Is a SIDS apnea-monitor and resuscitator system exempt medical equipment, and is the intercom bundled with it also exempt?

Plain-English summary

Modern Medical Systems Co. (New Hyde Park, New York) sells or rents an infant apnea-monitor and resuscitator system used to detect and rescue an infant from asphyxiation — designed to help protect an infant at risk of "crib death" (Sudden Infant Death Syndrome). The system includes a Healthdyne Infant Monitor (Model 16000), an intercom, an Infant Ambu Bag, Patient Snap Leads, Electrodes, and a Healthdyne Belt with Leads, plus two home visits and delivery. The company asked whether the sale or rental is subject to sales tax.

The Department ruled the medical components are exempt, but the intercom is taxable.

• § 1115(a)(3) exempts medical equipment and supplies intended for use in the cure, mitigation, treatment or prevention of illness (excluding equipment purchased to perform medical services for compensation).
• 20 NYCRR 528.4(e) requires that, to qualify, the equipment be primarily and customarily used for medical purposes and not generally useful in the absence of illness, injury or physical incapacity.
• Exempt: the Healthdyne Infant Monitor (Model 16000), Infant Ambu Bag, Patient Snap Leads, Electrodes, and Healthdyne Belt with Leads — these qualify as exempt medical equipment or supplies.
• Taxable: the intercom. Although used together with the medical equipment, an intercom is generally useful even without illness or injury, so it fails the 528.4(e) test and its sale or rental is taxable under § 1105(a).

What this means for you

The medical-equipment exemption turns on a "not useful absent illness" test. Equipment qualifies only if it is primarily and customarily used for medical purposes and would not be generally useful in the absence of illness, injury or physical incapacity. Purpose-built clinical devices — monitors, resuscitation bags, leads, electrodes — clear that bar.

Bundling a general-purpose item with medical gear doesn't make it exempt. An everyday device like an intercom is taxable even when packaged and sold as part of a life-saving system, because it's useful in ordinary life too. The Department looks at each item's own character, not the bundle.

Consider itemizing mixed systems. Because some components are exempt and others taxable, separately identifying the taxable general-purpose items (like the intercom) helps apply tax correctly on the sale or rental.

Common questions

Q: Is an infant apnea monitor exempt from New York sales tax?
A: Yes. The monitor, along with the Ambu bag, leads, electrodes and belt, are exempt medical equipment or supplies under § 1115(a)(3) — they're primarily used for medical purposes and not generally useful absent illness or injury.

Q: Why is the intercom taxable if it's part of the medical system?
A: Because an intercom is generally useful even without illness or injury, it fails the medical-equipment test in 20 NYCRR 528.4(e). Its sale or rental is taxable even though it's used with the exempt equipment.

Q: Does renting (versus selling) the equipment change the answer?
A: No. Section 1105(a) taxes rentals as well as sales, so the same split applies: the medical components are exempt whether sold or rented, and the intercom is taxable either way.

Citations and references

Statutes, regulations and authority:

• Tax Law § 1105(a) — imposes sales tax on receipts from retail sales, including rentals, of tangible personal property
• Tax Law § 1115(a)(3) — exempts drugs, medicines and medical equipment and supplies intended for use in the cure, mitigation, treatment or prevention of illness (excluding items purchased to perform medical services for compensation)
• 20 NYCRR 528.4(e) — defines "medical equipment"; to qualify it must be primarily and customarily used for medical purposes and not generally useful in the absence of illness, injury or physical incapacity

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1981.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/h81_17s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-H-81(17)S
Sales Tax
February 10, 1981

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S801027B

On October 27, 1980, a Petition for Advisory Opinion was received from
Modern Medical Systems Co., 1655 Jericho Turnpike, New Hyde Park, New York
11040.
The issue raised is whether the sale or rental of a resuscitator and
apnea monitor system is subject to the sales tax imposed under Article 28 of
the Tax Law.
The following equipment is supplied and constitutes the system sold or
rented:
Healthdyne Infant Monitor, Model 16000
Intercom
Infant Ambu Bag
Patient Snap Leads
Electrodes
Healthdyne Belt with Leads (optional)
In addition, two home visitations and equipment delivery is included in the
sales or rental price of the system.
The purpose of this system is the detection of and rescue of an infant
from asphyxiation, and is designed for practical life-saving or brain damage
avoidance for an infant at risk for "crib death" or Sudden Infant Death
Syndrome (SIDS). An infant's respiration may be monitored by use of the apnea
monitor, intercom and related equipment. The resuscitator is used to revive
the infant should respiratory failure occur.
Section 1105(a) of the Tax Law imposes a tax on the receipts from retail
sales (including rentals) of tangible personal property. Section 1115(a)(3) of
the Tax Law exempts from such taxes "Drugs and medicines intended for use. . .
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.
. .but not including. . .medical equipment. . .and supplies. . . purchased at
retail for use in performing medical and similar services for compensation."
The Sales and Use Tax Regulations defines the term "medical equipment"
as ". . .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. . . . To
qualify such equipment must be primarily and customarily used for medical
purposes and not be generally useful in the absence of illness, injury or
physical incapacity." 20 NYCRR 528.4(e).

TP-8 (4/80)

JAMES H. TULLY, JR., COMMISSIONER
LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

2
TSB-H-81(17)S
Sales Tax
February 10, 1981

Accordingly. Petitioner's sales or rentals of the following equipment
constitute tax exempt sales or rentals of medical equipment or supplies:
Healthdyne Infant Monitor, Model 16000
Infant Ambu Bag
Patient Snap Leads
Electrodes
Healthdyne Belt with Leads
An intercom, although used on conjunction with the medical equipment
described above, is also generally useful in the absence of illness, injury or
physical incapacity. It therefore does not constitute exempt medical
equipment, pursuant to 20 NYCRR 528.4(e), quoted above. Accordingly, receipts
from the sale or rental of an intercom is subject to the tax imposed under
Section 1105(a) of the Tax Law.

DATED: January 23, 1981

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau