Were a for-profit Florida hospital's purchases, leases, or rentals of infusion pumps subject to sales tax?

Subject

Sale of Infusion Pumps

Plain-English summary

The Department concluded that every proposed method of acquiring the infusion pumps was taxable. The for-profit Florida hospital asked about buying pumps from the manufacturer, renting or leasing them from the manufacturer, and leasing them from a third-party company.

Florida's definition of a sale included transfers of title or possession as well as leases and rentals of tangible personal property. The state taxed each such transaction unless a specific exemption applied.

The pumps were used to infuse liquids into patients and were medical products or supplies used in treatment. But the medical-use rule said sales to physicians and hospitals remained taxable unless the product was specifically exempt. The ruling found no exemption for these infusion pumps when acquired by a for-profit hospital.

What this means for you

Medical use alone did not establish exemption. Hospitals had to identify a statute or rule specifically covering the equipment or the way it was ordered, dispensed, or incorporated into a patient.

Changing the transaction from a purchase to a lease or rental did not change the result because Florida treated all three as sales of tangible personal property for consideration.

Common questions

Q: Did the result change if the hospital leased from a third party? No. The third-party lease was taxable too.

Q: Were the pumps exempt because they were used to treat patients? No. Medical products used in treatment were taxable unless a specific exemption applied.

Q: Did the general prescription-medicine exemption cover the pumps? The Department found no specific exemption applicable to the hospital's acquisition of the infusion pumps.

Q: Could the hospital rely on a TAA issued to another taxpayer? No. Section 213.22 stated that another taxpayer could not rely on someone else's advisement.

Citations and references

• Fla. Stat. § 212.05(1)(a)1.a. — tax on retail sales of tangible personal property
• Fla. Stat. § 212.02(15)(a) — sale includes leases and rentals
• Fla. Stat. § 212.08(2)(a) — specified medical exemptions
• Fla. Stat. § 212.21(2) — transactions taxable unless specifically exempt
• Fla. Admin. Code R. 12A-1.020(6) and 12A-1.038(1) — medical supplies and taxable-sale presumption
• Fla. Stat. § 213.22(1) — Technical Assistance Advisements and nonreliance by other taxpayers

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97A-018

Original ruling text

SUMMARY

The purchase, lease, and rental of Infusion Pumps from the
manufacturer or a third party leasing company by a forprofit hospital in this state, for use in providing its
medical services, is subject to tax under section
212.05(1)(a)1.a., F.S., and Rule 12A-1.020(6)(b), F.A.C.,
as medical products and supplies used in connection with
medical treatment.

Mar 20, 1997

Re: TAA 97A-018
Sale of Infusion Pumps
Sections 212.02(15)(a), 212.05(1)(a)1.a., 212.08(2)(a),
212.21(2), F.S.
Rules 12A-1.020(6), 12A-1.038(1), F.A.C.

Dear :

This is in response to your letter of September 3, 1996, in
which you requested the issuance of a technical assistance
advisement on behalf of your client XXX [hereinafter
"Taxpayer"], regarding the taxability of its purchase of certain
infusion pumps. The infusion pumps are used by your client to
infuse any type of liquid into a patient. Your client is a forprofit hospital which is located in the State of Florida. The
infusion pumps in question are:

1. Baxter Flo-Gard Volumetric Infusion Pump # 6201
2. Baxter Flo-Gard Dual-Channel Volumetric Infusion Pump

6301

3. Baxter Flo-Gard Volumetric Infusion Pump #8200
4. Baxter AS40A Auto Syringe Infusion Pump

You requested that we address the taxability of the pumps
when your client:

A. Purchases them from the manufacturer;
B. Rents or leases them from the manufacturer; or
C. Leases them from a third party leasing company.

You provided our office with a brochure for each pump.

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 212.02(15)(a), F.S., provides:

(15) "Sale" means and includes:
(a) Any transfer of title or possession, or both, exchange,
barter, license, lease, or rental, conditional or
otherwise, in any manner or by any means whatsoever of
tangible personal property for a consideration.

Section 212.21(2), F.S., provides in part:

(2) It is hereby declared to be the specific legislative
intent to tax each and every sale, admission, use, storage,
consumption, or rental levied and set forth in this
chapter, except as to such sale, admission, use, storage,
consumption, or rental as shall be specifically exempted
therefrom by this chapter subject to the conditions

appertaining to such exemption.

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

(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 signed by the
dealer or the dealer's authorized representative to the
effect that the property or service was purchased for
resale and bearing the date, the name and address of the
purchaser, the effective date of the certificate, and the
number of the dealer's certificate of registration, or a
certificate signed by an authorized representative of the
organization bearing the number of the organization's
consumer's exemption certificate, the effective date of the
certificate, and the expiration date of the certificate,
the sale shall be deemed to be a taxable sale at
retail,....

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 rescription 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.

Taxpayer's purchase, rental, or lease of infusion pumps
from the manufacturer or third party leasing company is subject
to tax under section 212.05(1)(a)1.a., F.S., and Rule 12A1.020(6)(b), F.A.C., as medical products and supplies used in
connection with medical treatment. There is no specific
exemption from tax for the purchase of infusion pumps by for

profit hospitals in this State.

Concerning the application of the findings of any prior TAA
to your client's purchase of infusion pumps, section 213.22(1),
F.S., states that a taxpayer may not rely on an advisement
issued to another taxpayer. An advisement issued to a taxpayer
with respect to a particular transaction represents a holding of
the Department for that taxpayer and that transaction only.

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
Senior Tax Specialists
Tax Policy and Dispute Resolution

RSH\h
Control No.26487