Are catheters, and colostomy bags and related supplies, exempt from Texas sales tax as prosthetic devices or medical appliances?

Subject

Urological Catheters/Incontinence Devices/Ureteral Stents — Prosthetic Devices Even If Implanted On Temporary Basis

Plain-English summary

A taxpayer wrote to the Comptroller asking about the taxability of several medical products: colostomy bags, flanges, paste, tape, barriers, seals, gaskets, dressing-change wipes, and catheters.

The Comptroller's answer split the products into two groups:

• Colostomy bags, flanges, paste, tape, barriers, seals, gaskets, or dressing change wipes are exempt. Rule 3.284(c)(2) exempts colostomy appliances, along with related supplies and replacement parts designed specifically for them.
• Catheters are treated differently. The letter states that "generally, most catheters are taxable," and that the specific use of a particular catheter has to be included with a request before the Comptroller can determine whether a given catheter is taxable. The letter notes that a prior case, Administrative Hearing #22,410, found a urological catheter to be exempt as a prosthetic device, and points to Rule 3.284(a)(10)(B), which defines what counts as a prosthetic device.

The letter closes with the Comptroller's standard caveat that the opinion is based on the facts presented, and that different facts, although similar, may result in different answers.

What this means for you

Medical supply sellers and pharmacies

If you sell colostomy bags, flanges, paste, tape, barriers, seals, gaskets, or dressing-change wipes, this letter supports treating those sales as exempt colostomy appliances and related supplies under Rule 3.284(c)(2). Catheters are a different story: don't assume a catheter is automatically exempt. The Comptroller treats most catheters as taxable and will only evaluate a specific catheter's exempt status if you describe its particular use.

Healthcare providers and taxpayers seeking a ruling on a specific catheter

Because "most catheters are taxable," getting a favorable answer for a specific product requires submitting the specific use of that catheter to the Comptroller. This letter references one precedent -- Administrative Hearing #22,410 -- where a urological catheter was found exempt as a prosthetic device under Rule 3.284(a)(10)(B), but that outcome was fact-specific and not a blanket exemption for all catheters.

Accountants and tax professionals

When advising clients on medical device sales tax, separate colostomy-related products (generally exempt under Rule 3.284(c)(2)) from catheters (generally taxable absent a specific showing that a particular catheter qualifies as a prosthetic device under Rule 3.284(a)(10)(B)). Because this is a fact-based determination, a fresh ruling request describing the specific catheter's use may be warranted rather than relying on this letter for a different taxpayer's product.

Common questions

Q: Are colostomy bags and related supplies taxable in Texas?
A: No. The letter states that Rule 3.284(c)(2) exempts colostomy appliances, related supplies, and replacement parts designed specifically for them -- covering colostomy bags, flanges, paste, tape, barriers, seals, gaskets, and dressing-change wipes.

Q: Are catheters exempt from Texas sales tax?
A: Generally no. The letter says "generally, most catheters are taxable," and that the Comptroller needs the specific use of a particular catheter before it can determine taxability of that catheter.

Q: Has any catheter been found exempt?
A: Yes -- the letter cites Administrative Hearing #22,410, which found a urological catheter exempt as a prosthetic device. Rule 3.284(a)(10)(B) defines a prosthetic device.

Q: Could this outcome change under different facts?
A: Yes. The letter states the opinion is based on the facts presented, and that different facts, although similar, may result in different answers.

Citations and references

Rules cited:

• Rule 3.284(c)(2) (exemption for colostomy appliances, related supplies, and replacement parts)
• Rule 3.284(a)(10)(B) (definition of a prosthetic device)

Administrative precedent cited:

• Administrative Hearing #22,410 (found a urological catheter exempt as a prosthetic device)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9609L1441C12

Original ruling text

September 20, 1996

Dear Mr. ***:

Thank you for your letter dated September 13, 1996, concerning the taxability
of the medical products listed below.

Colostomy bags, flanges, paste, tape, barriers, seals, gaskets, or dressing
change wipes - Rule 3.284(c)(2)exempts colostomy appliances, related supplies
and replacement parts that are designed specifically for them.

Catheters - generally, most catheters are taxable. The specific use of a
particular catheter must be included with a request before we can determine
taxability of a catheter. Administrative Hearing #22,410 found a urological
catheter to be exempt as a prosthetic device. Rule 3.284(a)(10)(B) defines a
prosthetic device.

This opinion is based on the facts presented and current law. Different facts
although similar, may result in different answers.

If you have any questions or need more information, 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 Policy Division, Comptroller of Public Accounts.

Sincerely,

Bettie Peterson
Tax Policy Division

NOTE: Previous Accession Number 9609791L