Was a wholesaler's sale of prescription-only TENS units and supplies to physicians exempt from Florida sales tax?

Subject

Medical Product/Nerve Stimulator

Plain-English summary

A wholesaler's sale of TENS units and supplies to a physician was taxable unless the physician was registered as a Florida sales-tax dealer and gave the wholesaler a properly executed resale certificate at the time of purchase. The physician was buying inventory for resale, not making a purchase under the patient's prescription.

The later sale to the patient was a separate transaction. A patient buying the unit under a prescription from a licensed practitioner received the medical-product exemption described in the ruling.

What this means for you

The Department analyzed each step independently. A prescription governing the physician's resale to the patient did not automatically exempt the wholesaler's earlier sale to the physician.

Common questions

Q: Were all prescription-only TENS units exempt throughout the supply chain? No. The wholesaler-to-physician sale needed a proper resale certificate to avoid tax.

Q: Was the patient's prescribed purchase exempt? Yes, under the facts and medical-product rule described in the ruling.

Q: What did the physician need for the resale purchase? Dealer registration and a properly executed resale certificate delivered to the wholesaler at the time of sale.

Citations and references

• Fla. Stat. §§ 212.05(1)(a)1.a., 212.08(2)(a), 212.18(3) — retail sales, medical exemptions, and registration
• Fla. Admin. Code rr. 12A-1.020(6), 12A-1.038(1) — medical products and resale certificates
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93A-016

Original ruling text

Title:

Medical Product/Nerve Stimulator

Mar 24, 1993

RE: TAA 93A-016
Medical Product - TENS Unit
Sections 212.05(1)(a)1.a., 212.08(2)(a), 212.18(3), F.S.
Rules 12A-1.020(6)(a),(b), 12A-1.038(1), F.A.C.

Dear :

This is in response to your letter of December 30, 1992, in
which you requested the issuance of a technical assistance
advisement on the taxability of TENS Units and supplies on
behalf of your client, XXXX [hereinafter "Taxpayer].

Your letter provides in part:

"[Taxpayer] is a wholesale company which sells an item
called a Transcontaneous Electric Nerve Stimulator Unit (TENS
Unit) and supplies for the use of said unit. This unit is
considered a restricted device, and the sale and use of the
device is regulated by the Food and Drug Administration (FDA)
under a 510K authorization for sale. This simply means that the
TENS units can only be sold by way of a prescription, or to a
vendor which will then sell the item by way of a prescription.

"In the past, sales of the TENS Units have been made to
insurance compan[ies], physicians which in turn prescribe them
to their patients, and to patients of physicians which have a
prescription for the item. In other words, the TENS Units are
only sold under a prescription as required by the FDA.

"The question which has been raised, and we are requesting
an 'Advisement' on, is whether the sale of the TENS Units, and
supplies for the Units, should be taxable under state sales tax
laws when sold to the physicians. Under the sales and use tax
law section 12A-1.020, paragraph 6(a)(2), it states that items

'Ordered and dispensed by or on the authority of the
prescription of a duly licensed practitioner authorized by the
laws of the state to prescribe medicinal drugs' are exempt from
taxation.

"Under paragraph 6(a)(2) it states simply that if the item
is ordered and dispensed by a prescription that the item will be
exempt from sales tax. This paragraph relates to my client in
the sense that they sell the TENS Units to the physician, which
has prescribed the item for his/her patient, and then sells the
item to that patient. Under this scenario the TENS unithas been
sold to a physician by way of a prescription, and the physician
in turn has resold the item to the patient based on the same
prescription. Therefore, the entire transaction, from inception
to conclusion, would be a non-taxable sale.

"In closing, we are requesting a letter from the Department
giving us a determination as to whether our conclusion
concerning the sales of TENS Units, and supplies for the Units,
to the physicians are considered to be non-taxable. In
addition, we would like any information possible as to why or
how the conclusion was reached regardless of the outcome."

APPLICABLE AUTHORITY

Section 212.05(1)(a)1.a., F.S., provides in part:

"212.05 Sales, storage, use tax.--It is hereby declared to
be the legislative intent that every person is exercising a
taxable privilege who engages in the business of selling
tangible personal property in this state....
"(1) For the exercise of such privilege, a tax is levied on
each taxable transaction or incident, which tax is due and
payable as follows:
"(a)1.a. At the rate of 6 percent of the sales price of
each item or article of tangible personal property when
sold at retail in this state, computed on each taxable sale
for the purpose of remitting the amount of tax due the
state, and including each and every retail sale."

Section 212.18(3), F.S., provides in part;

"Every person desiring to engage in or conduct business in
this state as a dealer, as defined in this chapter, or to
lease, rent, or let or grant licenses in living quarters or
sleeping or housekeeping accommodations in hotels,
apartment houses, roominghouses, tourist or trailer camps,
or real property, as defined in this chapter, and every
person who sells or receives anything of value by way of
admissions, shall file with the department an application
for a certificate of registration for each place of
business, showing the names of the persons who have
interests in such business and their residences, the
address of the business, and such other data as the
department may reasonably require. The application shall
be made to the department before the person, firm,
copartnership, or corporation may engage in such business,
and it shall be accompanied by a registration fee of $5."

Rule 12A-1.038(1), F.A.C., provides:

"(1) It is the specific legislative intent that each and
every sale, admission, use, storage, consumption or rental
is taxable under Chapter 212, F.S., unless such sale,
admission, use, storage, consumption or rental is
specifically exempt. The exempt status of the transaction
must be established by the dealer. Unless the dealer shall
have taken from the purchaser a certificate to the effect
that the property or service was purchased for resale and
bearing the name and address of the purchaser, the
effective date of the certificate and the number of his
dealer's certificate of registration, or a certificate
bearing the number of his consumer's exemption certificate,
and the effective date of the certificate, the sale shall
be deemed to be a taxable sale at retail, except sales of
alcoholic beverages by distributors, licensed by the
Division of Alcoholic Beverage and Tobacco, Department of
Business Regulation...."

Section 212.08(2)(a), F.S., provides in part:

"(2) EXEMPTIONS; MEDICAL.-

"(a) There shall be exempt from the tax imposed by this
chapter any product, supply, or medicine dispensed in a
retail establishment by a pharmacist licensed by the state,
according to an individual prescription or prescriptions
written by a prescriber authorized by law to prescribe
medicinal drugs; hypodermic needles; hypodermic syringes;
chemical compounds and test kits used for the diagnosis or
treatment of human disease, illness, or injury; and common
household remedies recommended and generally sold for
internal or external use in the cure, mitigation,
treatment, or prevention of illness or disease in human
beings, but not including cosmetics or toilet articles,
notwithstanding the presence of medicinal ingredients
therein, according to a list prescribed and approved by the
Department of Health and Rehabilitative Services, which
list shall be certified to the Department of Revenue from
time to time and included in the rules promulgated by the
Department of Revenue. There shall also be exempt from the
tax imposed by this chapter artificial eyes and limbs;
orthopedic shoes; prescription eyeglasses and items
incidental thereto or which become a part thereof;
dentures; hearing aids; crutches; prosthetic and orthopedic
appliances; and funerals...."

Rule 12A-1.020(6)(a) and (b), F.A.C., provides:

"(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."

DEPARTMENT RESPONSE

The sale of TENS Units and supplies is subject to tax as a
sale of medical products and supplies used in connection with
medical treatment as seen in Rule 12A-1.020(6)(b), F.A.C.

An exemption from tax is provided for the purchase of these
items when the patient purchases them pursuant to a prescription
written by a duly licensed practitioner of the healing arts
licensed by the state of Florida.

However, the transaction which preceded the sale to the
patient, the one in which the TENS Unit was sold to the
physician by Taxpayer is subject to tax unless the physician is
registered as a sales tax dealer with the department prior to
purchasing the Unit and extends a properly executed resale
certificate to Taxpayer at the time of sale as outlined in Rule
12A-1.038(1), F.A.C., quoted above. In this case, the physician
is purchasing the Unit for resale and not as a result of a
prescription.

For sales and use tax purposes, each transaction is viewed
independently and is subject to tax unless specifically exempt
or exempted as a result of the use of a resale or exemption
certificate extended by the purchaser to the selling dealer at
the time of sale.

As indicated above, the sale of TENS Units and supplies to
a physician is subject to tax in the absence of the use of a
resale certificate on the part of the physician.

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 and your request
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 notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or the response.

Sincerely,

Richard S. Harrod
Technical Assistant

RSH/pb
Con. #6253