Are ventilators and related breathing equipment exempt from New York sales tax as prosthetic devices, or only as ordinary medical equipment and supplies?

Plain-English summary

A law firm asked, on behalf of a medical equipment distributor, how New York's sales tax exemptions apply to ventilators and related equipment (ventilator circuits, filters, oxygen concentrators, and suction units) used by patients with permanent lung or respiratory conditions who need mechanical help breathing, and separately to the equipment (including a 50 PSI compressor) used by patients who've had a tracheotomy — a surgical airway opening in the neck.

New York has two overlapping medical exemptions: one for prosthetic aids (property that completely or partially replaces a missing or permanently non-functioning body part) and a broader one for medical equipment and supplies used to treat illness or alleviate physical incapacity generally. The Department's answer turned entirely on how permanently the equipment substitutes for lost bodily function, not on what the equipment is called:

• Permanent ventilator patients: Where a ventilator and its component parts (circuits, filters, oxygen concentrators, suction units) completely or partially replace a permanently inoperative or malfunctioning lung/respiratory system, they qualify as exempt prosthetic aids.
• Non-permanent ventilator use (e.g., a ventilator used on a patient under anesthesia during surgery): this doesn't qualify as a prosthetic aid, but the equipment can still be exempt as ordinary medical equipment/supplies used in treatment — unless bought by someone performing medical services for compensation, in which case that exemption doesn't apply.
• Permanent tracheotomy patients: the compressor and related component parts qualify as exempt prosthetic aids, since they perform the function of a permanently inoperative body part.
• Temporary tracheotomy patients: the same equipment doesn't qualify as a prosthetic aid (since the impairment isn't permanent), but it can still be exempt as medical equipment/supplies used to correct or alleviate physical incapacity, again unless purchased by a compensated medical-service provider.

In every category, ordinary consumable supplies used alongside a qualifying prosthetic aid (rather than the aid itself) don't get the prosthetic-aid exemption, though a patient buying them directly may still separately qualify under the broader medical-supplies exemption.

What this means for you

Medical equipment distributors and suppliers

Whether a piece of respiratory equipment is exempt — and under which exemption — depends on whether it's replacing a permanent loss of function versus supporting a temporary condition. The same physical item (a ventilator, a compressor) can be a tax-exempt prosthetic aid for one patient and merely exempt (or even taxable) medical equipment for another, purely based on the patient's underlying condition and how long the impairment is expected to last.

Healthcare providers purchasing equipment for patient care

If you're a provider performing medical services for compensation, the general medical-equipment/supplies exemption doesn't apply to your purchases — that exemption is aimed at patients buying supplies for their own treatment, not providers buying inputs to deliver services. Confirm which exemption (if any) actually covers your specific purchase.

Accountants and tax professionals

This opinion extends the Department's established function-over-form approach to medical device classification (see also Comprehensive Dialysis Center of WNY and Cobe Laboratories) to ventilators and tracheotomy equipment specifically. The permanent-vs-temporary distinction is the single most important fact to nail down when advising on this exemption; supplies used alongside an exempt prosthetic aid remain a separate analysis from the aid itself.

Common questions

Q: Are all ventilators exempt from New York sales tax?
A: Not automatically. A ventilator is an exempt prosthetic aid only when it completely or partially replaces a permanently inoperative or malfunctioning lung/respiratory system. Ventilators used temporarily (such as during surgery) aren't prosthetic aids, though they may still be exempt as ordinary medical equipment.

Q: Does it matter whether a patient's tracheotomy is permanent or temporary?
A: Yes — that's the key fact. Permanent tracheotomy equipment qualifies as an exempt prosthetic aid; temporary tracheotomy equipment doesn't, though it can separately qualify as exempt medical equipment/supplies.

Q: Are supplies used alongside a ventilator or tracheotomy equipment exempt too?
A: Supplies used in conjunction with an exempt prosthetic aid are not covered by the prosthetic-aid exemption itself, though they may separately qualify as exempt medical supplies if purchased by the patient.

Q: Can another medical equipment company rely on this ruling?
A: No. This advisory opinion binds the Department only for the petitioner's client on the facts described. Confirm the permanence of the patient's condition and the purchaser's identity before assuming the same tax treatment.

Citations and references

Statutes and regulations:

• Tax Law § 1105(a) (tax on retail sales of tangible personal property)
• Tax Law § 1115(a)(3) (medical equipment and supplies exemption)
• Tax Law § 1115(a)(4) (prosthetic aids exemption)
• 20 NYCRR § 528.4 (medical equipment and supplies)
• 20 NYCRR § 528.5 (prosthetic aids, hearing aids, eyeglasses, and artificial devices)

Prior rulings referenced:

• Comprehensive Dialysis Center of WNY, Inc., Adv Op Comm T&F, Aug. 4, 1998, TSB-A-98(51)S
• Cobe Laboratories, Inc., Adv Op Comm T&F, Aug. 6, 1998, TSB-A-98(53)S
• Microvasive, Inc., Adv Op Comm T&F, March 28, 1989, TSB-A-89(9)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2001.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a01_5s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-01(5)S
Sales Tax
January 11, 2001

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S000523A

On May 23, 2000, the Department of Taxation and Finance received a Petition for Advisory
Opinion from Barrett Gravante Carpinello & Stern LLP, 100 State Street, Suite 900, Albany,
New York 12207. Petitioner, Barrett Gravante Carpinello & Stern LLP., submitted additional
information with respect to the Petition on July 7, 2000 and November 21, 2000.
The issues raised by Petitioner are:
1) Whether ventilators and the necessary component parts described below used to treat
patients with certain permanent lung and/or respiratory conditions who must receive oxygen through
a ventilator to sustain life are exempt from sales and compensating use taxes.
2) Whether such component parts as well as the 50 PSI compressor used with respect to
patients with permanently impaired respiratory function who have had permanent tracheotomies, but
are not on ventilators, are exempt from sales and compensating use taxes.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner’s client (“Corporation”) sells and distributes supplies, equipment, prosthetic aids,
and component parts, including ventilators and related component parts within New York State. The
related component parts include ventilator circuits, ventilator filters, oxygen concentrators (which
convert room air to oxygen), and suction units (canisters, tubing and related apparatus).
People afflicted with certain permanent lung and/or respiratory conditions must receive
oxygen through a ventilator to sustain life. Ventilators provide such afflicted patients with the
necessary levels of oxygen, which could not otherwise be obtained as a result of their malfunctioning
or inoperative lungs. As such, ventilators function to provide the patient with the power to receive
the necessary amount of oxygen to survive.
The related component parts described above are also used for patients with permanently
impaired respiratory function who have had tracheotomies, but are not on ventilators. A tracheotomy
is a surgical procedure in which an incision is made in the front of the neck and a breathing tube is
placed into the trachea, which is also called the windpipe. The tube that is placed into the trachea
is called a tracheotomy tube. A tracheotomy may be done on a permanent basis or on a temporary
basis, such as when there is an emergency and the normal airway is blocked by swelling or blood.
Patients that have a tracheotomy require such related component parts as well as a 50 PSI

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compressor that maintains moisture in the airway opening. These non-ventilator patients similarly
cannot breathe without mechanical support.
Applicable Law and Regulations
Section 1105(a) of the Tax Law imposes a tax on “(t) he receipts from every retail sale of
tangible personal property, except as otherwise provided in this article.”
Section 1115(a) of the Tax Law provides, in part:
(a) Receipts from the following shall be exempt from the tax on retail sales
imposed under subdivision (a) of section eleven hundred five and the compensating
use tax imposed under section eleven hundred ten:
*

*

*

(3) Drugs and medicines intended for use, internally or externally, in the cure,
mitigation, treatment or prevention of illnesses or diseases in human beings, medical
equipment (including component parts thereof) and supplies required for such use or
to correct or alleviate physical incapacity, and products consumed by humans for the
preservation of health but not including... medical equipment (including component
parts thereof) and supplies, other than such drugs and medicines, purchased at retail
for use in performing medical and similar services for compensation.
(4) Prosthetic aids, hearing aids, eyeglasses and artificial devices and
component parts thereof purchased to correct or alleviate physical incapacity in
human beings.
Section 528.4 of the Sales and Use Tax Regulations provides, in part:
*

*

*

(g) Supplies. (1) Supplies used in the cure, mitigation, treatment or prevention
of illnesses or diseases or for the correction and alleviation of physical incapacity are
exempt.
*

*

*

(2) Medical supplies are not exempt if purchased by a person performing
medical or similar services for compensation....

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(h) Taxable medical equipment and supplies. (1) Medical equipment and
supplies purchased for use in performing medical or similar services for
compensation are not exempt from tax.
Section 528.5 of the Sales and Use Tax Regulations provides, in part:
(a) Exemption. Prosthetic aids, hearing aids, eyeglasses and artificial devices
and component parts thereof, purchased to correct or alleviate physical incapacity in
human beings are exempt from the tax.
(b) Qualifications. (1) In order to qualify as a prosthetic aid, a hearing aid,
eyeglasses or an artificial device, the property must either completely or partially
replace a missing body part or the function of a permanently inoperative or
permanently malfunctioning body part and must be primarily and customarily used
for such purposes and not be generally useful in the absence of illness, injury or
physical incapacity.
(c) Replacement parts. (1) Replacement parts for prosthetic aids, hearing aids,
eyeglasses and artificial devices must be identifiable as such at the time the retail sale
is made. If the replacement parts are not identifiable parts for prosthetic aids, the
purchaser must pay the tax at the time of purchase. The purchaser may apply . . . for
a refund of the tax paid provided he can show that the replacement parts were used
on exempt prosthetic aids.
*

*

*

(2) Supplies used in conjunction with prosthetic aids, hearing aids, eyeglasses
and artificial devices are not exempt from the tax.
Opinion
Issue 1
The function of the ventilator is key in determining whether it should be classified as medical
equipment or as a prosthetic aid (see Comprehensive Dialysis Center of WNY, Inc., Adv Op Comm
T&F, August 4, 1998, TSB-A-98(51)S; Cobe Laboratories, Inc., Adv Op Comm T&F, August 6,
1998, TSB-A-98(53)S). In patients with permanently inoperative or permanently malfunctioning
lungs or respiratory systems, the ventilator and component parts thereof replace the function of the
lung or respiratory system. Therefore, and to the extent that the ventilator and component parts

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thereof such as the ventilator circuits, filters, oxygen concentrators and suction units completely or
partially replace permanently inoperative or permanently malfunctioning lungs or respiratory
systems, the ventilator and such component parts qualify as prosthetic aids and parts under Section
1115(a)(4) of the Tax Law and Section 528.5 of the Sales and Use Tax Regulations. Therefore, in
such cases, the exemption under Section 1115(a)(4) of the Tax Law would apply. However, supplies
used in conjunction with such prosthetic aids are not exempt under Section 1115(a)(4) but may be
exempt under Section 1115(a)(3) if purchased by the patient.
Ventilators that are not used to completely or partially replace permanently inoperative or
permanently malfunctioning lungs or respiratory systems, as in the case where a ventilator is used
for patients under anesthesia when undergoing surgery, would not qualify as a prosthetic aid.
However, ventilators, component parts and related supplies which are not exempt under Section
1115(a)(4) of the Tax Law but are used in the cure, mitigation, treatment or prevention of illness or
disease in human beings or to correct or alleviate physical incapacity, for example used in surgery
as noted above, are exempt from sales and use taxes under Section 1115(a)(3) of the Tax Law,
except when purchased at retail by a non-exempt purchaser for use in performing medical and similar
services for compensation. See Microvasive, Inc., Adv Op Comm T&F, March 28, 1989, TSB-A­
89(9)S.
Issue 2
Where a tracheotomy is done on a permanent basis, the component parts described above and
the 50 PSI compressor used to facilitate the tracheotomy are considered to be performing the
function of a permanently inoperative or permanently malfunctioning body part. Therefore, in such
a situation, the compressor and component parts would constitute prosthetic aids and parts within
the meaning and intent of Section 1115(a)(4) of the Tax Law and Section 528.5 of the Sales and Use
Tax Regulations, and sales of such compressor and component parts for such purpose would be
exempt. However, supplies used in conjunction with such prosthetic aids are not exempt under
Section 1115(a)(4) but may be exempt under Section 1115(a)(3) if purchased by the patient.
Where a tracheotomy is done on a temporary basis, the component parts and the compressor
used in connection with such tracheotomies do not completely or partially replace a missing body
part or the function of a permanently inoperative or permanently malfunctioning body part.
Accordingly, they do not qualify for exemption under Section 1115(a)(4) of the Tax Law and Section
528.5 of the Sales and Use Tax Regulations. The compressor, component parts, and related supplies
in this instance would constitute medical equipment and supplies intended for use in the correction
or alleviation of physical incapacity. (See Section 1115(a)(3) of the Tax Law and Section 528.4(e)
of the Sales and Use Tax Regulations). Therefore, such compressors, component parts and related
supplies used for such temporary purpose would be exempt from sales and use taxes under Section

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1115(a)(3) of the Tax Law, except when purchased at retail by a non-exempt purchaser for use in
performing medical and similar services for compensation.

DATED: January 11, 2001

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist III
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.