Was a prescription-only, single-use permanent urological implant system sold to hospitals and medical facilities exempt from Florida sales tax?

Plain-English summary

The Florida Department of Revenue concluded that sales of this prescription-only urological implant system to hospitals and medical facilities were exempt from sales tax.

The system treated urinary obstruction associated with benign prostatic hyperplasia. It combined a permanent transprostatic implant with sterile, single-use housing that was inoperable after one use. Its label restricted sale to a physician's prescription or order.

Those facts satisfied the rule for a medical device that must be dispensed by a licensed practitioner's prescription or order, is intended for one patient, and is not reusable. The seller did not need an exemption certificate or annual resale certificate, but had to retain records showing the prescription-only labeling. The separately sold urethroscope was outside the requested advisement.

What this means for you

Medical-device manufacturers and sellers

Preserve product labels and instructions showing the medical purpose, prescription-only restriction, single-patient use, and nonreusable design.

Hospitals and medical facilities

The ruling treated the described implant-and-housing system as exempt without requiring an exemption certificate from the purchaser.

Accountants and tax professionals

Do not extend the answer to separately sold equipment. The taxpayer expressly did not request a ruling on the urethroscope.

Common questions

Q: Were sales of the implant system to hospitals taxable?
A: No.

Q: Was an exemption certificate required?
A: No, but the seller had to keep evidence that the device was labeled for dispensing only by a licensed practitioner's prescription or order.

Q: Did the ruling decide the taxability of the urethroscope?
A: No.

Citations and references

• Fla. Stat. §§ 212.02, 212.05, 212.08(2)(a), 212.21, and 213.22
• Fla. Admin. Code r. 12A-1.020(6)(a), (6)(c)1., and (6)(c)3.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 15A-010

Original ruling text

Executive
Director
Marshall Stranburg

QUESTION: IS THE SALE OF AN XXXXX SYSTEM WHICH IS DISPENSED ONLY BY
A VALID PRESCRIPTION AND IS FOR SINGLE-USE ONLY SUBJECT TO FLORIDA’S
SALES TAX?
ANSWER: THE SALE OF THE XXXXX SYSTEM IS EXEMPT FROM FLORIDA’S SALES
TAX UNDER S. 212.08(2)(A), F.S., AND RULE 12A-1.020(6)(C)1., F.A.C.
September 14, 2015
Re:

Technical Assistance Advisement 15A-010
Florida Sales and Use Tax
Medical – XXXXX
Sections: 212.02, 212.05, 212.08, and 212.21, Florida Statutes (F.S.)
Rule: 12A-1.020, Florida Administrative Code (F.A.C.)
Petitioner: XXXXX (“Taxpayer”)
BP#: XXXXX

Dear XXXXX:
This letter is a response to your petition dated XXXXX, 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 213.22, F.S.
Facts
Taxpayer is a C Corporation headquartered in California. Taxpayer is registered to collect and
remit Florida sales and use tax. Taxpayer is in the business of manufacturing and selling
urological devices.
Taxpayer seeks advice on the taxability of sales of its XXXXX (“System”) to hospital or
medical facilities. System is designed to be permanently incorporated in the male urinary tract
for patients with Benign Prostatic Hyperplasia (“BPH”).1
1

According to http://www.merriam-webster.com, BPH is an enlargement of the prostate gland caused by a benign
overgrowth of chiefly glandular tissue that occurs especially in some men over 50 years old and that tends to
obstruct urination by constricting the urethra.
Child Support – Ann Coffin, Director  General Tax Administration – Maria Johnson, Director
Property Tax Oversight – Dr. Maurice Gogarty, Director  Information Services – Damu Kuttikrishnan, Director

http://dor.myflorida.com/dor/
Florida Department of Revenue
Tallahassee, Florida 32399-0100

Technical Assistance Advisement
Page 2 of 4

Taxpayer’s website describes System’s function as “a minimally invasive approach to treating
BPH that lifts or holds the enlarged prostate tissue out of the way so it no longer blocks the
urethra.”
The XXXXX System is indicated for the treatment of symptoms due to urinary outflow
obstruction secondary to benign prostatic hyperplasia (BPH) in men 50 years of age or older.
In your letter, you provide that System provides permanent adjustable transprostatic implants
which are placed by a health care provider during a cystourethroscopy.2 Each permanent
adjustable transprostatic implant is sold to hospital or medical facilities in its own sterile,
individual housing, which is designed to couple to a urethroscope. The housing is single use; it
is not reloadable or reusable.
The handling tool includes a handle for positioning the implant and coupling to the urethroscope,
a retractable needle for puncturing the capsule of the prostate gland, and a tensioning spring
within the handle for allowing adjustment of the implant during placement.
The transprostatic implant is a permanent implant made up of standard surgical implantable
materials: a nitinol capsular tab, a stainless steel urethral tab, and polyester suture that connects
the two tabs.
Together, the permanent adjustable transprostatic implant and its housing form System. The
implant and its housing are sold together as an indivisible unit. The urethroscope is sold
separately, and it is not included in System. Taxpayer only seeks advisement of the taxability of
system, and does not seek advisement on the taxability of the urethroscope.
The following was provided under XXXXX”:
Tray Contents:
 1 XXXXX
 1 XXXXX
RX ONLY.
Caution: Federal Law restricts this device to sale by or on the order of a physician.
STERILE. The XXXXX System has been sterilized using gamma sterilization. For single-use
only and must not be resterilized. The XXXXX System is inoperable after single use.
INDICATIONS FOR USE
The XXXXX System is indicated for the treatment of symptoms due to urinary outflow
obstruction secondary to benign prostatic hyperplasia (BPH) in men 50 years or older.
2

According to http://www.medicalhealthtests.com, a cystourethroscopy or cystoscopy is a procedure that is used to
examine the insides of the urethra and bladder.

Technical Assistance Advisement
Page 3 of 4

Requested Advisement
Are Taxpayer’s sales of Systems to hospital and medical facilities subject to Florida sales tax?
Taxpayer’s Position
Taxpayer believes that the sale of System is exempt from Florida sales tax under the provision of
s. 212.08(2)(a), F.S.
Applicable Law and Discussion
Unless a specific exemption applies, s. 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.
Section 212.08(2)(a), F.S., provides that any medical products and supplies or medicine
dispensed according to an individual prescription or prescriptions written by a prescriber
authorized by law to prescribe are exempt from Florida sales tax.
Rule 12A-1.020(6)(a), F.A.C., defines medical products, supplies, or devices as those intended or
designed to be used for a medical purpose to treat, prevent, or diagnose human illness or injury.
The purpose is assigned to a product, supply, or device by its label or its general instructions for
use.
Rule 12A-1.020(6)(c)1., F.A.C., provides that 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.
Rule 12A-1.020(6)(c)3., F.A.C., provides that 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. Selling dealers, however, are required to maintain documents in their
records reflecting that the medical product, supply, or device sold to a hospital, healthcare entity,
or licensed practitioner was labeled to be dispensed only by the prescription or order of a
licensed practitioner.

Technical Assistance Advisement
Page 4 of 4

Response
Taxpayer’s sales of Systems to hospital and medical facilities are not subject to Florida sales tax.
Systems meet the definition of medical products, supplies, or devices, as Systems are products
used to treat, or diagnose, human illness (BPH). The documentation provided reflects that
System must be dispensed under federal or state law only by the prescription or order of a
licensed practitioner, and System is intended for use on a single patient and is not intended to be
reusable. Therefore, Taxpayer’s sales of Systems are specifically exempt from Florida sales tax,
and Taxpayer is not required to obtain an exemption certificate or annual resale certificate at the
time of the sale to document the exempt nature of the sale. Please note, however, Taxpayer is
required to maintain in its books and records evidence that System which is sold to a hospital,
healthcare entity, or licensed practitioner is labeled to be dispensed only by the prescription or
order of a licensed practitioner.
Closing Statement
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: 202227