Were component parts used to repair a lithotriptor exempt from Florida sales tax?

Subject

Repairs of Lithotriptors

Plain-English summary

Component parts necessary to repair and operate the lithotriptor were exempt from Florida sales tax under the rule then in effect. The rule specifically listed a lithotriptor as an exempt prosthetic or orthopedic appliance, and the company confirmed that the invoiced parts were components necessary for its operation and performance.

The Department warned that the rule was under review and might later remove lithotriptors from the exempt list. It said the parts would become taxable if lithotriptors became taxable. Although the request referred to charges for both parts and labor, the ruling's stated position addressed the parts and did not separately resolve labor.

What this means for you

The exemption followed the equipment's classification and the parts' necessary component function. This was expressly a rule-sensitive determination under the 1993 medical-product list.

Common questions

Q: Were necessary lithotriptor repair parts exempt? Yes, under the rule then in effect.

Q: Did the ruling clearly exempt repair labor? No. The request mentioned labor, but the Department's conclusion discussed only the component parts.

Q: Did the Department expect the rule to remain unchanged? No. It specifically said the rule was under review and might be amended.

Citations and references

• Fla. Admin. Code r. 12A-1.021(1)(a), (b) — prosthetic and orthopedic appliances
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 93A-072

Original ruling text

Oct 19, 1993

RE: TAA 93A-072
Repairs of Lithotriptors
Rule 12A-1.021(1)(a) and (b), F.A.C.

Dear :

Your letter of August 23, 1993, requested a Technical
Assistance Advisement on the application of sales and use tax to
charges for both parts and labor for the repair of a
"lithotriptor." This response to your request constitutes a
Technical Assistance Advisement under Chapter 12-11, Florida
Administrative Code, and is issued to you under the authority of
s. 213.22, Florida Statutes.

Your letter states in part:

"Approximately two years ago XXX [hereinafter the Company]
had contacted the State of Florida, Department of Revenue,
Taxpayer Assistance Section requesting an opinion on the
taxability of repairs done to lithotripters. As re-stated
from the attached correspondence, XXX, an operating company
of XXX [hereinafter the Customer] refused to pay sales tax
invoiced for service parts furnished to repair one of their
lithotripters. Based on the Florida tax specialist's
opinion coupled with our refusal to continue service,
[Customer] paid sales tax invoiced. Ever since this
opinion was received, [Company] has been invoicing
[Customer] for sales tax. (Please see attached invoices.)

"Per my phone conversation with the Florida Department of
Revenue on August 19 and 20, 1993, repairs and maintenance
done to lithotripters are exempt from tax because the sale
of the lithotripter itself is exempt from sales tax. The
attached correspondence dated July 29, 1991 conflicts with
these telephone conversations. The letter states: `Under
Rule 12A-1.021 the sale of a lithotripter is specifically
exempt from tax. However, there is no exemption provided

for repairs to lithotripters. Although the sale of a
lithotripter is exempt from tax, any repair to the
lithotripter is taxable under Rule 12A-1.006(1).'

"In view of the fact the result of our original inquiry
regarding this issue differs from recent opinions obtained
over the telephone, the Company is officially requesting a
binding technical advisement ruling on this issue as it
applies to our [Customer]. A binding technical advisement
regarding how this issue applies to another of our
customers, XXX, is also being addressed...."

In a telephone conversation held with you on September 13,
1993, you stated that the parts identified on the invoices
attached to your letter of request for a Technical Assistance
Advisement are a component part of a lithotriptor and are
necessary for its operation and performance.

Discussion

Rule 12A-1.021(1)(a) and (b), F.A.C., Prosthetic and
Orthopedic Appliances, states in part:

"(1)(a) Prosthetic and orthopedic appliances are exempt.
The term `prosthetic and orthopedic appliances' means any
apparatus, instrument, device, or equipment used to replace
or substitute for any missing part of the body, used to
alleviate the malfunction of any part of the body, or used
to assist any disabled person in leading a normal life by
facilitating such person's mobility. Such apparatus,
instrument, device, or equipment shall be exempted
according to an individual prescription or prescriptions
written by a duly licensed practitioner authorized by the
laws of the state to prescribe medicinal drugs, or
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. A list of prosthetic and orthopedic
appliances (DR-46NT), Nontaxable Medical and General
Grocery List, dated October, 1987, which is incorporated in
this rule and made part of this rule by reference, which

has been certified to the Department of Revenue by the
Department of Health and Rehabilitative Services, is
available without cost, upon written request directed to
the Department of Revenue, Supply Section, Tallahassee,
Florida 32399-0100.

"(b) The prosthetic and orthopedic appliances listed below
are specifically exempt:

... Lithotriptor...."

The lithotriptor is exempt from sales tax as a prosthetic
and orthopedic appliance. It is the Department's position that
parts used to repair a lithotriptor when the parts are a
component part of the lithotriptor and are necessary for its
operation and performance are also exempt from sales tax.
However, the rule stated above is currently under review and may
be amended to remove lithotriptors from the list as being exempt
as a prosthetic or orthopedic appliance. If at sometime in the
future the sale of lithotriptors should become subject to sales
tax, then the parts used in the lithotriptor will also become
subject to sales tax. Your name and address has been placed on a
mailing list so that you may receive a copy of any amendments
made to the sales and use tax rules on the taxability of medical
products.

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
based 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. Please note that we already have in
file some documents evincing some desired deletions.

Sincerely,

Amanda B. McAdams
Tax law Specialist

/amc
Con. #10616