Are replacement air filters for a prescribed air purification system exempt from Texas sales tax?

Subject

Air Filters — Treated As Related Supplies Of Air Purification System Prescribed By Physician — Subsequent Purchases Are Exempt

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9407L1309F13

Plain-English Summary

The Texas Comptroller has classified air purification systems as "therapeutic" devices since 1981. Under 34 Tex. Admin. Code Rule 3.284(c)(7), therapeutic devices and their related supplies can be purchased tax-free by individuals who have a prescription from a doctor. Until this ruling, however, the Comptroller had never allowed a tax exemption for the air filters used in those systems, even though the systems themselves were exempt.

In this letter, the Comptroller changed that position. The agency decided that air filters should be treated the same way as related supplies purchased for other therapeutic devices — drawing a comparison to lancets and test strips bought for use with a blood glucose monitor. Because those items are exempt supplies for an exempt device, replacement air filters should get the same treatment. As a result, a customer who has a doctor's prescription for an air purification system on file with a particular seller can buy replacement filters from that same seller tax-free going forward.

What This Means For You

If you sell air purification systems or air filters: Once a customer has provided a valid doctor's prescription for a physician-prescribed air purification system, you may sell that customer replacement air filters tax-exempt, provided you keep the original prescription on file. The exemption follows the customer's on-file prescription, not a new prescription for each filter purchase.

If you buy an air purification system on a doctor's prescription: You can purchase the system itself tax-free as a therapeutic device, and going forward you can also buy replacement filters tax-free from the same seller, as long as your prescription remains on file with that seller.

Accountants and tax professionals: This ruling illustrates how the Comptroller extends the "related supplies" concept for therapeutic devices under Rule 3.284(c)(7) — by analogy to consumable/replacement items like lancets and test strips for glucose monitors — to a device category (air purification systems) where the underlying device, but not its consumables, had previously been treated as exempt.

Q&A

Q: Do I need a new prescription every time I buy replacement air filters?
A: No. Based on this ruling, subsequent filter purchases are exempt as long as the seller has the customer's original prescription for the air purification system on file.

Q: Does this exemption apply to air filters bought from a different seller than the one that sold the air purification system?
A: The ruling as written ties the exemption to "the seller that has the customer's original prescription... on file," so it is tied to the seller holding that prescription record. A different seller without the prescription on file would not have the same documentation to support exempt treatment.

Citations

• 34 Tex. Admin. Code Rule 3.284(c)(7) (therapeutic devices and related supplies exempt with a doctor's prescription)

Original ruling text

July 18, 1994

Dear **:

Thank you for your letter dated June 7, 1994, regarding sales
tax as it applies to air purification systems and air filters.
We appreciate the brochures on air purification systems. They
are very helpful.

Since 1981 we have classified air purification systems as
therapeutic. Therapeutic devices and related supplies may be
purchased tax-free by individuals with a prescription from a
doctor. Rule 3.284(c)(7). However, an exemption has never been
allowed for any type of air filter.

We have decided that the air filters should be treated like
related supplies for use with other therapeutic devices (such as
lancets and test strips for use with a blood glucose monitor).
Subsequent purchases of air filters may be purchased exempt as
therapeutic from the seller that has the customer's original
prescription for the air purification system on file.

This opinion is based on the facts you submitted. Other facts,
though similar, may yield different results.

You may call me toll free at 1-800-531-5441, ext. 50330. The
direct line is 512/475-0330. You may also write to Tax
Administration, Comptroller of Public Accounts.

Sincerely,

Bettie Peterson
Tax Administration Division

NOTE: Previous Accession Number 9407471L