Unless specifically exempt, products, supplies, or devices sold to hospitals and
healthcare entities or to licensed practitioners are subject to tax. . . .
(c)1. Medical products, supplies, or devices sold to hospitals, healthcare entities,
or licensed practitioners are exempt when:

Technical Assistance Advisement
Page 3
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.

2. Medical trays and surgical or procedure kits containing medical products,
   supplies, or devices that are labeled to be dispensed only by the prescription or
   order of a licensed practitioner and are intended for use on a single patient are
   exempt, even when the medical tray or kit contains one or more items that, when
   sold separately, would be subject to tax.
3. No exemption certificate or Annual Resale Certificate is required to be
   obtained by the selling dealer from the purchasing hospital, healthcare entity, or
   licensed practitioner to document exempt sales of medical products, supplies, or
   devices that are labeled to be dispensed only by the prescription or order of a
   licensed practitioner. However, selling dealers are required to maintain documents
   in their records evidencing that the medical product, supply, or device sold to a
   hospital, healthcare entity, or licensed practitioner is labeled to be dispensed only
   by the prescription or order of a licensed practitioner. . . .
   (d)4. No exemption certificate or Annual Resale Certificate is required to make
   purchases of medical products, supplies, or devices exempt from tax when:
   a. The item is listed as an item exempt from tax in Form DR-46NT, Nontaxable
   Medical Items and General Grocery List; or,
   b. The label of the medical product, supply, or device indicates that it must be
   dispensed under federal or state law by the prescription or order of a licensed
   practitioner and that it is intended for use on a single patient. . . .
   Rule 12A-1.020(6), F.A.C., provides that the sales of medical products, supplies, or
   devices to hospitals, healthcare entities, or licensed practitioners are exempt when: 1)
   dispensed under federal or state law only by the prescription or order of a licensed
   practitioner; and 2) intended for use on a single patient and not intended to be reusable.
   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.”

Technical Assistance Advisement
Page 4
In this case, the IBMA needle is a one time use medical product required under federal
law to bear a prescription legend that reads “RX Use only- Limited by Federal Law to use
by or on the order of a physician.” Therefore, the IBMA needle is exempt from sales tax
both before and after July 12, 2010.
This response constitutes a Technical Assistance Advisement under S. 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 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., and are subject to disclosure to the public
under the conditions of S. 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 850-717-6363.
Sincerely,

Leigh L. Ceci
Tax Law Specialist
Technical Assistance & Dispute Resolution
Record ID: 97952