Are hospital gowns sold to a hospital or medical center subject to Texas sales tax?

Subject

Hospital Gowns Sold to Hospitals or Medical Centers Are Taxable

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9309L1259D01

Plain-English Summary

A taxpayer sent a FAX asking the Comptroller whether hospital gowns sold to a medical center or hospital were subject to sales tax. The Comptroller's response starts from a general rule: unless the hospital, nursing home, or other institution itself qualifies for an exemption under Tax Code Section 151.310(a)(1) or (2), that institution must pay sales tax on equipment and supply items it uses to provide medical services — unless the particular item itself falls into one of three narrow exempt categories.

Those three exempt categories, as listed in the letter, are: (1) medical equipment meeting the definition of a brace, corrective lens, hearing aid, orthopedic appliance, prosthetic device, or dental device (sales tax is also not due on replacement parts designed specifically for such devices and appliances, and — except for corrective lenses — no prescription is required); (2) ileostomy, colostomy, and ileal bladder appliances, along with related supplies or replacement parts designed specifically for such appliances; and (3) hypodermic syringes and hypodermic needles used for medical purposes.

The letter concludes plainly: "Hospital gowns do not fall into either of the criteria listed above and would be taxable when sold to hospitals or medical centers." The letter also notes it is based on the facts presented, and that other facts, though similar, may produce a different result.

What This Means For You

If you sell hospital gowns to a hospital, nursing home, or medical center: Per this letter, gowns don't qualify under any of the three listed exemption categories (brace/appliance-type medical equipment, ostomy-related appliances, or hypodermic items), so sales tax applies to the sale — even though the buyer is a medical institution.

If you run a hospital, nursing home, or other medical institution: This letter frames the underlying rule as a general one — the institution must pay sales tax on equipment and supply items used to provide medical services unless the institution itself qualifies for exemption under Tax Code Section 151.310(a)(1) or (2), or the specific item independently qualifies under one of the three listed exempt categories.

If you're evaluating other medical supply items: The letter's three-category list (bracing/prosthetic-type devices and their replacement parts; ostomy appliances and related supplies/replacement parts; and hypodermic syringes/needles) is the framework it applies. An item not described by one of those categories, like the hospital gowns here, is taxable regardless of the buyer's medical purpose.

Q&A

Q: Are hospital gowns taxable when sold to a hospital?
A: Yes. The letter states directly that "Hospital gowns do not fall into either of the criteria listed above and would be taxable when sold to hospitals or medical centers."

Q: Does a hospital or nursing home automatically avoid sales tax on its medical supplies?
A: Not automatically. Per the letter, unless the institution qualifies for exemption under Tax Code Section 151.310(a)(1) or (2), it must pay sales tax on equipment and supply items used to provide medical services unless the specific item itself qualifies for exemption.

Q: What kinds of items are exempt under this letter's framework?
A: The letter lists three categories: (1) medical equipment meeting the definition of a brace, corrective lens, hearing aid, orthopedic appliance, prosthetic device, or dental device, plus replacement parts designed specifically for them; (2) ileostomy, colostomy, and ileal bladder appliances and their related supplies or replacement parts; and (3) hypodermic syringes and hypodermic needles used for medical purposes.

Q: Is a prescription required for these exempt medical devices?
A: Per the letter, "With the exception of corrective lenses, a prescription is not required" for the brace/corrective lens/hearing aid/orthopedic appliance/prosthetic device/dental device category.

Q: Why don't hospital gowns qualify for any exemption?
A: The letter doesn't explain the reasoning beyond stating the conclusion — hospital gowns simply don't fall into either of the criteria (categories) listed in the response, so they are taxable.

Original ruling text

September 23, 1993

Dear ****:

Thank you for your FAX requesting a ruling on the taxability of
hospital gowns sold to a medical center or hospital.

RESPONSE: Unless a hospital, nursing home, or other institution
qualifies for exemption under the Tax Code, sec. 151.310(a)(1) or (2),
the institution must pay sales tax on equipment and supply items used
to provide medical services unless the item qualifies for exemption
as:

(1) Medical equipment meeting the definition of a brace, corrective
lens, hearing aid, orthopedic appliance, prosthetic device, or dental
device. Sales tax is not due on replacement parts designed
specifically for such devices and appliances. With the exception of
corrective lenses, a prescription is not required.

(2) Ileostomy, colostomy, and ileal bladder appliances, related
supplies or replacement parts designed specifically for such
appliances.

(3) Hypodermic syringes and hypodermic needles used for medical
purposes.

Hospital gowns do not fall into either of the criteria listed above
and would be taxable when sold to hospitals or medical centers.

This opinion is based on the facts presented. Other facts though
similar may provide a different result.

If you have other questions or need more information, you may call me
at 1-800-5315441, extension 3-4502. The regular number is
512/463-4502. You may also write to Tax Administration Division at the
above address.

Sincerely,

Gilbert Zamora
Tax Administration Division

NOTE: Previous Accession Number 93070186L.2 and/or 9307186L