Were single-patient Vasoseal medical kits sold to for-profit Florida hospitals exempt from sales tax?

Subject

Sales of Medical Kits

Plain-English summary

Sales of the Vasoseal Collagen Kits to for-profit Florida hospitals were not taxable when two conditions were satisfied. Each kit had to be dispensed under an individual prescription, and the purchasing hospital had to provide the seller a blanket resale certificate at the time of sale.

The kit was a single-patient medical device used to stop bleeding from arterial punctures in procedures such as coronary angiography and angioplasty. Its label restricted sale to, or on the order of, a physician. Florida's statute exempted medical products, supplies, and medicine dispensed according to a prescription, but the seller also needed the hospital's resale documentation.

What this means for you

The exemption was conditional, not a blanket exemption for every sale to a hospital. The seller needed both the prescription-based use and a properly documented resale purchase.

Common questions

Q: Did the hospital's for-profit status prevent exemption? No, if both stated conditions were met.

Q: Was a prescription alone enough? No. The hospital also had to provide a blanket resale certificate at the time of sale.

Q: Did the ruling cover every medical kit? No. It addressed the specifically described Vasoseal Collagen Kit and its use and labeling.

Citations and references

• Fla. Stat. § 212.08(2)(a) — prescription medical products, supplies, and medicine
• Fla. Stat. § 212.21(2) — transactions taxable unless specifically exempt
• Fla. Stat. § 212.07(1)(b) — strict compliance for resale
• Fla. Admin. Code r. 12A-1.038(1) — resale and exemption certificates
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 98A-074

Original ruling text

SUMMARY
The sale of medical kits for single patient use only, which kits states "Caution: Federal Law (USA) restricts this device to sale by or on the order of a physician," to for profit hospitals in this state are not subject to tax when the following conditions are satisfied: (1) the medical device is dispensed pursuant to a prescription; (2) the for profit hospital purchasing the device extends a blanket certificate of resale to the selling dealer at the time of sale.

Sep 23, 1998

Re: TAA 98A-074
Sales of Medical Kits
Sections 212.08(2)(a), 212.21(2), F.S.
Rule 12A-1.038(1), F.A.C.

Dear :

This is in response to your letter of July 29, 1998, in which you requested the issuance of a technical assistance advisement regarding the taxability of your company's sales of "Vasoseal Collagen Kits" to for profit hospitals in the state of Florida.

The information you furnished our office states that the Vasoseal kit is a medical device that can rapidly stop bleeding from arterial punctures used in diagnostic and therapeutic procedures such as coronary angiography and angioplasty. Vasoseal achieves hemostasis by introducing collagen along the tissue track up to the vessel wall without allowing collagen to enter the vessel. It forms a seal at the puncture site. The kit contains the following component parts:

Needle Depth Indicator Card
Needle Clamp

Guidewire
Guidewire Introducer
Vaso Seal Sheath
Dilator
Collagen Cartridge

The Vasoseal kit is for single patient use only, and states: "CAUTION: Federal Law (USA) restricts this device to sale by or on the order of a physician."

APPLICABLE AUTHORITY

Section 212.21(2), F.S., provides that it is the specific legislative intent to tax each and every sale, use, storage, consumption or rental levied and set forth in Chapter 212, F.S., except those that are specifically exempted therefrom by Chapter 212, F.S. Section 212.07(1)(b), F.S., provides that a resale must be in strict compliance with the rules and regulations of the Department. Rule 12A-1.038, F.A.C., states that a sale is taxable unless the dealer obtains from the purchaser either a resale certificate or a certificate evidencing that the purchaser holds a consumer's certificate of exemption. The resale certificate must be signed by the dealer, or the dealer's authorized representative; must state that the property was purchased for resale; and must bear 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. The certificate evidencing that the purchaser is an exempt organization must be signed by an authorized representative of the organization; and must bear the number of the organization's consumer's exemption certificate, the effective date of the certificate, and the expiration date of the certificate.

Section 212.08(2)(a), F.S., as amended by section 1, Chapter 98-143, L.O.F.,effective July 1, 1998, provides that there shall be exempt from the tax imposed by Chapter 212, F.S., any medical products and supplies or medicine dispensed according to an individual prescription or prescriptions written by a prescriber authorized by law to prescribe medicinal drugs.

DEPARTMENT RESPONSE

Your company's sales of "Vasoseal Collagen Kits" to for profit hospitals in this state are not subject to tax when the following conditions are satisfied: (1) the medical device is dispensed pursuant to a prescription; (2) the for profit hospital purchasing the device extends a blanket certificate of resale to your company at the time of sale.

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 Specialist
Technical Assistance & Dispute
Resolution
RAH/h
Control No. 34908