Was a hospital's rental of an automated instrument that analyzed blood and urine exempt from Florida sales tax as a test kit or blood analyzer?

Plain-English summary

Florida found no medical sales-tax exemption for a hospital's rental of an automated laboratory immunoassay instrument.

The countertop system used chemiluminescent detection and automated sample processing to analyze clinical specimens. It could process blood and urine and was marketed as an instrument for mid-volume laboratories.

The statute exempts chemical compounds and test kits used to diagnose or treat human disease, illness, or injury. The Department concluded that this system was an instrument rather than a test kit. It also declined to classify the system as an exempt blood analyzer because it did not strictly analyze blood.

What this means for you

Hospitals and laboratories

Medical use alone does not establish the exemption. The rented product must fit the exempt statutory and regulatory category.

Equipment vendors

The Department narrowly distinguished a large automated laboratory instrument from the test kits and blood analyzers listed in the rule.

Common questions

Was the system used for diagnostic testing? Yes, but that alone did not make the rental exempt.

Why was it not a test kit? The Department characterized it as an automated laboratory instrument rather than a collection of test-kit items.

Why was it not treated as an exempt blood analyzer? It analyzed urine as well as blood.

Citations and references

• Fla. Stat. Sec. 212.08(2)(a)
• Fla. Admin. Code R. 12A-1.020(7)(a)5.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 20A-019

Original ruling text

Florida Department of Revenue
Technical Assistance and Dispute Resolution
5050 West Tennessee Street Tallahassee FL 32399

Jim Zingale
Executive Director

floridarevenue.com

QUESTION: Is Taxpayer’s rental of System subject to Florida Sales and Use Tax?
ANSWER: There is no specific exemption for System. Therefore, Taxpayer’s rental of System
would be subject to Florida Sales and Use Tax.

December 4, 2020
XXX XXXXX XXXXXX
XX XXXX XXXXXXXXXXX XXX
XX XXX XXXXX XXXXXX XXXX
XXXXX XXX
XXXXX XX XXXXX
Subject: Technical Assistance Advisement 20A-019
STATUTE CITE(S): Section 212.08, Florida Statutes (F.S.)
RULE CITE: Rule 12A-1.020, Florida Administrative Code (F.A.C.)
XXXXXXX ("Taxpayer")
FEIN: XXXXXXX
BP#: XXXXXXX
Dear XX XXXXXX:
This is in response to your letter dated July 25, 2019, requesting this Department’s issuance of a
Technical Assistance Advisement (“TAA”) pursuant to section 213.22, F.S., and Rule Chapter 1211, F.A.C., concerning the taxability of Taxpayer’s rental of an XXXXXXX (“System”). An
examination of your letter has established you have complied with the statutory and regulatory
requirements for issuance of a TAA. Therefore, the Department is hereby granting your request
for a TAA.
Facts
In your letter you state that the Taxpayer is a XXX-XXX XXXXX XXXXXXXXX accredited hospital
operating in XXXXXXX XXXXX XXXXXXX. Your letter states that the System is used to analyze
blood. In an email, dated August 22, 2019, you corrected this assertion by stating that the
System analyzes both blood and urine.
According to the invoice you provided, Taxpayer is renting the System from XXXXXXX (“Lessor”),
and Lessor is charging the Taxpayer Florida Sales Tax on the rental of the System each month.

XXXXX XXXXXX
December 4, 2020
Florida Department of Revenue
Page 2

You also provided that the System is defined as:
A mains electricity (AC-powered) laboratory instrument intended to be used for the
qualitative and/or quantitative in vitro determination of chemical and/or biological
markers (e.g., drug, hormone, microbial toxin) in a clinical specimen, using an
immunological method that utilizes a chemiluminescent detection system together with
sample processing, data processing and/or data display software. The device operates
with minimal technician involvement and complete automation of all procedural steps.
Marketing material you provided shows photographs of the System as a countertop piece of
equipment. It is much larger than a computer desktop sitting next to it (if a computer screen is
approximately 18 inches across, the System appears to be three times longer). The System
appears in another photograph with two male technicians. The System sits on a countertop
and appears to be about the same height as the distance between the technicians’ waists and
shoulders. Another shows the System with one male technician standing in front of the system.
This photograph appears to show the System is comparable in height to that distance between
the technician’s waist and eyes.
The marketing material also provides that the System can perform “up to 180 tests/hour
throughput” and “400-test walkaway capacity” among other features that will increase the
productivity and operational efficiencies of the customer.
The Department has learned the following:
•

The U.S. Food and Drug Administration regulates things such as the test kits and devices
at issue here under the Federal Food, Drug, and Cosmetic Act.

•

The System can be found at the FDA’s website at:
XXXXXXX

•

By way of comparison, an exempt item listed in the Rule at issue (A Thyroid Stimulating
Hormone (TSH) test kit) can be found at the FDA’s website at:
https://accessgudid.nlm.nih.gov/devices/20816467020086

•

XXXXXXX XXXXX XXXX System as “an immunoassay test instrument for mid-volume
labs.” This website indicates that System’s sample types are “serum, plasma, and
urine.” [emphasis added]

XXXXX XXXXXX
December 4, 2020
Florida Department of Revenue
Page 3

Requested Advisement
Is the Taxpayer’s rental of the System, as described above, subject to Florida sales and use tax?
Statute and Rule
Section 212.08, F.S., provides, in pertinent part:
The sale at retail, the rental, the use, the consumption, the distribution, and the storage
to be used or consumed in this state of the following are hereby specifically exempt from
the tax imposed by this chapter.

(2) EXEMPTIONS; MEDICAL(a) …. chemical compounds and test kits used for the diagnosis or treatment of human
disease, illness or injury…
Emphasis added
Rule 12A-1.020(7), F.A.C., states, in pertinent part:
(a) The sale of chemical compounds and test kits used for the diagnosis or treatment of
human disease, illness, or injury is exempt. The following is a nonexhaustive list of
chemical compounds and test kits that are not subject to tax:

5. Blood analyzers, blood collection tubes, lancets, capillaries, test strips, tubes
   containing chemical compounds, and test kits to test human blood for levels of albumin,
   cholesterol, HDL, LDL, triglycerides, glucose, ketones, or other detectors of illness, disease
   or injury; …

Emphasis added.

XXXXX XXXXXX
December 4, 2020
Florida Department of Revenue
Page 4

Discussion
The rules of statutory construction are inapplicable here because Section 212.08(2)(a), F.S., is
clear and unambiguous; however, it should be pointed-out that Florida courts have consistently
held that exemptions must not be expanded beyond their express terms and must be strictly
and narrowly construed against the taxpayer. State Department of Revenue v. Anderson, 403
So.2d 397, 399 (Fla. 1981); Green v. Pederson, 99 So.2d 292, 296 (Fla. 1957); Asphalt Pavers,
Inc. v. Department of Revenue, 584 So.2d 55, 57 (Fla. 1st DCA 1991).
Section 212.08(2)(a), F.S., provides an exemption for test kits. Under an analysis of plain and
ordinary language or referring to such sources as the FDA website, the System is not a test kit.
Merriam-Webster’s dictionary defines “kit” as follows: “1a(1) : a collection of articles usually
for personal use …” https://www.merriam-webster.com/dictionary/kit This should conclude
our analysis of the question of whether or not the System is exempt from Florida Sales and Use
Tax.
Assuming there was any ambiguity in the term “test kits,” it would have to be interpreted
narrowly and as an exception in light of the other exemptions it is listed with – none of which
include the kind of immunoassay system like the System described here. Rule 12A1.020(7)(a)5., F.A.C., provides a specific exemption from Florida Sales and Use Tax on the sale
or rental of “blood analyzers.”

1. Although Rule 12A-1.020(7)(a)5., F.A.C., uses the term “blood analyzer,” that term must
   be read in the context of the entire rule (which provides that test kits are exempt from
   Florida Sales and Use Tax) and carries out the intent of the Legislature in Section
   212.08(2)(a), F.S. (that only test kits are exempt from Florida Sales and Use Tax).
2. The Department does not view the System as described to be a “blood analyzer” that
   would be exempt from Florida Sales and Use Tax because the System, while it may
   analyze blood, does not fall into the larger and qualifying category of a test kit.
3. The System is a laboratory instrument that analyzes more than blood. It also analyzes
   urine. Therefore, the System would not be a blood analyzer, as it does not strictly
   analyze blood.
   Conclusion
   Taxpayer’s rental of the System is not exempt from Florida Sales and Use Tax.
   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

XXXXX XXXXXX
December 4, 2020
Florida Department of Revenue
Page 5

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 that
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 15 days of the date of this letter.
Sincerely,

Leigh L. Ceci
Leigh L. Ceci
Tax Law Specialist
Technical Assistance and Dispute Resolution
Record ID: XXXXXXXXX
cc: XXXXXX
XXXXXXX
XXXXXXX