May a dental lab sell prescribed appliances, caps, coverings, and prostheses to dentists tax-free without Form ST-5?

Plain-English summary

Patient-specific dental appliances, caps, coverings, and prostheses were exempt when they could be made and sold only under a licensed dentist's prescription. The dental lab could sell them to the prescribing dentist without collecting tax or receiving Form ST-5. Fabrication and delivery charges connected with those exempt devices were exempt too.

Cosmetic coverings and products made for theatrical use were not prosthetic devices and remained taxable unless another exemption applied. For any exempt sale without Form ST-5, the lab had to keep records proving the prescription-only status and sale to a dentist for at least three years.

Common questions

Q: Did the Department approve every item on the lab's list?

A: No. It gave the classification rule rather than deciding each listed product individually.

Q: Were fabrication and delivery charges taxable?

A: Not when they were associated with an exempt prescribed prosthetic device.

Citations and references

• O.C.G.A. § 48-8-3(54) -- prescribed prosthetic-device exemption
• O.C.G.A. § 48-8-2(29) -- prosthetic-device definition
• Ga. Comp. R. & Regs. r. 150-14-.01, -.02 -- dental-device classifications and prescriptions
• O.C.G.A. § 48-8-52 -- sales-tax records

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2013-10

Original ruling text

State of Georgia
Douglas J. MacGinnitie
Commissioner

Department of Revenue

Administrative Division – Office of Tax Policy
1800 Century Blvd., N.E., Suite 15107
Atlanta, Georgia 30345-3205
(404) 417- 6649

Frank M. O’Connell
Director

June 12, 2013

Georgia Letter Ruling SUT No. 2013-06-12-01 Medical & Drugs
This letter is in response to your request for guidance on the application of Georgia sales and use tax to
the sale of certain items by Taxpayer.
Facts
Taxpayer manufactures patient specific dental devices pursuant to a doctor’s prescription and sells the
devices to the prescribing doctor. Taxpayer submitted a list of products and materials that it sells to
doctors pursuant to a prescription. Next to each product and material is noted the type of final device
associated with the product and/or material and the ultimate type of device into which the product or
material is incorporated.
Issue
Are charges by Taxpayer to licensed dentists for the items listed subject to sales and use tax in Georgia?
Analysis
Dental Practice Overview
The Georgia Board of Dentistry controls and regulates the practice of dentistry in Georgia. 1 The practice
of dentistry is generally defined in O.C.G.A. §§ 43-11-1(6) and 43-11-17(a). In addition, Ga. Comp. R. &
Regs. r. 150-14-.02 provides that the fabrication of any dental appliance, cap, covering, prosthesis or
cosmetic covering is included in the practice of dentistry as defined by O.C.G.A. § 43-11-17. No person
shall fabricate any dental appliance, cap, covering, prosthesis or cosmetic covering, as defined by this
chapter, unless he or she is licensed to practice dentistry or working under the prescription of a licensed
dentist. 2
The following definitions are applicable to the practice of dentistry:

1
2

O.C.G.A. § 43-11-7.
Ga. Comp. R. & Regs. r. 150-14-.02(2).

June 12, 2013
Page 2 of 5

(1) "Appliance" means any fixed or removable structure which may or may not be made
with an impression of a human mouth or extraoral facial structures or any portion of the
human mouth, teeth, gums or jaw used to prevent adverse dental conditions, including but
not limited to changing the appearance of teeth, changing the shape and shade of teeth,
protect teeth, effecting the position of teeth or repairing or replacing missing or damaged
teeth. In addition, appliances shall also include any device that gains a desired dental or
medical result by using the teeth or surrounding oral structures as support.
(2) "Cap" shall mean any fixed or removable artificial structure created with a model or
impression of a natural or artificial tooth and used or worn as a covering on that natural
or artificial tooth.
(3) "Cosmetic covering" means any fixed or removable artificial structure or product used
or worn as a covering on natural or artificial human teeth created with a model,
impression or any other measuring device including but not limited to computer assisted
design (CAD), of the human mouth or any portion thereof and used solely for cosmetic
purposes. Cosmetic covering shall include, but not be limited to, such structures
commonly known as "grills."
(4) "Covering" means any item that is used to permanently or temporarily place over a
natural or prosthetic tooth.
(5) "Dentist" shall mean an individual who is licensed in this State pursuant to O.C.G.A.
§43-11-1(9).
(6) "Fabricate" means to create, design or construct any structure, whether artificial or
naturally occurring, defined by this rule as a dental appliance, cap, covering, prosthesis or
cosmetic covering.
(7) "Prosthesis" means:
(a) Prosthesis: Artificial replacement of any part of the human body.
(b) Dental prosthesis: Any device or appliance replacing one or more
missing teeth and/or, if required, associated structures. This term
includes but is not limited to abutment crowns and abutment
inlays/onlays, bridges, dentures, obturators, and gingival prostheses.
(c) Definitive prosthesis: Prosthesis to be used over an extended period
of time.
(d) Fixed prosthesis: Non-removable dental prosthesis that is solidly
attached to abutment teeth, roots or implants.
(e) Fixed-removable prosthesis: Combined prosthesis, one or more parts
of which are fixed, and the other(s) attached by devices that allow their
detachment, removal and reinsertion by a dentist only.
(f) Interim prosthesis: A provisional prosthesis designed for use over a
limited period of time.

June 12, 2013
Page 3 of 5

(g) Removable prosthesis: Complete or partial prosthesis, which can be
removed and reinserted by a patient.
(8) "Theatrical purposes" shall mean any fabricated product defined by this rule that is
only used during activities of the performing arts and removed immediately after such
use. 3
Sales Tax Overview
Georgia levies and imposes a tax (subject to certain specific exemptions) on the retail purchase, retail
sale, storage, use, or consumption of tangible personal property and on certain enumerated services.4
“Retail sale” or “sale at retail” means a sale of tangible personal property or taxable services to any
person other than for resale. 5 “Sale” means any transfer of title or possession, exchange, barter, lease, or
rental, conditional or otherwise, in any manner, by any means of any kind of tangible personal property
for a consideration. 6 The amount subject to tax is the “sales price”. “Sales price” means the total amount
of consideration, including cash, credit, property, and services, for which personal property or services are
sold, leased, or rented, valued in money, whether received in money or otherwise without any deduction
for the following:
(i) The seller's cost of the property sold;
(ii) The cost of materials used, labor, or service cost, interest, losses, all costs of
transportation to the seller, all taxes imposed on the seller, and any other expense of the
seller;
(iii) Charges by the seller for any services necessary to complete the sale; and
(iv) Delivery charges.
“Sales price” does not include:
(i) Discounts, including cash, term, or coupons that are not reimbursed by a third party
that are allowed by a seller and taken by a purchaser on a sale;
(ii) Interest, financing, and carrying charges from credit extended on the sale of personal
property or services, if the amount is separately stated on the invoice, bill of sale, or
similar document given to the purchaser;
(iii) Any taxes legally imposed directly on the consumer that are separately stated on the
invoice, bill of sale, or similar document given to the purchaser;
(iv) Installation charges if they are separately stated on the invoice, billing, or similar
document given to the purchaser;
(v) Telecommunications nonrecurring charges if they are separately stated on the invoice,
billing, or similar document; and
(vi) Credit for any trade-in. 7
Exemptions from taxation are strictly construed, and an exemption will not be granted unless the
relevant statute clearly and distinctly shows that such was the plain and unambiguous intention of
the General Assembly. 8 The standards for reviewing taxation statutes are well settled:
3

Ga. Comp. R. & Regs. r. 150-14-.01.
O.C.G.A. §§ 48-8-1 and 48-8-30(a).
5
O.C.G.A. § 48-8-2(31).
6
O.C.G.A. § 48-8-2(33).
7
O.C.G.A. § 48-8-2(34).
8
Ga. Comp. R. & Regs. r. 560-12-1-.18.
4

June 12, 2013
Page 4 of 5

Taxation is the rule, and exemption from taxation [is] the exception. And
exemptions are made, not to favor the individual owners of property, but in the
advancement of the interests of the whole people. Exemption, being the
exception to the general rule, is not favored; but every exemption, to be valid,
must be expressed in clear and unambiguous terms, and, when found to exist, the
enactment which it is given will not be enlarged by construction, but, on the
contrary, will be strictly construed.9
Prosthetic Devices
O.C.G.A. § 48-8-3(54) provides a sales and use tax exemption for the “sale or use of any durable medical
equipment that is sold or used pursuant to a prescription or prosthetic device that is sold or used pursuant
to a prescription”. "Prosthetic device" means a replacement, corrective, or supportive device including
repair and replacement parts for the same worn on or in the body to:
(A) Artificially replace a missing portion of the body;
(B) Prevent or correct physical deformity or malfunction; or
(C) Support a weak or deformed portion of the body. 10
Dental crowns, implants, complete and partial dentures, obturators and fillings are considered to be
prosthetic devices. 11
If a prosthetic device can be sold or used only pursuant to a prescription under federal or state law, and
title and possession will be permanently transferred to a natural person to whom a prescription for the
device is issued, the entity transferring the device to that natural person may purchase the item tax exempt
without furnishing form ST-5 (Sales and Use Tax Certificate of Exemption).
Record Keeping for Audit Purposes
All dealers must keep and preserve: (a) suitable records of sales and purchases; (b) books of account
necessary to compute the tax due; and (c) other information required by the Commissioner. 12
Regulations require that the following records be kept:
•
•
•
•

9

a daily record of all cash and credit sales, including any type of financing or
installment plan in use, and amounts of taxes collected;
a record of the amount of all merchandise purchased, including all bills of lading,
invoices, and copies of purchase orders;
a record of all deductions and exemptions claimed in filing sales or use tax returns,
including exemption and resale certificates;
a record of all tangible personal property used or consumed in the conduct of the
business; and

GA Dep’t. of Rev. v. Owens Corning, 283 Ga. 489 (2008); see also Southwire Company v. Chilivis, 139 Ga. App.
329 (1976) (explaining that when interpreting tax exemptions all doubts must be resolved in favor of the taxing
authority).
10
O.C.G.A. § 48-8-2(29).
11
Ga. Comp. R. & Regs. r. 560-12-2-.30(2)(h)(3)(xix).
12
O.C.G.A. § 48-8-52; Ga. Comp. R. & Regs. r. 560-12-1-.15.

June 12, 2013
Page 5 of 5

•

a true and complete inventory of the stock on hand and its value, taken at least once
yearly. 13

Dealers must retain records for three years. 14 However, if an assessment has been made and an appeal to
the Commissioner or a court is pending, books and records relating to the period covered by the
assessment must be preserved until the final disposition of the appeal.15
Ruling
Although the Department of Revenue is unable to individually address each specific item in Taxpayer’s
list, if an item is properly classified for purposes of O.C.G.A. § 43-11-17 and Ga. Comp. R. & Regs. r.
150-14-.01 as an appliance, cap, covering, or prosthesis, such items would also be “prosthetic devices” for
sales tax purposes. Further, under Georgia law, a dental lab may only provide, produce, fit, repair, adjust,
and reline such items when the items are ordered by and returned to a licensed dentist. Consequently,
because the items categorized as appliances, caps, coverings, or prostheses are “prosthetic devices” for
sales tax purposes and under Georgia law may be sold or used only pursuant to a prescription, Taxpayer
may sell these items to a licensed dentist without the collection of sales tax even if the dentist does not
provide form ST-5. Fabrication and delivery charges associated with such exempt items are also exempt.
Cosmetic coverings and products used for theatrical purposes are not considered “prosthetic devices” for
sales tax purposes and are, thus, subject to tax unless the purchaser provides appropriate exemption
documentation.
When Taxpayer sells a prosthetic device without the collection of sales tax and the purchasing dentist
does not provide form ST-5 then Taxpayer must maintain books and records to support that the
prosthetic device on which tax was not collected can be sold or used only pursuant to a prescription under
federal or state law, and that the sale was to a dentist. These records must be maintained for a period of
no less than three years.
The opinions expressed in this ruling are based upon the information contained in your request and
limited to the specific transactions, facts, and taxpayer in question. Should the circumstances regarding
the transactions change, or differ materially from those represented, then this ruling may become invalid.
In addition, please be 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 tax treatment than that expressed in this response.

13

Ga. Comp. R. & Regs. r. 560-12-1-.23(1)(a) to Ga. Comp. R. & Regs. r. 560-12-1-.23(1)(e).
O.C.G.A. § 48-8-52(a); Ga. Comp. R. & Regs. r.560-12-1-.15.
15
O.C.G.A. § 48-8-52(a); Ga. Comp. R. & Regs. r. 560-12-1-.15; Ga. Comp. R. & Regs. r. 560-12-1-.23(1); Ga.
Comp. R. & Regs. r. 560-12-1-.23(3).
14