Was physician-prescribed or physician-dispensed methadone exempt, and how were dispensing bottles and prior tax payments treated?

Plain-English summary

The Comptroller said methadone was exempt as a drug or medicine when prescribed for or dispensed to an individual by a physician. The provider could buy it tax-free by giving the supplier a completed exemption certificate stating that the drug would be prescribed or dispensed to patients.

The provider could request refunds from suppliers for tax previously paid on methadone, going back up to four years under the stated limitations period. Suppliers would then recover the tax they had remitted to Texas.

Nonreturnable small bottles sold together with prescription drugs were exempt with an exemption certificate. Bottles used to dispense drugs that were not sold were taxable. The letter also said health-care providers owed tax on office furniture, office supplies, examination-room equipment, and examination supplies.

What this means for you

The drug exemption did not automatically cover every item used by the health-care provider. Whether a container accompanied a sold prescription drug mattered.

Common questions

Was methadone exempt? Yes, when prescribed or dispensed to an individual by a physician.

Could previously paid tax be refunded? The letter allowed written supplier refund requests for up to four years.

Were prescription bottles taxable? Not when sold with prescription drugs; bottles for drugs not sold were taxable.

Were office and examination supplies exempt? No.

Citations and references

The letter did not cite a statute or rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9103L1084D01

Original ruling text

March 4, 1991

Dear **:

I appreciate your prompt response to our letter notifying businesses of the
amnesty program.

Methadone is exempt as a drug or medicine when it is prescribed for or
dispensed to an individual by a physician. You may purchase the drug tax free
by issuing a property completed exemption certificate to your supplier,. The
certificate should state that the drug will be prescribed or dispensed to
patients.

You may request a refund of tax paid on methadone from your suppliers. They,
in turn, recover the tax they remitted to the State. The refund request should
be in writing, and tax may be refunded up to four years back as set by the
Statute of Limitations.

The small bottles that are used to dispense drugs sold by prescription are not
taxable. You are required to issue an exemption certificate for nonreturnable
containers that are sold along with their contents. Sales and use tax is owed
on bottles used in dispensing drugs that are not sold.

I do want to mention that health care providers are required to pay sales and
use tax on office furniture and supplies. Tax is also due on examination room
equipment and various examination supplies.

I hope you will call our Tax Administration Division at 1-800-531-5441 if you
have any questions or need additional information.

Thanks again for your prompt response.

Sincerely,

JOHN SHARP
Comptroller of Public Accounts