Does a Missouri medical spa owe sales or use tax on cosmetic injection products like Botox and dermal fillers that it buys from out-of-state vendors?

Plain-English summary

The Missouri Department of Revenue ruled that a medical spa's out-of-state purchases of cosmetic injection products -- Botox Cosmetic, Xeomin, Dysport, Sculptra Aesthetic, Restylane Fillers, Juvederm fillers, and RHA fillers -- are subject to Missouri use tax, even though the spa does not sell those products directly to its patients.

Applicant is a medical spa that buys these cosmetic products from out-of-state vendors and has them injected into patients by a registered nurse or nurse practitioner. The Department reasoned that because the spa's nurses are the ones who use and consume the products (by injecting them), the spa itself -- not the patient -- is the "consumer" of the tangible personal property under Missouri law. That means the spa is providing a non-taxable injection service to its patients, so it should not charge sales tax on what it bills patients. But because the spa is the end consumer of products it bought out of state, it owes Missouri use tax on those purchases under Section 144.610, RSMo.

What this means for you

Medical spas and aesthetics clinics

If your practice buys injectable cosmetic products like Botox, dermal fillers, or similar items from out-of-state suppliers and has clinical staff administer them to patients, this ruling indicates you should not charge sales tax to your patients for the injection service -- but you are responsible for self-assessing and paying Missouri use tax on your purchases of those products, since your practice (not the patient) is treated as the consumer of the tangible product.

Accountants and tax professionals serving medical/aesthetic practices

This ruling illustrates how Missouri distinguishes a taxable retail sale of tangible personal property from a non-taxable service that merely incorporates a product. Because the medical spa's staff -- not the patient -- physically uses and consumes the injectable product, the transaction with the patient is characterized as a service, while the spa's own purchase of the product from an out-of-state vendor triggers use tax liability under Section 144.610, RSMo, rather than sales tax collection obligations on patient billings.

Out-of-state suppliers to Missouri medical practices

Vendors selling injectable cosmetic products into Missouri should be aware that the purchasing clinic, not the eventual patient, is treated as the taxable consumer under this ruling's reasoning, which affects how the purchasing practice must account for Missouri tax on the transaction.

Common questions

Q: Does the medical spa have to charge sales tax to patients for Botox or filler injections?
A: No. Because the spa's nurses are the ones who use and consume the cosmetic products by injecting them, the spa is treated as selling a non-taxable service to patients, not reselling the product itself.

Q: If the spa doesn't charge sales tax to patients, does it owe any tax at all?
A: Yes. The spa must pay Missouri use tax on its own out-of-state purchases of the cosmetic injection products, under Section 144.610, RSMo, because it is the one storing, using, or consuming those products within Missouri.

Q: Why does it matter that the products were purchased out of state?
A: Use tax under Section 144.610, RSMo, specifically applies to the privilege of storing, using, or consuming tangible personal property within Missouri that was purchased outside the ordinary Missouri sales-tax system (typically from an out-of-state seller). Since the spa bought the Botox, fillers, and similar products from out-of-state vendors and then used them in Missouri, use tax applies.

Q: Does this ruling apply to all Missouri medical spas or clinics offering injectables?
A: Not automatically. This is a Missouri letter ruling, binding on the Department only with respect to the requesting Applicant, only for three years from its date, and only so long as the facts and law remain unchanged. Another practice should confirm its own facts match those described here and consult a tax professional before relying on this result.

Q: What products were specifically covered by this ruling?
A: The ruling lists Botox Cosmetic, Xeomin, Dysport, Sculptra Aesthetic, Restylane Fillers, Juvederm fillers, and RHA fillers as the cosmetic injection products at issue.

Source

• Landing page: Missouri DOR Rulings Search
• Ruling: LR 8239

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 March 10, 2023.

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

Applicant is a medical spa that offers cosmetic injections. The cosmetic products are purchased from out of state and are injected by a registered nurse or nurse practitioner. The items include: Botox Cosmetic, Xeomin, Dysport, Sculptra Aesthetic, Restylane Fillers, Juvederm fillers, and RHA fillers.

ISSUE :

Are Applicant's out of state purchases of cosmetic products used in their injections subject to tax?

RESPONSE :

Yes. Applicant's out of state purchases of cosmetic products used in their injections are subject to sales or use tax pursuant to sections 144.020 and 144.610, RSMo.

Section 144.020.1, RSMo, provides "[a] tax is hereby levied and imposed ... upon all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail in this state." Section 144.010.1(13), RSMo, defines "Sale at Retail" as "any transfer made by any person engaged in business as defined herein of the ownership of, or title to, tangible personal property to the purchaser, for use or consumption and not for resale in any form as tangible personal property, for a valuable consideration."

144.610, RSMo, provides:

A tax is imposed for the privilege of storing, using, or consuming within this state any article of tangible personal property, excluding motor vehicles, trailers, motorcycles, mopeds, motortricycles, boats, and outboard motors required to be titled under the laws of the state of Missouri and subject to tax under subdivision (9) of subsection 1 of section 144.020, purchased on or after the effective date of sections 144.600 to 144.745 in an amount equivalent to the percentage imposed on the sales price in the sales tax law in section 144.020.

The cosmetic products listed by Applicant and purchased out of state are used and consumed within the state of Missouri by Applicant's nurses when they are injected into their patients.

Because Applicant is the one consuming the products used, they are selling a non-taxable service, not the products themselves. Therefore, they should not charge sales tax on the sales to their patients, but should pay use tax on the purchases.

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.

Sincerely,

Wayne Wallingford