Which items on a medical-equipment company's product list — diabetic supplies, wheelchairs, braces, oxygen equipment, wound care supplies, and more — are exempt from Tennessee sales and use tax, and does a prescription, rental (vs. sale), or payment method change the answer?

Subject

Sales and use tax treatment of medical equipment and supplies rented and sold to patients.

Plain-English summary

The Tennessee Department of Revenue ruled item-by-item on 22 categories of medical equipment and supplies that a durable-medical-equipment (DME) company rents and sells to patients, applying five statutory sales-tax exemptions effective January 1, 2008 (2007 Tenn. Pub. Acts, ch. 602):

• Prosthetic devices (worn on/in the body to replace, correct, or support): exempt with no prescription needed. Includes diabetic shoes/inserts, neck/ankle/knee braces, and TENS units and CPAPs/Bi-PAPs while worn on the body.
• Durable medical equipment (reusable, not worn on the body, generally useful only to the sick/injured): exempt only if prescribed and for home use. Includes bedside commodes, table-top CPAPs/Bi-PAPs, hospital beds, and pressure mattresses. Diabetic (blood glucose) meters and nebulizers are DME but fail because they're meant to travel with the patient everywhere, not stay in the home.
• Oxygen delivery equipment and disposable supplies: exempt, no prescription needed — oxygen concentrators, tubing, masks, tanks.
• Mobility enhancing equipment (helps a person move, not usable by people with normal mobility): exempt if prescribed — power/manual wheelchairs, walkers, lift chairs, raised toilet seats, GeriChairs, trapeze bars.
• Drugs, including prescribed OTC drugs: exempt if prescribed and for human use — Gladase C wound cream, medicated dressings, insulin and syringes.

Everything else — lancets, diabetic test strips and control solution, most non-medicated wound-care supplies (gauze, tape, Kerlex), heat therapy pumps, and tracheotomy kits — falls outside all five categories and stays taxable. Two items flip differently before/after January 1, 2008: seat cushions/gel overlays lost their exemption on that date, while TENS units gained one. The ruling also confirms that renting an item (versus selling it) doesn't change its tax treatment, and that payment source (insurance, Medicare, TennCare, or cash) never affects exemption eligibility.

What this means for you

Durable medical equipment retailers and rental companies

Don't assume a whole product line is exempt or taxable as a category — Tennessee applies exemptions item-by-item based on precise statutory definitions, and near-identical products can land differently. A blood glucose meter (taxable, not "for home use") and a hospital bed (exempt DME) are both "durable medical equipment" in a loose sense, but only one qualifies. Track which of your SKUs need a prescription on file and which don't — errors go against you since exemptions are narrowly construed.

Accountants and tax professionals

The ruling is a useful working checklist across the five DME-family exemptions (Tenn. Code Ann. § 67-6-314(1), (2), (3), (6) and § 67-6-320(a)). Note the recurring "for home use" test that trips up items meant to travel with the patient (glucose meters, nebulizers) even though they otherwise fit the DME definition, and the "worn on the body" line that moves an item between the no-prescription prosthetic-device exemption and the prescription-required DME exemption (CPAPs, Bi-PAPs, TENS units).

Common questions

Q: Does a prescription matter for every medical exemption?
A: No. Prosthetic devices and oxygen delivery equipment/supplies are exempt with no prescription required; durable medical equipment, mobility enhancing equipment, and drugs (including OTC drugs) require a prescription to qualify.

Q: Does renting instead of selling equipment change whether it's exempt?
A: No. Tennessee's definition of "sale" includes leases and rentals, so an item that qualifies for exemption keeps that exemption whether it's rented or sold.

Q: Does it matter whether insurance, Medicare, TennCare, or cash pays for the item?
A: No. Exemption eligibility doesn't depend on the payment source.

Q: Why are diabetic test strips and glucose meters taxable if they're medical supplies?
A: Test strips, lancets, and control solution aren't covered by any statutory exemption. Glucose meters are technically durable medical equipment but fail the "for home use" requirement because they're designed to travel with the patient everywhere.

Q: Does this ruling apply to my DME business?
A: No. A Tennessee letter ruling binds the Department only for the specific taxpayer and facts addressed and cannot be relied on by others, though it's a useful illustration of how the Department classifies common DME products.

Citations and references

Statutes:

• Tenn. Code Ann. § 67-6-314(1) (Supp. 2007) (prosthetic devices, no prescription required, human use)
• Tenn. Code Ann. § 67-6-314(2) (Supp. 2007) (durable medical equipment, prescription + home use required)
• Tenn. Code Ann. § 67-6-314(3) (Supp. 2007) (oxygen delivery equipment/disposable supplies, no prescription required)
• Tenn. Code Ann. § 67-6-314(6) (Supp. 2007) (mobility enhancing equipment, prescription required)
• Tenn. Code Ann. § 67-6-320(a) (Supp. 2007) (drugs, incl. prescribed OTC drugs, excludes grooming/hygiene products)
• Tenn. Code Ann. § 67-6-102(28), (29), (48), (62), (70)(A) (Supp. 2007) (definitions of drug, DME, mobility enhancing equipment, prosthetic device, and sale/rental)
• 2007 Tenn. Pub. Acts, ch. 602, effective January 1, 2008 (source of the current exemption scheme)

Source

• Landing page: https://www.tn.gov/revenue/tax-resources/legal-resources/tax-rulings.html
• Original PDF: https://www.tn.gov/content/dam/tn/revenue/documents/rulings/sales/08-15.pdf

Original ruling text

TENNESSEE DEPARTMENT OF REVENUE
LETTER RULING # 08-15
WARNING
Letter rulings are binding on the Department only with respect to the individual taxpayer
being addressed in the ruling. This presentation of the ruling in a redacted form is
informational only. Rulings are made in response to particular facts presented and are not
intended necessarily as statements of Department policy.
SUBJECT
Application of the Tennessee sales and use tax to the rental and sale of various items of medical
equipment and supplies.
SCOPE
This letter ruling is an interpretation and application of the tax law as it relates to a specific set of
existing facts furnished to the Department by the taxpayer. The rulings herein are binding upon
the Department, and are applicable only to the individual taxpayer being addressed.
This letter ruling may be revoked or modified by the Commissioner at any time. Such revocation
or modification shall be effective retroactively unless the following conditions are met, in which
case the revocation shall be prospective only:
(A) The taxpayer must not have misstated or omitted material facts involved in
the transaction;
(B) Facts that develop later must not be materially different from the facts upon
which the ruling was based;
(C) The applicable law must not have been changed or amended;
(D) The ruling must have been issued originally with respect to a prospective or
proposed transaction; and
(E) The taxpayer directly involved must have acted in good faith in relying upon
the ruling and a retroactive revocation of the ruling must inure to his detriment.

FACTS
[TAXPAYER] is a Tennessee limited liability company set up to rent and sell various items of
medical equipment and supplies. All of the Taxpayer’s customers are patients with a
prescription for the equipment and supplies rented and sold. The Taxpayer bills private
insurance, Medicare or TennCare for payment of the equipment and supplies for the majority of

its business; however, for the one percent (1%) of the Taxpayer’s business where the customer
has no insurance or the items rented and sold are not payable by insurance, the customer pays
cash for the equipment and supplies.
Provided by the Taxpayer is a list of various items of equipment, associated parts and supplies.
The items of tangible personal property are as follows:
1.

Diabetic Meters, Lancets, Lancet Devices, Diabetic Strips, and Control Solution

2.

Diabetic Shoes and Shoe Inserts

3.

Power Wheelchairs- Batteries (Gel), Casters, Fork Assembly, and Parts

4.

Manual Wheelchairs, Crutches, Canes, Walkers, Rollators and Cam Walkers

5.

Braces: Neck, Ankles and Knee

6.

Lift Chairs and Lift Chair Mechanisms

7.

Seat Assists, Gel Cushions for Seating, and Gel Overlays

8.

Bedside Commodes

9.

Raised Toilet Seats

10.

Heat Therapy Pumps and Pump Replacement Pads

11.

4x4 Pads, 2x2 Pads, Surgical Tape, Gauze, Kerlex, Duoderm, and Conform

12.

Tracheotomy Kits

13.

Gladase C

14.

TENS Units- Electrodes and Leads

15.

Oxygen Concentrators- Tubing, Nasal Cannula, Filters, Tanks and Masks

16.

CPAPs- Tubing, Filters and Masks

17.

Bi-PAPs- Tubing, Filters and Masks

18.

Nebulizer- Circuits and Filters

19.

GeriChairs

20.

Hospital Beds and Bed Mattresses

21.

Alternating Pressure Mattresses and Low Air Loss Mattresses

22.

Trapeze Bars

QUESTIONS

1. Are the medical equipment and supplies listed above exempt for purposes of the
   Tennessee sales and use tax laws, as amended by 2007 Tenn. Pub. Acts, Chapter 602,
   effective January 1, 2008?

2

2. With respect to the sales and use tax laws in effect as of January 1, 2008, is a prescription
required for an exemption to apply?

3. Are the medical equipment and supplies listed above exempt for purposes of the
   Tennessee sales and use tax laws in effect through December 31, 2007?
4. Can the medical equipment and supplies be rented as well as sold, and still qualify for an
   exemption as determined under Questions 1 and 2?
5. Can the medical equipment and supplies be paid for by private insurance, Medicare,
   TennCare and/or with cash and still qualify for an exemption as determined under
   Questions 1 and 2?
   RULING
   The following table provides the answers to Questions 1 and 2:
   Items
   1.
   2.
   3.
   4.
   5.
   6.
   7.
   8.
   9.
   10.
   11.
   12.
   13.
   14.

Prescription
Required
as of 1/1/08?

Diabetic Meters, Lancets, Lancet Devices,
Diabetic Strips, and Control Solution
Diabetic Shoes and Shoe Inserts
Power Wheelchairs- Batteries (Gel), Casters, Fork
Assembly, and Parts
Manual Wheelchairs, Crutches, Canes, Walkers,
Rollators and Cam Walkers
+Braces: Neck, Ankles and Knee
Lift Chairs and Lift Chair Mechanisms
^Seat Assists, Gel Cushions for Seating, and Gel
Overlays
Bedside Commodes
Raised Toilet Seats
Heat Therapy Pumps and Pump Replacement Pads
Wound Care Supplies: 4x4 Pads, 2x2 Pads,
Surgical Tape, Gauze, Kerlex, Duoderm, and
Conform
Tracheotomy Kits
Wound Care Supply: Gladase C
^TENS Units- Electrodes and Leads

3

Exempt
as of
1/1/08?
No

☼Applicable
Exemption

No
Yes

Yes
Yes

Prosthetic
MEE

Yes

Yes

MEE

No
Yes

Yes
Yes
No

Prosthetic
MEE
None

Yes
Yes

*Yes
Yes
No
No

DME
MEE
None
None

No
Yes
Yes
*Yes

None
Drug
Prosthetic
DME

Yes
No-worn
Yes-not worn

None

Items
15.
16.

Oxygen Concentrators- Tubing, Nasal Cannula,
Filters, Tanks and Masks
CPAPs- Tubing, Filters and Masks

17.

Bi-PAPs- Tubing, Filters and Masks

18.
19.
20.
21.

Nebulizer- Circuits and Filters
GeriChairs
Hospital Beds and Bed Mattresses
Alternating Pressure Mattresses and Low Air Loss
Mattresses
Trapeze Bars

22.

Prescription
Required
as of 1/1/08?
No

Exempt
as of
1/1/08?
Yes

☼Applicable
Exemption

No-worn
Yes-not worn
No-worn
Yes-not worn
Yes
Yes
Yes

Yes
Yes
Yes
Yes
No
Yes
Yes
Yes

Prosthetic
DME
Prosthetic
DME
None
MEE
DME
DME

Yes

Yes

MEE

Oxygen

☼
MEE: “Mobility enhancing equipment” exempt under Tenn. Code Ann. § 67-6-314(6) (Supp. 2007)
DME: “Durable medical equipment” exempt under Tenn. Code Ann. § 67-6-314(2) (Supp. 2007)
Prosthetic: “Prosthetic devices” exempt under Tenn. Code Ann. § 67-6-314(1) (Supp. 2007)
Drug: “Drug” exempt under Tenn. Code Ann. § 67-6-320(a) (Supp. 2007)
Oxygen: “Oxygen delivery equipment” exempt under Tenn. Code Ann. § 67-6-314(3) (Supp. 2007)
+Note that braces are “prosthetics devices” that qualify for the exemption under Tenn. Code Ann. § 67-6-314(2) (Supp. 2007);
however, non-medicated ace bandages, elastic bandages and gauze wraps are not prosthetic devices and are taxable.

*For items that are “durable medical equipment,” to qualify for the exemption under Tenn. Code Ann. § 67-6-314(2) (Supp.
2007), the item must be dispensed pursuant to a prescription and for home use.
^ For these items, the exemption determination as of January 1, 2008, differs from the result through December 31, 2007.

3. The items of medical equipment and supplies qualify for an exemption from the sales and
   use tax laws in effect through December 31, 2007, the same as provided in the table
   above for the sales and use tax laws effective January 1, 2008, with the following
   exceptions: (1) seat cushions, gel cushions for seating, and gel overlays are exempt only
   through December 31, 2007, and (2) TENS units, with its related electrodes and leads, are
   durable medical equipment and are exempt only as of January 1, 2008, when dispensed
   pursuant to a prescription and generally understood for use in the home.
4. Yes. The definition of a “sale” under Tenn. Code Ann. § 67-6-102(70)(A) (Supp. 2007)
   includes a “lease or rental;” therefore, the rental, versus a sale, of an item does not affect
   its taxability. If items of medical equipment and supplies otherwise qualify for a sales
   and use tax exemption, the items can be rented and still qualify.
5. Yes. If items of medical equipment and supplies qualify for a sales and use tax
   exemption as provided by the table above, the item qualifies for an exemption regardless
   whether the item is paid for by private insurance, Medicare, TennCare or with cash.
   ANALYSIS
   1.

Exemptions/Prescriptions

4

Under the Retailers’ Sales Tax Act, Tenn. Code Ann. § 67-6-101 et seq., the sale of tangible
personal property, which includes medical equipment and supplies, is generally subject to the
sales and use tax. An item of tangible personal property is exempt for purposes of the Tennessee
sales and use tax only if the item is specifically included within the scope of a statutory
exemption. The Taxpayer requested a ruling that includes the taxability of the items of medical
equipment and supplies provided by the Taxpayer according to the sales and use tax laws in
effect through December 31, 2007. However, the following analysis primarily is limited to
treatment of the sales and use tax laws effective January 1, 2008, because of the limited
applicability of the laws in effect through December 31, 2007. Accordingly, a detailed analysis
is not provided for the 2007 determinations. While the exact basis for an exemption may differ,
the result changes as of January 1, 2008, in only two instances, i.e. seat cushions, gel cushions
for seating, and gel overlays and TENS units, with its related electrodes and leads, and additional
analysis is provided in those cases.
Effective January 1, 2008, the following five exemptions are applicable to the list of medical
equipment and supplies provided by the Taxpayer:
(1)

Exemption for prosthetic devices for human use.

Tenn. Code Ann. § 67-6-314(1) (Supp. 2007) provides an exemption from the sales and use tax
for prosthetic devices. Tenn. Code Ann. § 67-6-102(62)(A) (Supp. 2007) defines the term
“prosthetic device” as “a replacement, corrective or supportive device including repair and
replacement parts for same worn on or in the body to: (i) Artificially replace a missing portion
of the body; (ii) Prevent or correct physical deformity or malfunction; or (iii) Support a weak
or deformed portion of the body[.]” Note that Tenn. Code Ann. § 67-6-102(62)(B) (Supp.
2007) specifically excludes corrective eyeglasses and contact lenses from the definition of
“prosthetic device.” No prescription is required for a prosthetic device to qualify for the
exemption; however, Tenn. Code Ann. § 67-6-314(1) (Supp. 2007) limits the exemption by
requiring items to be “for human use.”
(2)

Exemption for durable medical equipment for home use with a prescription.

Tenn. Code Ann. § 67-6-314(2) (Supp. 2007) provides an exemption from the sales and use tax
for durable medical equipment. Tenn. Code Ann. § 67-6-102(29) (Supp. 2007) defines “durable
medical equipment” as equipment and replacement parts that a person can use repeatedly for a
medical purpose, which is not “worn in or on the body” and is generally useful only to a person
who is sick or injured. Note that Tenn. Code Ann. § 67-6-102(29) (Supp. 2007) specifically
excludes “mobility enhancing equipment” from the definition of “durable medical equipment.”
In addition, Tenn. Code Ann § 67-6-314(2) (Supp. 2007) further limits the exemption by
requiring items to be “dispensed pursuant to a prescription.”
Furthermore, to qualify for the sales and use tax exemption as durable medical equipment, the
medical equipment must be “for home use.” Tenn. Code Ann. § 67-6-314(2) (Supp. 2007).
Thus, purchases of durable medical equipment by for-profit hospitals, physicians, nursing
facilities and treatment centers for use in such facilities do not qualify for the exemption. On the
other hand, purchases by patients of durable medical equipment that is of a nature such that it is
generally understood and intended to be used in the patient’s home do qualify for the exemption.
For example, a blood glucose meter is durable medical equipment that does not qualify for an
5

exemption because it is not primarily intended “for home use.” Rather, a blood glucose meter is
intended for use everywhere and is meant to be taken with the patient and used in any place the
patient goes.
(3)

Exemption for oxygen delivery equipment and disposable medical supplies.

Tenn. Code Ann. § 67-6-314(3) (Supp. 2007) provides an exemption for “oxygen delivery
equipment,” such as oxygen tents, as well as for “disposable medical supplies,” such as oxygen
masks, that are “necessary to administer or deliver medical oxygen.” No prescription is required
for oxygen delivery equipment.
(4)

Exemption for mobility enhancing equipment with a prescription.

Tenn. Code Ann. § 67-6-314(6) (Supp. 2007) provides an exemption for mobility enhancing
equipment. Tenn. Code Ann. § 67-6-102(48) (Supp. 2007) defines “mobility enhancing
equipment” as equipment used to enable or assist a person “to move from one place to another”
that generally is not used by persons “with normal mobility,” which is appropriate for use “in a
home or motor vehicle,” but does not include any “motor vehicle or equipment on a motor
vehicle normally provided by a motor vehicle manufacturer.” Note that Tenn. Code Ann. § 676-102(48) (Supp. 2007) specifically excludes “durable medical equipment” from the definition of
“mobility enhancing equipment.” In addition, Tenn. Code Ann § 67-6-314(6) (Supp. 2007)
further limits the exemption by requiring items to be “dispensed pursuant to a prescription.”
(5)

Exemption for drugs, including over-the-counter drugs, for human use dispensed
with a prescription.

Tenn. Code Ann. § 67-6-320(a) (Supp. 2007) provides an exemption for drugs. Tenn. Code
Ann. § 67-6-102(28) (Supp. 2007) defines “drug” as a “compound, substance or preparation”
that either is recognized in the United States Pharmacopoeia, Homeopathic Pharmacopoeia, or
National Formulary, “intended for use in the diagnosis, cure, mitigation, treatment, or
prevention of disease” or “intended to affect the structure or any function of the body[.]” In
addition, Tenn. Code Ann. § 67-6-320(a) (Supp. 2007) includes “over-the-counter drugs” in
the exemption for “drugs,” provided that the drugs are “dispensed pursuant to a prescription.”
However, Tenn. Code Ann. § 67-6-320(a) (Supp. 2007) specifically excludes “grooming and
hygiene products” from the definition of “over-the-counter drugs.” Tenn. Code Ann. § 67-6320(a) (Supp. 2007) further limits the exemption by requiring items to be “for human use.”
The exemption provisions cited above are applicable to specific items of medical equipment and
supplies as follows:

1. Diabetic Meters, Lancets, Lancet Devices, Diabetic Strips, and Control Solution
   Lancets, lancet devices, diabetic strips and control solution, are not included in any statutory
   exemption; therefore, they are taxable for purposes of the sales and use tax. Diabetic meters, or
   blood glucose meters, are durable medical equipment as defined by Tenn. Code Ann. § 67-66

102(29); however, a diabetic meter does not qualify for the exemption because it is not primarily
intended “for home use” as required by Tenn. Code Ann. § 67-6-314(2) (Supp. 2007). Rather, a
blood glucose meter is intended for use everywhere and is meant to be taken with the patient and
used in any place the patient goes.
Nonetheless, insulin and syringes used to dispense insulin for human use are exempt under Tenn.
Code Ann. §§ 67-6-320(b)(1) and 67-6-314(7) (Supp. 2007), respectively.

2. Diabetic Shoes and Shoe Inserts
   Diabetic shoes and shoe inserts are included in the category of orthopedic shoes, shoe lifts,
   inserts, arch supports and heal protectors, and therefore qualify for exemption as a prosthetic
   device for human use under Tenn. Code Ann. § 67-6-314(1) (Supp. 2007). No prescription is
   required for a prosthetic device.
3. Power Wheelchairs- Batteries (Gel), Casters, Fork Assembly, and Parts
   Power wheelchairs, including batteries (gel), casters, fork assembly and parts are exempt from
   sales and use tax as mobility enhancing equipment when dispensed pursuant to a prescription
   under Tenn. Code. Ann. § 67-6-314(6) (Supp. 2007).
4. Manual Wheelchairs, Crutches, Canes, Walkers, Rollators and Cam Walkers
   Manual wheelchairs, crutches, canes, walkers, rollators and cam walkers are exempt as mobility
   enhancing equipment when dispensed pursuant to a prescription under Tenn. Code Ann. § 67-6314(6) (Supp. 2007).
5. Braces: Neck, Ankles and Knee
   Neck, ankle and knee braces are items normally to be used to brace, support or align the skeletal
   or muscular system, and are therefore exempt as prosthetic devices under Tenn. Code Ann. § 676-314(1) (Supp. 2007). No prescription is required for a prosthetic device. However, nonmedicated ace bandages, elastic bandages and gauze wraps are not defined as prosthetic devices
   and are taxable.
6. Lift Chairs and Lift Chair Mechanisms
   Lift chairs and lift chair mechanisms are used to raise a person to a standing position and lower a
   person to a sitting position when the handicap individual’s natural ability to raise or lower
   himself is either totally or partially impaired, and are therefore exempt as mobility enhancing
   equipment when dispensed pursuant to a prescription under Tenn. Code Ann. § 67-6-314(6)
   (Supp. 2007).
7. Seat Assists, Gel Cushions for Seating, and Gel Overlays
   Seat assists, gel cushions, and gel overlays are not included in any statutory exemption as of
   January 1, 2008, and, thus, are not exempt from the sales and use tax. However, through
   December 31, 2007, these items are exempt from the sales and use tax pursuant to the medical
   equipment exemption under Tenn. Code Ann. § 37-6-314 (2006), provided that the items qualify
   7

as cushions, pillows and care seats for back supports for medical reasons that are used for
support by a patient who has a decreased ability to sit or move.

8. Bedside Commodes
   Bedside commodes sold to a patient are exempt from the sales and use tax as durable medical
   equipment for home use when dispensed pursuant to a prescription under Tenn. Code Ann. § 676-314(2) (Supp. 2007), falling within the category of commodes, which includes toilet safety
   frames and stationary commodes for use outside the bathroom, along with snap-on seats and lids,
   splash shields, removable backrests with wing nuts, nonskid rubber tips, and armrests for added
   comfort.
9. Raised Toilet Seats
   Raised toilet seats are bath aids and are exempt from the sales and use tax as mobility enhancing
   equipment when dispensed pursuant to a prescription under Tenn. Code Ann. § 67-6-314(6)
   (Supp. 2007).
10. Heat Therapy Pumps and Pump Replacement Pads
    Heat therapy pumps and replacement pads are not included in any statutory exemption, and, thus,
    are not exempt from the sales and use tax.
11. Wound Care Supplies: 4x4 Pads, 2x2 Pads, Surgical Tape, Gauze, Kerlex, Duoderm, and
    Conform
    The following wound care supplies are not exempt from the sales and use tax, because they are
    not included in any statutory exemption: 4x4 pads, 2x2 pads, surgical tape, gauze, Kerlex,
    Duoderm and Conform. However, medicated dressings (including elastic, compression and
    gauze wraps) that are dispensed pursuant to a prescription are exempt as a drug under Tenn.
    Code Ann. § 67-6-320(a) (Supp. 2007).
12. Tracheotomy Kits
    Tracheotomy kits are not included in any statutory exemption, and, thus, are not exempt from the
    sales and use tax.
13. Wound Care Supply: Gladase C
    Gladase C, a medicated cream used for diabetic and decubitis ulcers, postoperative wounds,
    burns and various other wounds, is exempt as a drug when dispensed pursuant to a prescription
    under Tenn. Code Ann. § 67-6-320(a) (Supp. 2007).
14. TENS Units- Electrodes and Leads
    Effective January 1, 2008, pocket-size TENS units, including electrodes and leads, that are worn
    on the body correct a physical malfunction, i.e. pain, and, therefore, are exempt from the sales
    and use tax as a prosthetic device under Tenn. Code Ann. § 67-6-314(1) (Supp. 2007). No
    prescription is required for a prosthetic device. In addition, table-top TENS units, including
    8

electrodes and leads, that are not worn on the body are durable medical equipment and are
exempt from the sales and use tax when sold to a patient for home use and dispensed pursuant to
a prescription under Tenn. Code Ann. § 67-6-314(2) (Supp. 2007).
However, through December 31, 2007, TENS units, including electrodes and leads, are not
exempt from the sales and use tax because the Department has not construed TENS units to be a
prosthetic device under Tenn. Code Ann. § 67-6-314(5) (2006).

15. Oxygen Concentrators- Tubing, Nasal Cannula, Filters, Tanks and Masks
    Oxygen concentrators, including tubing, nasal cannula, filters, tanks and masks, are exempt as
    “oxygen delivery equipment and disposable medical supplies necessary to administer or deliver
    oxygen for human use” under Tenn. Code Ann. § 67-6-314(3) (Supp. 2007). No prescription is
    required for oxygen delivery equipment.
16. CPAPs- Tubing, Filters and Masks
    CPAPs, including tubing, filters and masks, that are worn on the body correct a physical
    malfunction, i.e. apnea, and, therefore, are exempt from the sales and use tax as a prosthetic
    device under Tenn. Code Ann. § 67-6-314(1) (Supp. 2007). In addition, table-top CPAPs,
    including tubing, filters and masks, are not worn on the body and, therefore, are durable medical
    equipment. CPAPs are primarily used while sleeping, which is generally understood and
    intended for use in a patient’s home, such that table-top CPAPs are exempt from the sales and
    use tax as durable medical equipment under Tenn. Code Ann. § 67-6-314(2) (Supp. 2007) when
    sold to a patient and dispensed pursuant to a prescription.
17. Bi-PAPs- Tubing, Filters and Masks
    Bi-PAPs, including tubing, filters and masks, that are worn on the body correct a physical
    malfunction, i.e. apnea, and, therefore, are exempt from sales and use tax as a prosthetic device
    under Tenn. Code Ann. § 67-6-314(1) (Supp. 2007). In addition, table-top Bi-PAPs, including
    tubing, filters and masks, are not worn on the body and, therefore, are durable medical
    equipment. Bi-PAPs are primarily used while sleeping, which is generally understood and
    intended for use in a patient’s home, such that table-top Bi-PAPs are exempt from sales and use
    tax as durable medical equipment under Tenn. Code Ann. § 67-6-314(2) (Supp. 2007) when sold
    to a patient and dispensed pursuant to a prescription.
18. Nebulizer- Circuits and Filters
    Effective January 1, 2008, nebulizers, including circuits and filters, are durable medical
    equipment; however, nebulizers are not generally understood and intended to be used in the
    patient’s home, but rather, like blood glucose meters, nebulizers are intended for use everywhere
    and are meant to be taken with the patient and used in any place the patient goes. Therefore,
    nebulizers, including circuits and filters, are not exempt as durable medical equipment under
    Tenn. Code Ann. § 67-6-314(2) (Supp. 2007), but are subject to the sales and use tax.
    In addition, through December 31, 2007, nebulizers, including circuits and filters, generally are
    not exempt from the sales and use tax because the Department has not construed nebulizers to be
    exempt under the medical equipment exemption provided in Tenn. Code Ann. § 67-6-314
    9

(2006), although, in limited circumstances, nebulizers may be exempt as equipment necessary
for the administration of oxygen under Tenn. Code Ann. § 67-3-318 (2006) when sold with the
oxygen.

19. GeriChairs
    GeriChairs are exempt from the sales and use tax as mobility enhancing equipment when
    dispensed pursuant to a prescription under Tenn. Code Ann. § 67-6-314(6) (Supp. 2007).
20. Hospital Beds and Bed Mattresses
    Hospital beds and bed mattresses, defined as a single bed with a frame in three (3) sections so the
    head, middle or foot can be raised as required, are durable medical equipment and are exempt
    from the sales and use tax when sold to a patient for home use and dispensed pursuant to a
    prescription under Tenn. Code Ann. § 67-6-314(2) (Supp. 2007).
21. Alternating Pressure Mattresses and Low Air Loss Mattresses
    Alternating pressure mattresses and low air loss mattresses used to eliminate bed sores are
    durable medical equipment and are exempt from the sales and use tax when sold to a patient for
    home use and dispensed pursuant to a prescription under Tenn. Code Ann. § 67-6-314(2) (Supp.
    2007).
22. Trapeze Bars
    Trapeze bars are included in the definition of a bed pull-up T, which is defined as a rope with a
    handle attached to the base of the bed where the individual hold the handles to help pull himself
    to a sitting position or lower himself to recline, and are exempt from the sales and use tax as
    mobility enhancing equipment when dispensed pursuant to a prescription under Tenn. Code Ann.
    § 67-6-314(6) (Supp. 2007).
    2.

Rentals

Tenn. Code Ann. § 67-6-102(70)(A) (Supp. 2007) provides that the term “sale” means “any
transfer of title or possession, or both, exchange, barter, lease or rental, conditional or otherwise,
in any manner or by any means whatsoever of tangible personal property for a consideration.”
(Emphasis added). Accordingly, whether the items of medical equipment and supplies are sold
or rented to the patient does not affect the taxability of the items for purposes of the Tennessee
sales and use tax. Thus, rentals of medical equipment and supplies qualify for an exemption
from the sales and use tax to the same extent as sales of such items.
3.

Payments

Medical equipment and supplies that are otherwise exempt from the sales and use tax can be paid
for by private insurance, Medicare or TennCare as well as with cash and still qualify for a sales
and use tax exemption.

Rachel Wheeler
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Tax Counsel
APPROVED:

Reagan Farr
Commissioner of Revenue

DATE:

2/27/08

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