Is the Ceprate Stem Cell Concentration System, used to prepare a patient's stem cells before high-dose chemotherapy, exempt from Texas sales tax as a health care supply?

Plain-English summary

A seller asked the Comptroller whether the Ceprate Stem Cell Concentration System -- a new medical product -- was exempt from Texas sales tax as a health care supply. The product is used in a process called immunoadsorption, which removes specific cells from a patient's bone marrow or blood. Its initial use was to remove a patient's own stem cells before myeloablative (extremely high-dose) chemotherapy; after the chemotherapy, the stem cells are returned to the patient (an "autologous" transplant). The purpose is to keep those healthy stem cells from being destroyed by the chemotherapy.

The Comptroller's response was brief: the product does not qualify for the health care supplies exemption in Tax Code § 151.313, citing 34 Tex. Admin. Code Rule 3.284 for reference. The letter doesn't walk through detailed reasoning for why it falls outside the exemption -- it simply confirms the product is taxable and points to the statute and rule governing the exemption category.

What this means for you

Medical device sellers and hospitals

Not every product used in a medical procedure automatically qualifies as an exempt health care supply. This letter shows the Comptroller applying Tax Code § 151.313 and Rule 3.284 narrowly even to a product with a clear therapeutic purpose (protecting healthy cells during chemotherapy) -- if you sell specialized medical equipment or kits, don't assume medical necessity alone secures the exemption; check the specific exemption criteria in § 151.313 and Rule 3.284.

Accountants and tax professionals

Because this letter states a conclusion without detailed reasoning, it's most useful as a data point (this specific product was found taxable) rather than as a fully reasoned precedent. For a closer look at how the Comptroller analyzes similar stem-cell/health-care-supply products, see the more detailed 9703287L ruling on the same product line.

Common questions

Q: Is the Ceprate Stem Cell Concentration System exempt from Texas sales tax?
A: No. Per this letter, it does not qualify for the health care supplies exemption under Tax Code § 151.313.

Q: Does the product's use in cancer treatment (protecting cells during chemotherapy) matter to the outcome?
A: The letter describes that medical use in the facts but doesn't tie the taxable conclusion to any specific feature of it -- it simply states the product doesn't qualify under § 151.313 and Rule 3.284.

Citations and references

Statutes and rules:

• Tax Code § 151.313 (health care supplies exemption)
• 34 Tex. Admin. Code Rule 3.284 (health care items)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9702165L

Original ruling text

February 21, 1997

Dear ***:

Thank you for your letter dated January 27, 1997, concerning the taxability of
a new medical product called Ceprate Stem Cell Concentration System. The
literature you provided on
the product was most helpful.

Facts: The Ceprate Stem Cell Concentration System is used in a process called
immunoadsorption which removes specific cells from the bone marrow or blood of
human beings. The initial use of the product will be for the removal of stem
cells from patients prior to their undergoing myeloablative (extremely high
dose) chemotherapy. After the chemotherapy, the stem cells are returned to the
patient. This is referred to as an autologous (patient's own) stem cell
transplantation. This procedure is performed to prevent important healthy
cells (stem cells) from being destroyed during the chemotherapy.

Comptroller Response: I am enclosing a copy of Texas Tax Code Sec. 151.313
which provides for the exemption of certain health care supplies. The product
Ceprate does not qualify for exemption under the Tax Code.

Rule 3.284 is also enclosed for your reference.

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