Was injected Conray solution exempt, and how were mixed diagnostic kits classified?

Plain-English summary

Conray solution used as a saline medium for radioactive dye and injected into a patient by a doctor was exempt as a drug or medicine. The requester could seek refunds of previously accrued and paid sales or use tax by amending the affected returns, subject to the letter's stated four-year limit measured from the refund request.

The reproduced record also includes a 1983 product classification. It lists numerous diagnostic items as taxable and numerous contrast agents, injections, capsules, and related products as potentially qualifying as drugs or medicines when dispensed on a physician's prescription.

For a kit sold at one price, the "predominant cost rule" applied: the entire kit was exempt if the value of medicine, hypodermic syringes, and needles exceeded the value of taxable equipment, vials, standards, tags, and labels. The entire kit was taxable when the taxable components had greater value. Separately charged ingredients stood on their own.

Common questions

Was the described Conray solution taxable? No. How could past tax be recovered? Through amended sales-tax returns for the periods paid, within the stated limitation. How were single-price mixed kits classified? By which category of components had greater value.

Citations and references

The letters refer to a four-year statute of limitations and a predominant-cost rule but give no numbered statutory or rule citation.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8505L0648B03

Original ruling text

May 15, 1985

Dear ***:

Thank you for your letter of May 7, 1985, concerning the taxability of
Conray solution.

As you explained in our May 14, 1985 telephone conversation, the Conray
solution is a saline solution used as a medium for radioactive dye which
is dispensed (injected in to the patient) by a doctor.

The Conray solution is exempt as a drug or medicine.

You may get a refund of the sale or use tax that you accrued and paid on
past purchases. The Statute of Limitations limits refunds to four years
from the date of a refund request. You can get the refund by amending
sales tax returns for those periods in which the tax on the solution was
paid.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call us at
1-800-252-5555 toll free from anywhere in Texas. You may write us at the
Tax Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS

May 16, 1983

Dear ***:

Thank you for your letter of February 9, 1983, requesting a taxability
ruling on various medical products sold by you. In a phone conversation
with ***, I was told your customers include hospitals,
doctors and chemical companies.

Since your products are often sold to hospitals (who are not themselves
exempt) and doctors for their own use, I have categorized your products
in alphabetical order as either taxable or exempt when sold under these
circumstances.

The following items are taxable:

Bi-Vee
Cardiovascular Catheters (unless permanently implanted in the body)
Catheters (unless permanently implanted in the body)
Ferro-Quant Fe 59 Test Kit
Fibrinopeptide A I-125 RIA Kit
Limulus Amebocyte Lysate Pyrogent
Molytech Calibrator
Ready-Box
Res-0-Mat ETR
Res-0-Mat T3 Micro Test
RIA-Nate Pregnancy Test Kit
RIA-Quant B-HCG Test Kit
RIA-Quant C-Peptide Test Kit
RIA-Quant CK-MB Test Kit
RIA-Quant P.A.P. Test Kit
RIA-Quant Prolactin Test Kit
SPAC Digoxin Kit
SPAC T3 RIA Test Kit
SPAC T3 Uptake Kit
SPAC T4 RIA Kit
TechneColl
Tridrate
Xenomatic II

The following items could qualify as drugs or medicines. They would be
exempt when dispensed on prescription by a physician:

Angio-Conray
Barosperse
Cholebrine Tablets
Conray
Conray - 325
Conray - 400
Cyanocobalamin Co 57 Capsules
Cysto-Conray
DTPA Multi-dose Kit (see note below)
Ferrous Citrate Fe 59 Injection
Gallium Citrate GA 67 Injection
Hippuran I 131 Injection
Iodinated I 125 Albumin Injection
MD-50
MD-60
MD-76
MD-Gastroview
Methadose
Oleic Acid I 125 Capsules (see note below)
Perchloracap
Phosphocol P32
Rose Bengal Sodium I 131 Injection
Selenomethionine Se 75 Injection
Sodium Chromate Cr 51 Injection
Sodium Iodide I 125 Solution
Sodium Iodide I 131 Capsules and Solution Therapeutic
Sodium Iodide I 131 Capsules
Sodium Pertechnetate Tc 99m Injection
Sodium Phosphate P 32 Solution
TechneScan Gluceptate
TechneScan MAA
TechneScan MOP Kit (see note below)
TechneScan PYP
Thallous Chloride Ti 201 Injection
Triolein I 131 Capsules (see note below)
Ultra-TechneKow FM (see note below)
Vascoray
Xeneisol
Xenon Xe 133 Gases

NOTE: When an item is sold in kit form for a single price, the
"predominant cost rule" applies. This means that if the value of
the medicine, hypodermic syringes and/or needles is greater than
the value of taxable items such as equipment, vials, reference
standards, tags and labels, the whole kit is exempt. If the value
of the taxable items is greater, the entire kit is taxable. If
there are separate charges for each ingredient, each item stands on
its own.

This opinion is based on the facts presented. If there are additional
or different facts, the opinion may change.

Please feel free to contact us if you have additional questions. You
may write us, call toll free 1-800-252-5555 from anywhere in Texas.

Sincerely,

Sales Tax Division