Which rentals of medical equipment are exempt from Kansas sales tax, and which are taxable?

Plain-English summary

A company that rents medical equipment asked how Kansas sales tax applies to its items. The Department walked through three separate exemptions, and the answer turns on both what the item is and who is buying it.

1. The nonprofit nursing-home exemption — K.S.A. 79-3606(hh). Under Senate Bill 309 (1987), medical supplies and equipment purchased directly by a nonprofit skilled nursing home or nonprofit intermediate nursing care home (as defined in K.S.A. 39-923), to provide medical services to residents, are exempt. But the exemption does not cover tangible personal property customarily used for human habitation. The Department said items that qualify as "medical equipment" include wheelchairs, shower/commode chairs, and walkers; items that are not "medical equipment" — hospital beds, patient lift systems, continuous air flow mattresses, and a bed trapeze — are subject to Kansas sales/use tax on the gross rental receipts, including any delivery fees.

2. Prescribed prosthetic/orthopedic appliances — K.S.A. 79-3606(r). Sales of prosthetic and orthopedic appliances prescribed in writing by a person licensed in the healing arts, dentistry, or optometry are exempt (apparatus used to replace a missing body part, alleviate a malfunction, or facilitate a disabled person's mobility). From the customer's list, only wheelchairs, shower/commode chairs, and walkers would qualify — and only if a prescription accompanies the purchase or lease.

3. Direct purchases by a nonprofit hospital — K.S.A. 79-3606(b). Property or services (including rentals) purchased directly by a public or private nonprofit hospital and used exclusively for hospital purposes are exempt, unless used in a separately taxable business.

Finally, delivery fees follow the item: they are taxable only when the underlying purchase or lease of the equipment is itself taxable.

What this means for you

If you rent or buy medical equipment in Kansas, sort each item and each transaction against the right exemption.

• Item category matters. Mobility devices like wheelchairs, shower/commode chairs, and walkers can be exempt. Beds, lift systems, air-flow mattresses, and bed trapezes are treated as taxable — the Department does not classify them as "medical equipment."
• A written prescription unlocks 79-3606(r). To claim the prosthetic/orthopedic appliance exemption, get a written prescription from a licensed healing-arts, dentistry, or optometry practitioner.
• Who buys directly can exempt the whole purchase. Direct purchases by a qualifying nonprofit nursing home (79-3606(hh)) or nonprofit hospital (79-3606(b)) can be exempt — but "customarily used for human habitation" property is excluded from the nursing-home exemption, and hospital purchases used in a taxable business are excluded.
• Delivery fees ride along. Charge tax on delivery only when the equipment itself is taxable; if the item is exempt, its delivery fee is exempt too.

Common questions

Is renting a hospital bed taxable in Kansas?
Yes. The Department's position is that hospital beds — along with patient lift systems, continuous air flow mattresses, and a bed trapeze — are not "medical equipment," so their rental is subject to Kansas sales/use tax on the gross rental receipts, including delivery fees.

Are wheelchairs and walkers exempt?
They can be. Wheelchairs, shower/commode chairs, and walkers qualify as "medical equipment," and they also qualify as prosthetic/orthopedic appliances under 79-3606(r) if a licensed practitioner has prescribed them in writing.

What makes a nursing home's purchases exempt?
Under 79-3606(hh), medical supplies and equipment purchased directly by a nonprofit skilled or intermediate nursing care home (as defined in K.S.A. 39-923) to provide medical services to residents are exempt — but not property customarily used for human habitation.

Are delivery charges taxable?
Only when the equipment itself is taxable. The Department said delivery fees are subject to sales tax only when the purchase or lease of the property is subject to Kansas sales tax.

Citations and references

• K.S.A. 79-3606(hh) (Senate Bill 309, 1987) — exempts medical supplies and equipment purchased directly by a nonprofit skilled nursing home or nonprofit intermediate nursing care home (defined in K.S.A. 39-923) for residents' medical services, excluding property customarily used for human habitation.
• K.S.A. 79-3606(r) — exempts prosthetic and orthopedic appliances prescribed in writing by a licensed healing-arts, dentistry, or optometry practitioner; of the items listed, only wheelchairs, shower/commode chairs, and walkers qualify (with a prescription).
• K.S.A. 79-3606(b) — exempts property and services purchased directly by a public or private nonprofit hospital and used exclusively for hospital purposes, unless used in a separately taxable business.
• K.S.A. 39-923 — supplies the definition of the nonprofit skilled and intermediate nursing care homes covered by the 79-3606(hh) exemption.

Source

• Original ruling (DOCX): https://www.ksrevenue.gov/pildocs/rulings/P-1999-31.docx
• Kansas Policy Information Library: https://www.ksrevenue.gov/prpil.html

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

February 18, 1999

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Dear Ms. TTTTTTT:

We wish to acknowledge receipt of your letter dated January 21, 1999, regarding the application of Kansas Retailers’ Sales tax.

Senate Bill 309, enacted by the 1987 Kansas Legislature, provided that all sales of medical supplies and equipment purchased directly by a nonprofit skilled nursing home or nonprofit intermediate nursing care home, as defined by K.S.A. 39-923, for the purpose of providing medical services to residents thereof, shall be exempt from sales tax in the state of Kansas. However, this exemption does not apply to tangible personal property customarily used for human habitation purposes. [See K.S.A. 79-3606(hh)].

Equipment which qualifies as “medical equipment” would be: wheelchairs, shower/commode chairs and walkers. It would be the position of this department that hospital beds, patient lift systems, continuous air flow mattresses, as well as a bod trapeze would not be “medical equipment”, and therefore would be subject to the appropriate Kansas sales/use tax on the gross rental receipts, including any delivery fees thereon.

K.S.A. 79-3606(r) exempts from sales tax: “all sales of prosthetic and orthopedic appliances prescribed in writing by a person licensed to practice healing arts, dentistry or optometry. For the purposes of this subsection, the term prosthetic and orthopedic appliances means any apparatus, instrument, device, or equipment used to replace or substitute for any missing part of the body; used to alleviate the malfunction of any part of the body; or used to assist any disabled person in leading a normal life by facilitating such person’s mobility; such term shall include accessories to be attached to motor vehicles, but term shall not include motor vehicles or personal property which when installed becomes a fixture to real property. . ."

In order for an individual to purchase/lease a prosthetic or orthopedic appliance, a person licensed to practice healing arts, dentistry or optometry must write a prescription for said purchase/lease. From the list that you have provided, only wheelchairs, shower/commode chairs and walkers would qualify for the sales tax exemption in K.S.A. 79-3606(r). This is assuming that a prescription order accompanied the purchase/lease request.

K.S.A. 79-3606(b) exempts from sales tax: "all sales of tangible personal property or service, including the renting and leasing of tangible personal property purchased directly by......a public or private nonprofit hospital...and used exclusively for...hospital...purposes, except when: (1) Such...hospital is engaged or proposes to engage in any business specifically taxable under the provisions of this act and such items of tangible personal property or service are used or proposed to be used in such business,..."

Please be advised that purchases made directly by a non-profit hospital, that are not going to be used in carrying out a taxable business, would be exempt from Kansas state and local sales tax(es).

In closing, the delivery fees would be subject to sales tax, only when the purchase/lease of tangible personal property is subject to sales tax in the state of Kansas.

This is a private letter ruling pursuant to K.A.R. 92-19-59. It is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to an accurate determination by the department, this ruling is null and void. This ruling will be revoked in the future by the operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or published revenue ruling, that materially effects this private letter ruling.

Sincerely yours,

Thomas P. Browne, Jr.
Tax Specialist

TPB

Date Composed: 03/01/1999 Date Modified: 10/11/2001

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