Is a flaxseed Moist Heat Pack for breastfeeding relief exempt from New York sales tax as medical equipment?

Plain-English summary

A seller asked whether its "Moist Heat Pack" -- a flannel pillow filled with flaxseed that can be heated or cooled and worn against the skin (in a water-resistant pouch) -- is exempt from sales tax as medical equipment. The product treats and helps prevent breastfeeding conditions like mastitis, clogged milk ducts, and milk blisters, and can also serve as a hot/cold pack for other ailments. It's sold to retailers and directly to consumers online, and may soon be sold to hospitals.

The Office of Counsel concluded the product is exempt medical equipment under Tax Law section 1115(a)(3):

• "Medical equipment" means devices intended for use in the cure, mitigation, treatment, or prevention of illness, or to correct/alleviate a physical incapacity (20 NYCRR 528.4(e)(1)).
• It qualifies only if it is primarily and customarily used for medical purposes and not generally useful in the absence of illness, injury, or incapacity (528.4(e)(2)).
• Heating pads and medical ice bags -- similar items -- already qualify (Publication 822), and this product generally is not useful absent illness, injury, or incapacity. So it's exempt.

Two limits:

• If the product is purchased at retail for use in performing medical (and similar) services for compensation, the exemption does not apply and the sale is taxable.
• Sales to a Tax Law section 1116(a) exempt organization (e.g., a qualifying hospital) are not taxable -- the seller should keep its invoice naming the organization plus the buyer's Form ST-119.1 (Exempt Organization Exempt Purchase Certificate).

What this means for you

Sellers of therapy/heat-cold products

A device that's primarily medical and not useful without illness or injury can be sold exempt as medical equipment -- heating pads and ice bags are the benchmark. Direct-to-consumer and retail sales are exempt without any exemption certificate.

Selling to providers vs. patients

The exemption is for the equipment itself, but it flips to taxable when a buyer purchases it at retail to deliver medical services for pay. Watch who your buyer is and how they'll use it.

Selling to hospitals / exempt organizations

Those sales are exempt on a different basis (section 1116(a)). Collect Form ST-119.1 and keep it with the invoice.

Common questions

Q: Do I need an exemption certificate to sell this tax-free to consumers?
A: No. The item itself is exempt medical equipment, so ordinary retail and online sales to consumers are exempt.

Q: When would this product be taxable?
A: When it's bought at retail for use in performing medical or similar services for compensation -- that purchase is excluded from the exemption.

Q: How do I handle a sale to a hospital?
A: If the hospital is a section 1116(a) exempt organization, the sale is exempt; keep your invoice and the hospital's Form ST-119.1.

Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your own facts.

Citations and references

• Tax Law section 1105(a) (sales tax on retail sales of tangible personal property)
• Tax Law section 1115(a)(3) (exemption for medical equipment)
• Tax Law section 1116(a) (exempt organizations)
• 20 NYCRR 528.4(e) (definition of medical equipment; primarily and customarily used for medical purposes)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2015.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a15_49s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-15(49)S
Sales Tax
December 11, 2015

Office of Counsel

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S150127A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
REDACTEDREDACTEDREDACTEDREDACTEDREDACTEDREDACTED (“Petitioner”).
Petitioner asks whether its Moist Heat Pack constitutes medical equipment exempt from sales
tax. We conclude that Petitioner’s Moist Heat Pack is medical equipment exempt from sales tax.
Facts
Petitioner’s Moist Heat Pack (the “Product”) is designed to provide relief from
breastfeeding pain and discomfort. It is used to treat various breastfeeding conditions such as
mastitis, clogged milk ducts and milk blisters, and also can help prevent mastitis. The Product
also can replace hot or cold packs that are used for other ailments.
The Product is a therapy pack composed of a cotton flannel pillow filled with flaxseed
that can be heated or cooled. The pillow is inserted into a food safe, water-resistant pouch. The
pouch can then be put in a bra against the skin. A cloth also can be attached to the pouch to wear
against the skin. This cloth can be moistened under warm or cold water.
Petitioner currently sells the Product to retailers and on the Internet directly to consumers.
Petitioner may begin selling the Product to hospitals soon.
Analysis
Sales tax is imposed on the sale, except for resale, of tangible personal property. See Tax
Law § 1105(a). Medical equipment, other than medical equipment purchased at retail for use in
performing medical and similar services for compensation, is exempt from sales and use tax
pursuant to Tax Law § 1115(a)(3). “Medical equipment means machinery, apparatus and other
devices . . . which are intended for use in the cure, mitigation, treatment or prevention of
illnesses or diseases or the correction or alleviation of physical incapacity in human beings.” 20
NYCRR § 528.4(e)(1). Equipment will qualify as medical equipment only if it is “primarily and
customarily used for medical purposes and [is] not [] generally useful in the absence of illness,
injury or physical incapacity.” 20 NYCRR § 528.4(e)(2).
Heating pads and medical ice bags, which are similar to Petitioner’s Product, have
previously have been determined to qualify as medical equipment. See Publication 822, Taxable
Status of Medical Equipment and Supplies, Prosthetic Devices, and Related Items. Additionally,
the Product generally is not useful in the absence of illness, injury or physical incapacity.
Accordingly, the Product constitutes medical equipment exempt from sales tax pursuant to Tax
Law § 1115(a)(3).

-2-

TSB-A-15(49)S
Sales Tax
December 11, 2015

Notably, if the Product is purchased at retail for use in performing medical and similar
services for compensation, the sale of the Product is excluded from the exemption provided by
Tax Law § 1115(a)(3), and is subject to sales tax. However, sales of equipment to an
organization that is exempt pursuant to Tax Law § 1116(a) are not subject to tax. See TSB-A14(16)S. Thus, if Petitioner eventually does sell the Product to hospitals for use in performing
medical services for compensation, Petitioner will need to determine whether the hospital is an
exempt organization pursuant to Tax Law § 1116(a). Petitioner’s records for each sale to an
exempt organization should include a copy of Petitioner’s invoice listing the exempt organization
as the purchaser and a copy of Form ST-119.1, Exempt Organization Exempt Purchase
Certificate, completed by the organization. See id.

DATED: December 11, 2015

NOTE:

/S/
DEBORAH R. LIEBMAN
Deputy Counsel

An Advisory Opinion is issued at the request of a person or entity. It is limited to the
facts set forth therein and is binding on the Department only with respect to the
person or entity to whom it is issued and only if the person or entity fully and
accurately describes all relevant facts. An Advisory Opinion is based on the law,
regulations, and Department policies in effect as of the date the Opinion is issued or
for the specific time period at issue in the Opinion. The information provided in this
document does not cover every situation and is not intended to replace the law or
change its meaning.