Are prescription-only dental appliances that correct misaligned teeth exempt from Georgia sales tax when sold to dentists for patients?

Plain-English summary

The custom dental appliance was exempt as a prescription prosthetic device. It was worn in the mouth to correct misaligned teeth, and federal law allowed it to be sold or used only through a prescribing orthodontist or dentist.

A dentist could purchase the appliance from the manufacturer without giving Form ST-5 and then transfer it tax-free to the patient for whom it was prescribed. Both the supplier and dentist had to maintain records supporting the exempt sale and use for at least three years.

Common questions

Q: Why was the appliance a prosthetic device?

A: It was a corrective device worn in the body to correct a physical deformity or malfunction: misaligned teeth.

Q: Did the dentist need to give the supplier Form ST-5?

A: No, not for the prescription-only prosthetic device described, but the dentist and supplier still had recordkeeping duties.

Citations and references

• O.C.G.A. § 48-8-3(54) -- prescription prosthetic-device exemption
• O.C.G.A. § 48-8-2(28) -- prescription definition
• Ga. Comp. R. & Regs. r. 560-12-2-.30(5)(a) -- dentist purchase without Form ST-5
• O.C.G.A. §§ 48-8-52, 48-8-53 -- recordkeeping period

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2015-13

Original ruling text

Date Issued: September 22, 2015
Georgia Letter Ruling: LR SUT-2015-13
Topic: Medical Devices-Prosthetics

This letter is in response to your request for guidance on the application of Georgia sales and use tax to sales of custom
designed and fabricated devices to orthodontists and dentists for use by their individual patients.
Facts as Presented by Taxpayer
Taxpayer designs, manufacturers, and markets a dental appliance which corrects misaligned teeth. The appliance is
regulated by the Federal Drug Administration as a Class II medical device and may only be used or sold by a
prescribing orthodontist or dentist. Taxpayer has asked for guidance as to the appropriate application of tax to its sales
of appliances made to orthodontists and dentists (“dentist(s)”).
Issue
Are Taxpayer’s sales of appliances made to dentists subject to sales and use tax in Georgia?
Analysis
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, certain enumerated services, and utilities. Every purchaser of
tangible personal property at retail in this state shall be liable for sales and use tax on the sales price of the purchase.1
Prosthetic Devices
Georgia law provides a sales and use tax exemption for the sale or use of any prosthetic device that is sold to a natural
person pursuant to a prescription.2
The following definitions are relevant to this discussion:


"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




1

(C) Support a weak or deformed portion of the body. Georgia Code provides a sales and use tax exemption
for the sale or use of prosthetic devices for the treatment of natural persons that can be used or sold
by prescription only.3
“Natural person" means an individual human being.
"Prescription" means an order, formula, or recipe issued in any form of oral, written, electronic, or other
means of transmission by a duly licensed practitioner authorized by the laws of this state. An order issued by
a licensed dentist is a prescription.4

O.C.G.A. §§ 48-8-1; 48-8-2(31)(A); 48-8-30.
O.C.G.A. § 48-8-3(54); Ga. Comp. R. & Regs. r. 560-12-2-.30.
3
O.C.G.A. § 48-8-3(54); Ga. Comp. R. & Regs. r. 560-12-2-.30.
4
O.C.G.A. § 48-8-2(28).
2

Date Issued: September 22, 2015
Georgia Letter Ruling: LR SUT-2015-13
Topic: Medical Devices-Prosthetics
Page 2 of 2

If a prosthetic device can be sold or used only by prescription under federal or state law, and title and possession will
be permanently transferred to a natural person (i.e., the patient) having a prescription for the device, the dentist
transferring the device to the patient may purchase the item tax exempt without furnishing form ST-5 (Sales and Use
Tax Certificate of Exemption) to the supplier.5 The purchasing dentist may then transfer the device tax exempt to the
patient to whom a prescription for the device is issued.
Record Keeping
Both the supplier and the dentist must maintain suitable records to support the sale and use of a prescription only
prosthetic device in a manner consistent with the exemption requirements. 6 Regulations require that the following
records be kept:






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
a true and complete inventory of the stock on hand and its value, taken at least once yearly. 7

Records must be maintained for no less than three years. 8
Ruling
The appliance produced and sold by Taxpayer is worn in an individual’s mouth for the correction of misaligned teeth
and thus is a prosthetic device for sales and use tax purposes. The appliance may be sold or used only pursuant to a
prescription. Because Georgia provides a sales and use tax exemption for the sale or use of a prosthetic device that
may only be obtained by prescription, the tax does not apply to either the sale or use of the appliance. A dentist may
purchase the appliance exempt from the tax without providing an ST-5 Certificate of Exemption to Taxpayer. The
dentist may then transfer the appliance to a patient having a prescription without incurring a sales or use tax liability.
Both Taxpayer and the dentist must maintain suitable records to support the sale and use of the appliance in a manner
consistent with the exemption requirements. 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, circumstances 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.

5

Ga. Comp. R. & Regs. r. 560-12-2-.30(5)(a).
O.C.G.A. § 48-8-52; Ga. Comp. R. & Regs. r. 560-12-1-.15.
7
Ga. Comp. R. & Regs. r. 560-12-1-.23(1)(a) to Ga. Comp. R. & Regs. r. 560-12-1-.23(1)(e).
8
O.C.G.A. §§ 48-8-52; 48-8-53.
6