What does Missouri LR 8182 conclude about Dental Straighteners/Aligners are Subject to Sales Tax?

Plain-English summary

The Missouri Department of Revenue ruled that a dental supply distributor's sales of removable clear teeth straighteners and aligners are subject to Missouri sales tax. The Applicant sold these products after a dentist took an impression of a patient's teeth (traditional or digital) and sent it out to be manufactured into the finished straightener/aligner.

The Department's reasoning is straightforward. Section 144.020.1, RSMo, imposes sales tax broadly on tangible personal property. Missouri does carve out an exemption in Section 144.030.2(18), RSMo, for insulin and for durable medical equipment, prosthetic devices, and orthopedic devices "as defined on January 1, 1980" by the federal Medicare program under Title XVIII of the Social Security Act, including items specified in Section 1862(a)(12) of that Act. But the Department concluded that removable dental straighteners/aligners simply don't fit within any of those defined categories — they aren't durable medical equipment, and they aren't a prosthetic or orthopedic device as Medicare defined those terms in 1980, nor are they on the Section 1862(a)(12) list.

Because the product falls outside the exemption, the general taxability rule in Section 144.020.1 controls, and the Applicant's sales of these items are subject to Missouri sales tax.

This is an unconditional holding — the Department did not identify any circumstance under which these particular removable aligners would be exempt, so long as the facts described in the request (a distributor selling removable, custom-manufactured aligners) remain accurate.

What this means for you

Dental supply distributors and orthodontic labs

If you sell removable clear aligners or similar teeth-straightening products in Missouri, this ruling indicates the Department views them as taxable tangible personal property, not exempt medical devices, even though they are custom-made from a dental impression and used for a health-related purpose. You should be charging and collecting Missouri sales tax on these sales unless your specific facts differ from those described here.

Accountants and tax professionals

The key takeaway is how narrowly the Department reads the Section 144.030.2(18), RSMo, exemption: it applies only to items that meet the definitions of "durable medical equipment," "prosthetic devices," or "orthopedic devices" as those terms existed under Medicare on January 1, 1980, or that are specifically listed in Section 1862(a)(12) of the Social Security Act. A product being custom-fitted, dentist-prescribed, or medically motivated is not by itself enough to qualify — it must fit those specific, dated federal definitions.

Businesses considering a similar ruling request

Because this letter ruling is binding only on the Department and only as to this Applicant, other sellers of dental appliances with even slightly different facts (for example, a different manufacturing process or a different classification under Medicare's definitions) should not simply assume the same result applies to them without their own analysis or ruling request.

Common questions

Q: Does this ruling mean all dental devices are taxable in Missouri?
A: No. It addresses only removable clear teeth straighteners/aligners as described in this Applicant's facts. Other dental or medical products might independently qualify as durable medical equipment or a prosthetic/orthopedic device under Section 144.030.2(18), RSMo, depending on how they're classified.

Q: Why doesn't the medical equipment exemption cover aligners?
A: The exemption in Section 144.030.2(18), RSMo, is tied to definitions of durable medical equipment, prosthetic devices, and orthopedic devices used by Medicare as of January 1, 1980, plus items listed in Section 1862(a)(12) of the Social Security Act. The Department found that removable aligners don't meet any of those specific, dated definitions.

Q: Can another dental supply company rely on this ruling?
A: No. As stated in the ruling itself, it is binding on the Department only with respect to the requesting Applicant, only for three years from its February 25, 2022 date, and only so long as the facts and law don't change.

Q: Is this ruling still in effect today?
A: The ruling states it is binding for three years from its date (February 25, 2022), subject to the facts and law remaining the same. Businesses should confirm current treatment with the Department or a tax professional rather than relying on the ruling's continued validity indefinitely.

Citations and references

Statutes and regulations:

• Section 144.020.1, RSMo (imposition of sales tax on tangible personal property and certain services)
• Section 144.030.2(18), RSMo (exemption for insulin, durable medical equipment, prosthetic and orthopedic devices as defined by Medicare on January 1, 1980)
• Section 536.021.10, RSMo (statutory authority for letter rulings)
• 12 CSR 10-1.020 (Missouri Code of State Regulations governing letter ruling procedure)
• Title XVIII of the Social Security Act of 1965, Section 1862(a)(12) (federal Medicare provision referenced for defining exempt devices)

Source

• Landing page: Missouri DOR Rulings Search
• Ruling: LR 8182

Original ruling text

Dear Applicant:

This is a letter ruling issued by the Director of Revenue under Section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your letter dated December 28, 2021.

The facts as presented in your letter ruling request are summarized as follows:

Applicant is a dental supply distributor located in Missouri. Among the items Applicant sells are clear teeth straighteners and aligners that are removable. These are produced when a dentist takes a traditional or digital impression of a patient's teeth and sends the impressions to be manufactured into the straighteners/aligners.

ISSUE :

Are Applicant's sales of the removable straighteners/aligners subject to Missouri Sales tax?

RESPONSE :

Yes. Applicant's sales of the straighteners and aligners would be subject to sales tax pursuant to section 144.020.1, RSMo.

Section 144.020.1, RSMo, imposes a sales tax on sales of tangible personal property and certain enumerated services.

Section 144.030.2(18), RSMo, exempts from sales and use tax, "[a]ll sales of insulin, and all sales, rentals, repairs, and parts of durable medical equipment, prosthetic devices, and orthopedic devices as defined on January 1, 1980, by the federal Medicare program pursuant to Title XVIII of the Social Security Act of 1965, including the items specified in Section 1862(a)(12) of that act..."

Applicant's removable straighteners/aligners do not qualify as durable medical equipment or as a prosthetic or orthopedic device as defined on January 1, 1980, and they likewise are not included in the list of items specified in Section 1862(a)(12) of the Social Security Act of 1965.

Because the straighteners/aligners do not fall within the scope of section 144.030.2(18), RSMo, Applicant's sales of these items are subject to sales tax.

This letter ruling is binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of this letter and is subject only to statutory changes by the General Assembly and to changes in the interpretation of law by the courts or administrative tribunals.  If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change.  For this reason, the interpretation set forth above should be reviewed on a regular basis.  Please note that any change in or deviation from the facts as presented will render this ruling inapplicable.

Should additional information be needed, please contact Legal Counsel J. Ross Shelton, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475 (phone 573-751-0961), or me.

Sincerely,

Wayne Wallingford