Does an orthotist owe sales tax on braces, canes, crutches, and walkers it buys, and is fitting a brace a taxable medical service?

Plain-English summary

A certified orthotist measures, casts, fabricates, fits, and adjusts braces (custom and prefabricated) for patients, and also stocks canes, crutches, and walkers for sale -- all on doctors' prescriptions. Its CPA asked three questions about sales tax on the orthotist's purchases and services.

The Department's answers all turned on one point: an orthotist is not performing a "medical service":

• Braces and their parts -- not taxable. Braces are exempt medical equipment under Tax Law 1115(a)(3) unless bought for use in performing medical services for compensation. But the regulations (20 NYCRR 528.4(h)(2)) list what counts as a medical service (medicine, dentistry, therapy, chiropractic, nursing, podiatry, optometry, radiology), and an orthotist's fabricating and fitting work isn't on that list. So the orthotist's purchases of custom braces and component parts are not subject to tax.
• Canes, crutches, walkers -- not taxable. These are also medical equipment, taxable only if bought by someone performing a medical service for compensation. Since the orthotist isn't, its purchases of canes, crutches, and walkers are not subject to tax.
• Fitting a brace -- not a taxable service. Measuring, casting, fitting, and adjusting braces is not a "medical or similar service." The Department analogized it to fabricating orthopedic or corrective shoes, which is exempt under 20 NYCRR 528.4(f). So delivering and fitting a brace is not a taxable medical service.

What this means for you

Orthotists and providers of braces/mobility aids

Because the Department views an orthotist as not performing a "medical service," your purchases of braces, parts, canes, crutches, and walkers can be treated as exempt medical equipment rather than caught by the carve-out. Fabricating and fitting the device is treated like making orthopedic shoes -- not a taxable service.

The carve-out is about who performs a "medical service"

The section 1115(a)(3) exemption is lost when equipment is bought by someone performing a medical service for compensation -- the regulation's list is physicians, dentists, therapists, chiropractors, nurses, podiatrists, optometrists, radiologists, and similar. If your activity isn't on that list, the carve-out may not reach you.

Keep prescriptions and documentation

The devices here were doctor-prescribed. Solid documentation supports treating the items as exempt medical equipment.

Common questions

Q: An orthotist gets paid to fit braces -- isn't that a "medical service for compensation"?
A: The Department said no. Fabricating and fitting braces isn't a medical service under the regulation's definition; it's like making exempt orthopedic shoes.

Q: So the orthotist owes no tax on the braces, canes, crutches, or walkers it buys?
A: Correct -- because it isn't performing a medical service, those medical-equipment purchases aren't caught by the carve-out and are exempt.

Q: Would a physician buying the same items be taxed?
A: A person who buys medical equipment to use in performing a medical service for compensation is generally taxed under the section 1115(a)(3) carve-out. The orthotist differs because its activity isn't a "medical service."

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

Citations and references

• Tax Law section 1115(a)(3) (medical equipment exemption; carve-out for equipment used in performing services for compensation)
• 20 NYCRR 528.4(e) (definition of medical equipment)
• 20 NYCRR 528.4(f) (orthopedic/corrective shoes are exempt medical equipment)
• 20 NYCRR 528.4(h) (medical equipment used in performing medical services is taxable; what counts as a medical service)
• NYS Dept. of Taxation and Finance Publication 822 (taxable status of medical equipment and supplies)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1993.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a93_37s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-93 (37)S
Sales Tax
June 21, 1993

Taxpayer Services Division
Technical Services Bureau

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S930125A

On January 25, 1993, a Petition for Advisory Opinion was received from Bruce Mac
Corkindale, CPA, 137 Broadway, Suite H, Amityville, NY 11701.
The issues raised by Petitioner, Bruce Mac Corkindale, CPA, are:
1.

Whether purchases by an orthotist of custom made braces and any parts which are
used to manufacture braces to be used in performing a medical service for
compensation are subject to State and local sales and use taxes.

2.

Whether purchases by an orthotist of crutches, canes and walkers to be sold to
patients where no medical service is provided are subject to State and local sales and
use taxes.

3.

Whether an orthotist that delivers a prefabricated brace to a patient and assists in
fitting and adjusting the brace is performing a medical service.

Petitioner's client is an orthotist certified by the American Board of Certification in Orthotics.
An orthotist provides orthotic devices and consultation to the public. A majority of an orthotist's
work is in the manufacturing of or delivery of custom made and stock (prefabricated) braces to
individual patients.
Petitioner's client maintains an office in a hospital, as well as a private office, for the purpose
of providing orthotic services to patients of the immediate community. Generally, a patient's
diagnosis is determined by an orthopedic doctor or rehabilitation doctor. Such diagnosis indicates
what extremity of the patient's body is to be braced. The orthopedic doctor writes a prescription
describing what the brace is to be made of i.e., material, components, etc. The patient then locates
an orthotist who measures, casts, fabricates, fits, adjusts and delivers such brace to the patient.
Where a doctor prescribes a custom made brace for a patient, the orthotist takes a cast
(impression) and sends this impression to a company that manufactures a finished product (brace).
The orthotist then fits the brace on the patient and renders advice as to the proper use and care of the
brace. There is one charge for the brace. No fee is charged for fitting the brace or for rendering
advice.
Braces can be constructed of various metals (aluminum, steel or laminated plastic). Parts are
purchased from a company specifically designed for the orthotics industry and then hand crafted and
covered with leather.

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Sales Tax
June 21, 1993
In some cases, a brace does not have to be custom made but can be selected from an
inventory of prefabricated braces. The brace is then adjusted by the orthotist to fit the particular
patient's needs.
In addition to providing orthotic services to patients of the hospital, the orthotist maintains
an inventory of canes, crutches and walkers for sale. If a doctor prescribes that a patient should use
a cane, crutches, or a walker, a hospital employee will requisition such item from the orthotist's
office. No medical service is provided by the orthotist to the patient.
Section 1115 of the Tax Law provides, in part, as follows:
Sec. 1115. Exemptions from sales and use taxes.-- (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 cosmetics or toilet articles
notwithstanding the presence of medicinal ingredients therein or 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. (emphasis added)
Section 528.4 of the Sales and Use Tax Regulations provides, in part, as follows:
*

*

*

(e) Medical equipment. (1) Medical equipment means machinery, apparatus
and other devices (other than prosthetic aids, hearing aids, eye glasses and artificial
devices which qualify for exemption under section 1115(a)(4) of the Tax Law),
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.
*

*

*

(4) Medical equipment is not exempt if purchased by a person performing
medical or similar services for compensation.
*

*

*

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Sales Tax
June 21, 1993
(f) Orthopedic or corrective shoes. (1) Shoes made to specifications
prescribed by a podiatrist, orthopedist or other physician for the purpose of treating
or preventing illnesses or disease, or to correct physical incapacity are deemed to be
medical equipment and exempt from tax.
Example: Shoes made from a mold of a foot or shoes with
special devices to straighten malformed bones are exempt.
*

*

*

(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.
Example 1: Stethoscopes, syringes, wheel chairs, etc.
purchased by physicians are not exempt.
Example 2: Resuscitators, stretchers and other such
equipment purchased by an ambulance service are not exempt.
Example 3: Bandages, gauze, dressings, etc. are not exempt
when purchased by a physician, ambulance service or other person
who will use them in performing a medical service for compensation.
Example 4: Dental supplies such as porcelain, mercalloy,
gold, silver, acrylic denture base, amalgam, composite resin, silicate,
and dental floss are not exempt when purchased by a dentist who will
use them in performing a dental service for compensation.
(2) Medical services for human beings include but are not limited to the
practices of medicine, dentistry, therapy, chiropractic, nursing, podiatry, optometry
and radiology, whether performed by a private practitioner, clinical laboratory,
hospital, nursing home, ambulance service, clinic, or health maintenance facilities.
(emphasis added)
(3) It is immaterial whether the compensation is paid to the practitioner or
institution by the patient or another source.
Moreover, Taxable Status of Medical Equipment and Supplies, Prosthetic Devices and
Related Items, Publication 82 (7/87) at page 1, provides that braces, canes, crutches and walkers used
as medical equipment shall be exempt from sales and use taxes "unless purchased for use in
performing medical or similar services for compensation."
With respect to issue "1", pursuant to Sections 528.4(a) and (e) of the Sales and Use Tax
Regulations and Publication 822, supra, braces, including any component parts, constitute medical
equipment, and are subject to sales tax if purchased for use in performing medical or similar services
for compensation.

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Sales Tax
June 21, 1993
Petitioner's client's activities do not constitute a medical service as defined in Section 528.4(h)(2)
of the Sales and Use Tax Regulations. Accordingly, Petitioner's client's purchases of custom braces
and any component parts thereof are not subject to sales and use taxes.
Concerning issue "2", pursuant to Publication 822, supra, crutches, canes and walkers
constitute "medical equipment" within the meaning and intent of Section 1115(a)(3) of the Tax Law
and Section 528.4(e)(4) of the Sales and Use Tax Regulations and are subject to sales tax if
purchased by a person performing medical or similar services for compensation. Pursuant to Section
528.4(h)(2) of the Sales and Use Regulations Petitioner's client is not performing a medical service.
Therefore, Petitioner's client's purchases of crutches, canes and walkers are not subject to sales and
use taxes.
With respect to issue "3", Petitioner's client's activities do not constitute a "medical service"
within the meaning and intent of Section 1115(a)(3) of the Tax Law and Section 528.4(h) of the
Sales and Use Tax Regulations. Petitioner's client's activities of measuring, casting, fitting and
adjusting of custom and prefabricated braces are similar to those of someone who fabricates
orthopedic or corrective shoes, the charges for which are exempt from sales tax in accordance with
Section 528.4(f) of the Sales and Use Tax Regulations, and therefore do not constitute the
performance of a taxable medical or similar service for compensation.

DATED: June 21, 1993

/s/
PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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