Is a hair-replacement system for male pattern baldness -- a custom mesh grid woven with human hair, fused into the client's existing hairline and serviced every 6-8 weeks -- exempt from sales tax as a prosthetic device?

Subject

, is whether its hair replacement system, is exempt from sales tax as a prosthetic device.

What this means for you

A hair-replacement business serves clients experiencing male pattern baldness (described as irreversible and sometimes accompanied by psychological effects). Its process: a flesh-tone mesh grid with human hair tied in is fused or woven into the client's existing hairline using nylon filaments or a liquid polymer, then attached by a licensed technician -- with return visits every 6-8 weeks for as long as the client wants to keep it, which only the company's trained technicians can perform.

New York exempts "prosthetic aids... and artificial devices... purchased to correct or alleviate physical incapacity in human beings," but only if the item completely or partially replaces a missing body part or malfunctioning bodily function AND is primarily/customarily used for that purpose (not generally useful absent illness or injury). The Department's own published guidance (Publication 822) explains that hair prostheses ARE exempt when used for a genuine medical problem, but since the same product is often bought for purely cosmetic reasons, sales tax must be collected up front regardless, and the customer must separately apply for a refund (Form AU-11) with an attending physician's statement documenting the specific medical need.

Separately, a 1978 Tax Commission decision held that the fitting and fusing of a hairpiece into a customer's natural hair is itself the taxable "installation" of tangible personal property (and later maintenance/styling visits are taxable servicing) -- regardless of whether the hairpiece purchase itself later qualifies for a medical refund. Because whether any specific client's purchase is for a "medical problem" versus cosmetic reasons is a factual question, the Department couldn't resolve it in this opinion; that determination happens through the refund-claim process, not up front at the point of sale.

Q&A

Q: Do we need to charge sales tax on our hair-replacement systems, or can we treat them as exempt medical prosthetics up front?
A: You must collect sales tax at the point of sale regardless of the client's reason for purchasing. If the client can show the prosthesis was needed for a genuine medical problem (not cosmetic), they can separately apply for a refund using Form AU-11, accompanied by an attending physician's statement.

Q: Is the fitting/fusing service itself ever exempt, even if the hairpiece purchase qualifies for a medical refund?
A: No -- per the 1978 Tax Commission precedent, fitting and fusing a hairpiece into a customer's own hair is treated as installing tangible personal property, a taxable service in its own right, separate from whatever tax treatment applies to the hairpiece purchase itself.

Q: What about our recurring maintenance/styling visits every 6-8 weeks?
A: Those are also taxable, following the same precedent that treats hairpiece styling/servicing as maintaining tangible personal property under the installation/repair services tax.

Q: How does a customer actually document the medical-need refund?
A: By filing Form AU-11 (Application for Credit or Refund) along with a statement from the treating physician describing the specific medical problem that created the need for the prosthesis.

Citations

• Tax Law § 1105(c)(3) -- taxes installing, maintaining, servicing, or repairing tangible personal property.
• Tax Law § 1115(a)(4) -- exempts prosthetic aids and artificial devices purchased to correct or alleviate physical incapacity.
• 20 NYCRR 528.5 -- qualifies an item as a prosthetic aid only if it replaces a missing/malfunctioning body part or function and isn't generally useful absent illness/injury.
• Allen Arthur Co., Inc., Dec St Tx Comm, October 6, 1978, TSB-H-78(60)S -- fitting/fusing a hairpiece into a customer's natural hair is a taxable installation of tangible personal property; subsequent styling is taxable servicing.
• New York State Department of Taxation and Finance, Publication 822 (7/87), "Taxable Status of Medical Equipment and Supplies, Prosthetic Devices and Related Items" -- hair prostheses are exempt only for a genuine medical problem; tax must be paid up front, with a refund available via Form AU-11 and physician documentation.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1995.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a95_9s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-95 (9)S
Sales Tax
April 10, 1995

Taxpayer Services Division
Technical Services Bureau

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S940727A

On July 27, 1994, a Petition for Advisory Opinion was received from Hair Club for Men of
Albany, Ltd., One Washington Square, Albany, New York 12205.
The issue raised by Petitioner, Hair Club For Men of Albany, Ltd., is whether its hair
replacement system, is exempt from sales tax as a prosthetic device.
Some of Petitioner's clients lose their hair as a direct result of Male Pattern Baldness.
Petitioner states that this condition is irreversible and will lead to total baldness and it may create
psychological problems that accompany baldness.
Petitioner has an in-depth technical method of giving hair back to its clients. The procedure
entails preparing a flesh tone mesh grid with human hair tied into the grid. A foundation is woven
or polyfused into the clients' existing hairlines using translucent nylon filaments or a breathing,
liquid polymer. The mesh grid is then attached to the foundation by a licensed technician. The
clients must return to the office for treatment and servicing of the hair prothesis every six to eight
weeks. These return visits continue as long as the clients wish to keep their hair, and can only be
done by Petitioner's professionally trained technicians.
Section 1105 of the Tax Law provides, in part, as follows:
Sec. 1105. Imposition of sales tax.... there is hereby imposed and there shall
be paid a tax ... upon:
(a) The receipts from every retail sale of tangible personal property, except
as otherwise provided in this article.
*

*

*

(c) The receipts from every sale, except for resale, of the following services:
*

*

*

(3) Installing tangible personal property, excluding a mobile home, or
maintaining, servicing or repairing tangible personal property, including a mobile
home, not held for sale in the regular course of business, whether or not the services
are performed directly or by means of coin-operated equipment or by any other
means, and whether or not any tangible personal property is transferred in
conjunction therewith...

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TSB-A-95 (9)S
Sales Tax
April 10, 1995
Section 1115(a) of the Tax Law provides, in pertinent 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 under section eleven
hundred ten:
*

*

*

(4) Prosthetic aids, hearing aids, eyeglasses and artificial devices and
component parts thereof purchased to correct or alleviate physical incapacity in
human beings.
Section 528.5 of the Sales and Use Tax Regulations provides, in part, as follows:
Reg. Sec. 528.5. Prosthetic aids .-- (Tax Law Secs. 1115(a)(4), 1115(g)).
(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 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. (emphasis added)
In Allen Arthur Co.. Inc.. Dec St Tx Comm, October 6, 1978, TSB-H-78(60)S, the Tax
Commission held that activities in the fitting and "fusion" of a hairpiece, incorporated into the
customer's natural hair, constituted the installing of tangible personal property within the intent and
meaning of Section 1105(c)(3) of the Tax Law and thus, the Petitioner was required to collect sales
tax with respect to such activities. In addition, the Tax Commission held that the activities of
applicant with respect to the styling of the customer's hair with the hairpiece in place constituted the
maintaining or servicing of tangible personal property within the intent and meaning of Section
1105(c)(3) of the Tax Law and thus, such activities were subject to sales tax.
Moreover, Taxable Status of Medical Equipment and Supplies, Prosthetic Devices and
Related Items, Publication 822 (7/87) at page 2, provides that "hair prostheses" are exempt to all if
the prosthesis is to be used as a result of a medical problem. However, since hair prosthesis may be
used for cosmetic purposes which do not relate to medical problems, sales tax must be paid when
it is purchased and an application for a refund of the tax paid must be submitted to support the
medical problem. Form AU-11, Application for Credit or Refund, when filed, must be accompanied
by a statement from the attending physician describing the specific medical problem which resulted
in the need for a prothesis.
Pursuant to Section 528.5(b) of the Sales and Use Tax Regulations, in order to qualify as a
prosthetic aid, a hair prothesis must completely or partially replace a missing body part or the

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TSB-A-95 (9)S
Sales Tax
April 10, 1995
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. Moreover, pursuant to Publication 822, supra, the purchase of
a hair prosthesis is exempt from sales tax where it is demonstrated that such prosthesis is to be used
as a result of a medical problem and not for cosmetic purposes. In Allen Arthur Co., Inc., supra, it
was held that the fitting and fusion of a hairpiece, incorporated into the customer's natural hair,
constituted the installation of tangible personal property and not use of a prosthetic aid, and
therefore, the purchase and installation of the hairpiece was held to be subject to sales tax pursuant
to Section 1105(c) of the Tax Law. Accordingly, the purchase of a hair prosthesis is exempt only
under Section 1115(a)(4) of the Tax Law where it is demonstrated that the prosthesis is to be used
as a result of a medical problem.
A determination in the instant case as to whether Petitioner's clients are purchasing a hair
prosthesis as a result of medical problems and not for cosmetic purposes is a factual question which
cannot be determined in an Advisory Opinion. An Advisory Opinion merely sets forth the
applicability of pertinent statutory and regulatory provisions to a "specified set of facts." Tax Law,
Section 171, subd. twenty-fourth; 20 NYCRR 23716.1(a). Such determination can be made,
however, by customers filing Form AU-11, Application for Credit or Refund, accompanied by a
statement from the attending physician describing the specific medical problem which resulted in
the need for a prothesis.

DATED: April 10, 1995

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

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