Did nonmedicated Breathe Right nasal strips qualify as medical appliances for Illinois's reduced tax rate?

Plain-English summary

Nonmedicated nasal strips that simply improved airflow generally did not qualify as Illinois medical appliances. The requester said Breathe Right strips opened the nasal passage to relieve a deviated septum, cold congestion, and snoring and noted their federal FSA eligibility.

Illinois defined a medical appliance as an item intended by its manufacturer to directly substitute for a malfunctioning part of the human body. The regulation's examples included artificial limbs, dental prostheses, braces, wheelchairs, pacemakers, dialysis machines, hearing aids, eyeglasses, and contact lenses.

The Department said products that merely improve airflow and thereby may reduce snoring or congestion generally do not substitute for a malfunctioning body part. It therefore did not support treating the strips as medical appliances for the historical reduced State rate.

What this means for you

Federal benefit-plan eligibility did not answer the Illinois medical-appliance test in this GIL. Retailers needed evidence of the manufacturer's intended function and a direct substitution for a malfunctioning body part, not merely symptom relief or improved airflow.

Common questions

Q: Did Breathe Right strips meet the medical-appliance definition?
A: Generally no, because they improved airflow rather than directly substituting for a malfunctioning body part.

Q: Did FSA eligibility control Illinois tax treatment?
A: The Department did not use FSA eligibility as the test; it applied Regulation 130.311's manufacturer-intent and direct-substitution standard.

Q: Did the GIL conclusively assign the full general rate?
A: It rejected medical-appliance treatment but did not issue a binding ruling on every possible product category.

Subject

Medical Appliances

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2011.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2011/st-11-0018.pdf

Original ruling text

ST 11-0018-GIL 03/29/2011 MEDICAL APPLIANCES
A medical appliance is defined as an item which is intended by its manufacturer for use in
directly substituting for a malfunctioning part of the body. See 86 Ill. Adm. Code 130.311. (This
is a GIL.)

March 29, 2011

Dear Xxxxx:
This letter is in response to your letter dated February 23, 2011, in which you request
information. The Department issues two types of letter rulings. Private Letter Rulings (“PLRs”) are
issued by the Department in response to specific taxpayer inquiries concerning the application of a
tax statute or rule to a particular fact situation. A PLR is binding on the Department, but only as to the
taxpayer who is the subject of the request for ruling and only to the extent the facts recited in the PLR
are correct and complete. Persons seeking PLRs must comply with the procedures for PLRs found in
the Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information
Letter (“GIL”) is to direct taxpayers to Department regulations or other sources of information
regarding the topic about which they have inquired. A GIL is not a statement of Department policy
and is not binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website
at www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant to
your inquiry.
The nature of your inquiry and the information you have provided require that we respond with
a GIL. In your letter you have stated and made inquiry as follows:
COMPANY is requesting a letter ruling in regards to the taxability of Breathe Right nasal
strips. Breathe Right nasal strips are not medicated, used to open the nasal passage to
relieve symptoms of a deviated septum, common cold congestion and snoring. I have
attached product information.
It is our understanding that Breathe Right nasal strips are part of the Federal FSA
program. I have also included information regarding the eligibility of Breathe Right
nasal strips in the FSA program.
Thank you in advance for your time and assistance.

DEPARTMENT’S RESPONSE:
Please see the Department’s regulation at 86 Ill. Adm. Code Section 130.311, which is its
regulations governing Drugs, Medicines, Medical Appliances, and Grooming and Hygiene Products.
Those products that qualify as food, drugs, medicines and medical appliances are taxed at a lower
State rate of 1% plus any applicable local taxes. Those items that do not qualify for the low rate of tax
are taxed at the general merchandise rate of 6.25% plus applicable local taxes.

A medical appliance is an item that is intended by its manufacturer for use in directly
substituting for a malfunctioning part of the human body. Included in the exemption as medical
appliances are such items as artificial limbs, dental prostheses and orthodontic braces, crutches and
orthopedic braces, wheelchairs, heart pacemakers, and dialysis machines (including the dialyzer).
Corrective medical appliances such as hearing aids, eyeglasses and contact lenses qualify for
exemption. Generally, products that simply improve airflow, thereby potentially, reducing snoring or
relieving nasal congestion would not qualify as a medical appliance because they are not intended by
the manufacturer for use in directly substituting for a malfunctioning part of the human body.
I hope this information is helpful. If you require additional information, please visit our website
at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.
Very truly yours,

Debra M. Boggess
Associate Counsel
DMB:msk