Which hearing-aid-related repairs, warranties, impression materials, equipment leases, maintenance items, and phone attachments qualified for Utah's sales-tax exemption?

Plain-English summary

Utah Private Letter Ruling 99-042 explained that the new sales-tax exemption for hearing aids and hearing-aid accessories did not exempt every product or service connected with hearing aids.

Repairs and extended warranties remained taxable. So did materials used to make ear impressions, leases of equipment used to program or test hearing aids, and consumable maintenance items such as lubricants, air blowers, and moisture-removal kits.

A phone attachment could qualify if it was a telephone amplifying device or a qualifying accessory to one, but the Commission could not decide without facts about the specific attachment.

New hearing-aid exemption

The request asked how 1999 Senate Bill 19 applied to several transactions. The response said the legislation took effect July 1, 1999 and exempted sales of hearing aids and hearing-aid accessories.

The Commission addressed each requested item separately rather than treating all hearing-aid-related products and services as exempt.

Repairs remained taxable

The response said the bill exempted hearing aids and qualifying accessories but did not exempt repairs.

It cited Utah Code section 59-12-103(g), as printed in the official source, for the tax on repair or renovation services involving tangible personal property.

Because a hearing aid was tangible personal property and Senate Bill 19 created no repair exemption, hearing-aid repairs remained taxable.

Extended warranties remained taxable

Utah Admin. Rule R865-19S-78(D) treated an extended warranty as a sale of future repairs.

If hearing-aid repairs had been exempt, a related extended warranty could also have been exempt. But because the Legislature did not exempt repairs, extended hearing-aid warranties remained taxable even when the hearing aid itself was exempt.

Ear-impression materials

Materials used to make patient ear impressions were consumed by the hearing-aid professional while providing services.

The Commission said those materials were taxable when purchased by the professional unless another exemption applied.

The hearing-aid and hearing-aid-accessory exemption in Utah Code section 59-12-104(49) did not extend to them.

Programming and testing equipment leases

The provider leased equipment used to program, modify, and test hearing aids.

The Commission said that equipment was neither a hearing aid nor a hearing-aid accessory under Senate Bill 19.

The lease payments were taxable because the provider used the equipment to perform its services.

Lubricants, air blowers, and moisture-removal kits

Utah Code section 59-12-102(10)(b) listed examples of hearing-aid accessories, including neck loops, cords, ear molds, tubing, ear hooks, and remote controls.

The Commission read the general category in light of those examples. The listed items were permanent in nature and generally used constantly with the hearing aid.

Lubricants, air blowers, and moisture-removal kits instead maintained the hearing aid, did not become a constant part of it, and were generally consumable.

The Commission therefore found them taxable rather than exempt hearing-aid accessories.

Phone attachments

Utah Code section 59-12-102(9)(a)(iii) treated a telephone amplifying device as a tax-exempt hearing aid.

A phone attachment could be exempt if it was:

• A telephone amplifying device; or
• An accessory, as defined in section 59-12-102(10), to a telephone amplifying device.

The Commission needed details about the particular attachment before it could decide whether either definition applied.

Holding

Under the ruling:

• Hearing-aid repairs were taxable.
• Extended warranties covering future repairs were taxable.
• Ear-impression materials bought and consumed by the provider were taxable.
• Leases of hearing-aid programming, modification, and testing equipment were taxable.
• Lubricants, air blowers, and moisture-removal kits were taxable.
• A qualifying telephone amplifying device or accessory could be exempt.
• The particular phone attachment required more facts.

What this means for you

Hearing-aid providers and audiologists

The exemption did not automatically extend to everything used around an exempt hearing aid. Separate the device, repairs, warranties, consumables, professional-use equipment, and patient accessories.

Medical-device sellers

A product's function and relationship to the hearing aid mattered. Permanent, constantly used accessories were treated differently from consumable maintenance products.

Accountants and tax professionals

Review the current definitions and facts for each item. Do not classify a bundle solely by the exempt status of the hearing aid itself.

Common questions

Q: Were hearing-aid repairs exempt?

A: No.

Q: Were extended warranties exempt?

A: No. They were treated as future taxable repairs.

Q: Were ear-impression materials exempt?

A: No. The provider consumed them in performing services.

Q: Was leased programming and testing equipment exempt?

A: No. It was not itself a hearing aid or qualifying accessory.

Q: Were lubricants and moisture-removal products exempt accessories?

A: No. The Commission treated them as consumable maintenance items.

Q: Could a telephone attachment be exempt?

A: Yes, if it qualified as a telephone amplifying device or an accessory to one, but the Commission needed product-specific facts.

Key source language

• Repair result: “the repair of hearing aids remains a taxable transaction.”
• Warranty result: “the sale of an extended warranties related to a hearing aid is a taxable transaction, even though the hearing aid itself may be exempt.”
• Consumable items: “are not hearing aid accessories as defined in the subsection and are, consequently, subject to sales tax.”
• Phone attachment: “Without additional information concerning a specific phone attachment, we are unable to determine if it is exempt from taxation.”

Citations and references

• Utah Code Ann. § 59-12-103(g), as printed in the official source
• Utah Code Ann. § 59-12-104(49)
• Utah Code Ann. § 59-12-102(9)(a)(iii)
• Utah Code Ann. § 59-12-102(10)(b)
• Utah Admin. Rule R865-19S-78(D)
• Utah Senate Bill 19 (1999), effective July 1, 1999

Source

• Landing page: Utah Private Letter Rulings
• Official ruling: Utah PLR 99-042
• Date note: the legacy page begins with “Response April 22, 2000,” but the formal response letter is dated April 26, 2000; the page uses the letter date.
• Source-text note: the official source prints the repair-services citation as “59-12-103(g).”
• Fetch note: the exact official URL returned HTTP 404 to a direct request and was then retrieved through Sofya.

Original ruling text

99-042

Response April 22,
2000

REQUEST LETTER

July 2, 1999

REQUEST FOR ADVISORY OPINION

To Whom May Concern:

I am writing this Request For Advisory Opinion to get details on the new Hearing Aid Sales Tax

Exemption. I have some specific questions about the exemptions that are not covered in the tax bulletin I spoke with a sales tax auditor today who was unable to answer these questions and said it would be best to submit them in writing.

I would like to know if the following are covered as exemptions:

‑ Factory warranty extensions and factory repairs?

‑ Materials we use to make impressions of patients' ears for custom hearing aids?

‑ Payments on equipment leases (equipment used to program, modify, and test hearing aids)?

‑ Accessories used with hearing aids (lubricants, air blowers, hearing aid moisture removal kits)?

‑ Phone attachments for use with a hearing aid?

Please let me know about these specifies and any other information that will help us implement the new hearing aid tax exemption.

Thank you,

NAME

RESPONSE LETTER

April 26, 2000

NAME

ADDRESS

RE: Sales Tax Exemption for Hearing Aids

Dear NAME,

You have requested information concerning the 1999 Utah Legislature=s passage of Senate Bill 19, which became effective on July 1, 1999. This bill exempts from taxation sales of hearing aids and hearing aid accessories. You ask if a number of specific transactions and items associated with the sale of hearing aids are considered exempt from taxation under the bill. We shall separately address these questions.

Factory warranty extension and factory
repairs. While the bill does exempt
hearing aids and hearing aid accessories, the bill does not exempt repairs made to hearing aids. Utah Code Ann. ' 59-12-103(g) dictates that a tax is to be levied on the purchaser for Aservices for repairs or renovations of tangible personal property. . ..@ As a hearing aid is tangible personal property, the repair of a hearing aid is subject to sales tax unless a specific exemption relates to that repair. Senate Bill 19 provides no such exemption, and, accordingly, the repair of hearing aids remains a taxable transaction.

Utah Admin. Rule R865-19S-78(D) provides that a sale of an extended warranty is taxable because that sale is considered to be for future repairs. Had the Legislature exempted the repair of hearing aids from taxation, any extended warranty (i.e., the sale of future repairs) related to hearing aids would also be exempt. However, the Legislature did not exempt the repair of hearing aids from taxation, and, accordingly, the sale of an extended warranties related to a hearing aid is a taxable transaction, even though the hearing aid itself may be exempt.

Materials used to make ear impressions. Materials used to make impressions are consumed by the hearing aid professionals in providing their services to their patients. Accordingly, unless an exemption applies, these materials are taxable when purchased by the hearing aid professional. The hearing aid and hearing aid accessory exemption of Utah Code Ann. '59-12-104(49) does not extend to these items.

Payments on equipment leases. You lease equipment to program, modify, and test hearing aids. This equipment is not a hearing aid or hearing aid accessory, as defined in Senate Bill 19, and, accordingly, does not qualify for the sales tax exemption. This is equipment you lease in order to provide your services, and any such lease payments are taxable.

Accessories - lubricants, air blowers,
moisture removal kits. Section '59-12-102(10)(b) provides a non-exclusive list of hearing aid accessories that receive the sales tax exemption, as follows:

(b) AHearing aid accessory@ includes:

(i) a hearing aid neck loop;

(ii) a hearing aid cord;

(iii) a hearing aid ear mold;

(iv) hearing aid tubing;

(v) a hearing aid ear hook; or

(vi) a hearing aid remote control.

Under common canons of statutory construction, the general language of that subsection should be interpreted in light of the specific items listed. The specific items listed include only items of a permanent nature that generally are in constant use with the hearing aid. The items you specifically ask about differ from these listed items. Lubricants, air blowers, and moisture removal kits are items used to maintain the hearing aid and do not become a constant part of it. These items are also generally consumable in nature. Accordingly, these Aaccessories@ are not hearing aid accessories as defined in the subsection and are, consequently, subject to sales tax.

Phone attachments for use with a hearing
aid. Utah Code Ann. '59-12-102(9)(a)(iii)
specifies that a Atelephone
amplifying device@ is
considered a tax-exempt hearing aid. If
the phone attachment you ask about is an amplifying device or if it qualifies as an accessory, as defined in subsection 59-12-102(10), of a telephone amplifying device, then that phone attachment would be exempt from taxation. However, determining whether a phone attachment qualifies under either of these definitions would require an analysis of the facts concerning the specific phone attachment. Without additional information concerning a specific phone attachment, we are unable to determine if it is exempt from taxation.

The Commission plans to enact an administrative rule that will include the above opinion and address other issues relating to the hearing aid exemption. Please let us know if you have any other questions.

For the Commission,

Marc B. Johnson

Commissioner

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