Are collagen wound dressings and membranes used in dental surgery exempt from New York sales tax?

Plain-English summary

A medical-products maker sells collagen wound dressings and collagen membranes used in dental surgery. The dressings are absorbable sponges that help stabilize blood clots and protect wounds; the membranes are sutured in to support guided tissue regeneration. Both are made from bovine tendon collagen and are absorbed by the body over days to weeks. The maker asked whether they are exempt as prosthetic aids under Tax Law § 1115(a)(4).

The Office of Counsel concluded they are not prosthetic aids, but are exempt under a different provision. A prosthetic aid must primarily replace a missing body part or the function of a permanently inoperative one (20 NYCRR 528.5(b)); these products instead stabilize clotting and aid healing, so § 1115(a)(4) doesn't apply. However, Tax Law § 1115(a)(3) exempts products consumed by humans for the preservation of health, and where the dressings/membranes are left in place to be absorbed during healing, they qualify and are exempt. The catch: dressings sold for temporary use and removed before surgical closure are taxable supplies when purchased to perform medical services for compensation.

What this means for you

Medical and dental product makers / suppliers

Don't assume an absorbable surgical material is a "prosthetic aid." It may still be exempt, but as a product consumed for the preservation of health (§ 1115(a)(3)) when it's absorbed into the body. The right exemption category matters for documentation.

Dental and surgical practices

Absorbable dressings/membranes left in place during healing can be bought exempt. But the same products bought for temporary use (removed before closure) are taxable supplies you consume in providing medical services.

Accountants and tax professionals

Two distinct exemptions: § 1115(a)(4) (prosthetic aids, narrow, replacement-of-function test) vs. § 1115(a)(3) (preservation of health, substances used internally/externally). The in-situ-absorption fact is what triggers the (a)(3) exemption here (compare TSB-A-13(26)S).

Common questions

Q: Why aren't these prosthetic aids?
A: They don't replace a missing body part or the function of a permanently malfunctioning one; they support clotting and healing.

Q: So why are they exempt at all?
A: Because, when absorbed by the body during healing, they are products consumed for the preservation of health under § 1115(a)(3).

Q: When would a sale of these be taxable?
A: When sold for temporary use and removed before surgical closure, they are taxable supplies used in performing medical services for compensation.

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

Statutes and guidance:
- Tax Law § 1115(a)(4); § 1115(a)(3)
- 20 NYCRR 528.4; 528.5(b); TSB-A-13(26)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales-ao-2020.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a20-23s.pdf

Original ruling text

New York State Department of Taxation and Finance
Office of Counsel

TSB-A-20(23)S
Sales Tax
June 30, 2020

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION
The Department of Taxation and Finance received a Petition for Advisory Opinion from
[ REDACTED ] (Petitioner). Petitioner asks whether its sales of collagen wound dressings and
collagen membranes intended for use during dental surgery are exempt from State and local sales
and use tax (tax) under Tax Law § 1115(a)(4). We conclude that these products are not exempt
prosthetic aids under Tax Law § 1115(a)(4), but these products are exempt from tax under Tax
Law § 1115(a)(3) where they are consumed by humans for the preservation of health.
Facts
Petitioner is a medical products manufacturer. Petitioner’s product line includes collagen
wound dressings and collagen membranes intended for use during dental surgery.
Collagen wound dressings are soft, white, pliable, non-friable, absorbent sponges made
from collagen obtained from bovine deep flexor (Achilles) tendon. These wound dressings are
intended for use on moist or bleeding wounds created during dental surgery where a stabilized
blood clot can help control bleeding and protect the surface of the wound from further injury.
The wound dressings can be used as temporary dressings prior to surgical closure or left in situs;
the collagen wound dressings are totally absorbed by the body in 10 to 14 days.
Collagen membranes are white, compressed, absorbable, non-friable matrices made from
collagen obtained from bovine deep flexor (Achilles) tendon. These implantable membranes
have the strength to be sutured in place and provide wound stabilization and create space during
guided tissue regeneration procedures where an extended resorption profile is desired. The
membrane incorporates into the surrounding tissue and is generally absorbed within 4 to 8
weeks, eliminating the need for a second surgery to remove a non-absorbable membrane.
Analysis
Tax Law § 1115(a)(4) exempts from tax retail sales of “[p]rosthetic aids, hearing aids,
eyeglasses and artificial devices and component parts thereof purchased to correct or alleviate
physical incapacity in human beings.” Under the Sales Tax Regulations (Regulations), for
property to qualify as a prosthetic aid, it must be primarily or customarily used to either
completely or partially replace a missing body part or the function of a permanently inoperative
or permanently malfunctioning body part and not be generally useful otherwise. 20 NYCRR
528.5(b). The collagen wound dressings and collagen membranes do not completely or partially
replace a missing body part or the function of a completely inoperative or permanently

-2-

TSB-A-20(23)S
Sales Tax
June 30, 2020

malfunctioning body part. Instead, these products are designed to stabilize blood clotting and aid
the healing of wounds incurred during dental surgery. Thus, the collagen wound dressings and
collagen membranes are not prosthetic aids and are not exempt from tax under Tax Law §
1115(a)(4).
Tax Law § 1115(a)(3) provides an exemption for “products consumed by humans for the
preservation of health but not including cosmetics or toilet articles notwithstanding the presence
of medicinal ingredients therein.” Regulation § 528.4 provides that “[p]roducts consumed by
humans for the preservation of health include other substances used internally or externally,
which are not ordinarily considered drugs or medicines.” Following this explication of the
“preservation of health” exemption, both products described here qualify for exemption under
Tax Law § 1115(a)(3) to the extent that they are left in situs during dental surgery to be absorbed
by the human body during the healing/tissue regeneration process (see, TSB-A-13[26]S). Note,
however, that sales of collagen wound dressings or collagen membranes for temporary use prior
to surgical closure would be taxable supplies when purchased for performing medical and similar
services for compensation.
DATED: June 30, 2020

/S/
DEBORAH R. LIEBMAN
Deputy Counsel
NOTE:

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.