Were a medical group's listed diagnostic slides, reagents, test kits, and blood-collection system exempt from Florida sales tax?

Subject

Medical Chemical Compounds and Test Kits

Plain-English summary

All diagnostic slides and reagents listed as items A-1 through A-9 were exempt from Florida sales tax. The Department treated them as chemical compounds and test kits used to diagnose or treat human disease, illness, or injury.

The Vacutainer system was also exempt. It consisted of a sterile single-use needle, glass collection tube, and holder used to collect blood specimens for diagnostic analysis, fitting the rule for hypodermic needles, syringes, tubing, and parts.

What this means for you

The ruling covered the submitted medical group's identified products and diagnostic uses. The statutory exemption was not limited to the examples named in the rule, which said exempt chemical compounds and test kits included but were not limited to its list.

Common questions

Q: Which laboratory categories were approved? The list covered serum-analyte slides and reagents for microbiology, blood-protein disorders, cancer markers, urine abnormalities, diabetes, immunological status, hematology, and detection of blood in feces or gastric contents.

Q: Was the complete Vacutainer system exempt? Yes, on the described composition and diagnostic blood-collection use.

Q: Did the ruling approve every control or calibrator? No. The request said questionable instrument-associated controls and calibrators were conservatively excluded from the claimed refund list.

Citations and references

• Fla. Stat. § 212.08(2)(a) — medical-product exemptions
• Fla. Admin. Code r. 12A-1.020(7), (8) — diagnostic compounds, test kits, and hypodermic items
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93A-018

Original ruling text

Mar 29, 1993

RE: TAA 93A-018
Medical Chemical Compounds and Test Kits
Section 212.08(2)(a), F.S.
Rule 12A-1.020(7) and (8), F.A.C.

Dear :

This is in response to your letter of February 23, 1993, in
which you requested the issuance of a technical assistance
advisement for XXX (hereinafter "Company") concerning the
taxable or exempt status of the list of chemical compounds and
test kits and certain other products you furnished with your
letter.

Your letter provides in part:

"Statement of Facts

"[Company] is a Florida general partnership which was
organized in 1941. Since organization of the company the
services provided have grown to include 130 physicians
practicing medicine in nearly every specialty and all the
requisite services to support this practice. These services
include a complete radiology department, laboratory facilities,
kidney dialysis center, and a rehabilitative medicine center.
As such, the Company purchases a wide assortment of drugs and
medical supplies used in the diagnosis or treatment of disease,
illness or injury.

"We have attached the following information pertaining to
items which we believe to be tax exempt for which we currently
pay sales tax. A list of products by vendor showing a
procedural classification, the physician's current procedural
terminology (`CPT Code'), the vendor item number and a
description of the product. We have included a summary of our
procedural classification codes with explanations of the use of
the products and a 1992 CPT code manual for your use in

evaluating the listed products. In addition, we are enclosing a
summary of tax refunds due, Form DR-26, application for refund
from the State of Florida Department of Revenue, executed
Assignments to Right of Refunds from each of our vendors,
summaries of all invoices by vendor for the past three years
showing date of invoice, invoice number and refundable taxes due
on each invoice and finally copies of each invoice listed on the
summaries by vendor.

"Advisement Requested

"Under Chapter 12A-1.020 of the Rules of the Department of
Revenue Sales and Use Tax, paragraphs 7a., b., and 8 state that
chemical compounds, test kits, and items associated with
hypodermic needles, syringes, tubing and parts are exempt from
sales and use tax if they are used in the diagnosis or treatment
of disease, illness or injury.

"The following advisement is requested in connection with
the attached list of drugs and medical supplies purchased by the
Company:

"That the Department of Revenue stipulate that the listed
items are exempt from sales and use tax under the provisions of
Chapter 12A-1.020 7a., b and 8 of the Rules of the Department of
Revenue Sales and Use Tax....

"A. Items described under 12A-1.020(7)(a).
"A-1 Kodak slides which contain reagents to determine serum
levels of a specific analyte. This is comparable to
'cholesterol tests' listed in section.
"A-2 Reagents used in Microbiology to determine infective
agent(s) or therapeutic levels to apply against such
agents. This is comparable to 'urine testing kits' as
listed in section.
"A-3 Reagents used to detect and diagnose blood protein
disorders. These are not specifically listed with
examples, but they are definitely chemical reagents or test
kits which meet the definitions defined in the section.
"A-4 Reagents used to detect `Cancer Markers' in serum.
These are not specifically listed with examples, but they

are definitely chemical reagents or test kits which meet
the definitions defined in the section.
"A-5 Reagents or test kits used for detecting abnormalities
in freshly voided urine. These materials are comparable to
Combistix reagent strips, dextrostix, etc. listed in the
section.
"A-6 Reagents used to detect diabetes markers. These are
specifically listed as such in the section.
"A-7 Reagents used for diagnosis of immunological disorders
or to determine immunologic status relative to a specific
disease, e.g., Mononucleosis (Epstein-Barr Virus).
"A-8 Reagents used for detection of abnormalities in whole
blood. Specifically, these tests are related to Hematology
testing.
"A-9 Reagents used to detect blood in feces or gastric
contents.

"B. Items described under 12A-1.020(8)(a).
"B-1 Collection devices, e.g., hypodermic needles and
vacutainer systems for phlebotomy.

"Notes: There are materials used for testing purposes that
are labeled controls' orcalibrators' on the invoices.
Where specific analyte or test is indicated these materials
are an integral part of the test, thus should be tax-exempt
as part of the Kit' for that analyte. Where an instrument is associated with thecontrol' or `calibrator' there is
question on the tax-exempt status. Therefore, we have
assumed a conservative stand and not included the materials
as tax-exempt."

Applicable Authority

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...." (Emphasis Supplied)

Rule 12A-1.020(7)(a) and (b), F.A.C., provides:

"(7)(a) The chemical compounds and test kits specified in
this paragraph which are used for the diagnosis or
treatment of disease, illness or injury are specifically
exempt. Examples of chemical compounds and test kits
include, but are not limited to the following: Albustix
reagent strips and tablets; blood pressure units;
cholesterol tests; clinistix reagent strips; clinitest
tablets; combistix reagent strips; dextrostix, reagent
strips; dextrotest kit and refills; diabetic test kits;
galatest; ictotest reagent tablets; sugar test tablets for
diabetics; thermometers for human use; tuberculin patch
test; urine testing kits; urograph test.
"(b) Likewise exempt is any chemical compound and test kit
used for the diagnosis or treatment of disease, illness, or
injury, ordered and dispensed in a retail establishment by
a pharmacist licensed by the State of Florida, according to
an individual prescription or prescriptions written by a
duly licensed practitioner authorized by the laws of the
state to prescribe medicinal drugs."

Rule 12A-1.020(8), F.A.C., provides:

"(8) The sale of hypodermic needles, hypodermic syringes,
hypodermic syringe tubing and parts is exempt when sold for
the diagnosis or treatment of disease, illness or injury."

Department Response

All the slides and reagents listed as items A-1 through A-9
are exempt from tax under section 212.08(2)(a), F.S., and Rule
12A-1.020(7), F.A.C., as chemical compounds and test kits used
in the diagnosis or treatment of human disease, illness or
injury.

The Vacutainer System which consists of a sterile
single-use needle, a glass collection tube and a holder to
secure the needle which is used to collect blood specimens for
diagnostic analysis is exempt from tax under Rule 12A-1.020(8),
F.A.C., which exempts hypodermic needles, hypodermic syringes,
hypodermic syringe tubing and parts used for the diagnosis or
treatment of disease, illness or injury.

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. #7390