What does Virginia Ruling of the Tax Commissioner P.D. 09-4 conclude about Manufacturer of permanent aesthetic injectable implants does not meet exemption qualifications?

Subject

Cosmetic injectable implant did not qualify as an exempt prosthetic device

Plain-English summary

Virginia ruled that the permanent injectable facial implant was taxable because it served a cosmetic purpose rather than replacing a missing body part or function. The product combined synthetic filler, collagen, and anesthetic, required a prescription, and was injected by trained physicians to smooth smile lines.

Those medical characteristics did not satisfy the prosthetic-device exemption. Virginia distinguished reconstructive implants that replace a missing part from implants used only for cosmetic enhancement. Because this product treated wrinkles, it did not meet the mandatory exemption requirements.

What this means for you

• FDA classification and prescription-only status do not automatically create a sales-tax exemption.
• Identify whether the device replaces a missing body part or function rather than merely changing appearance.
• Document the actual indicated use, purchaser, patient, and product design.
• Verify current tax rates and medical-device definitions; the ruling stated the rate in effect in 2009.

Common questions

Did physician administration make the implant exempt?

No. The cosmetic purpose controlled the ruling's analysis.

Could a reconstructive implant qualify?

The cited prior ruling allowed qualifying breast or chin implants used to replace a missing body part for a specific individual.

Was this wrinkle treatment taxable?

Yes, at the rate stated in the historical ruling.

Citations and references

• Va. Code § 58.1-609.10(10).
• 23 VAC 10-210-940.
• P.D. 94-127.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 09-4

Original ruling text

February 4, 2009

Re: Request for Ruling: Retail Sales and Use Tax

Dear *:

This will reply to your letter in which you request a ruling on the application of the retail sales and use tax to the sale of a product by * (the "Taxpayer"). I apologize for the delay in responding to you letter.

FACTS

The Taxpayer is a manufacturer of a permanent aesthetic injectable implant for the treatment of facial wrinkles known as nasolabial folds or smile lines. The United States Food and Drug Administration (the "FDA") has classified the implant as a Class III medical device. The injectable implant contains synthetic filler material, collagen, and lidocaine hydrochloride (an anesthetic) and is injected into the smile lines around the mouth to smooth the wrinkles. The injectable implant is only obtained via prescription and is injected as an outpatient procedure by trained physicians.

RULING

Virginia Code § 58.1-609.10 10 provides an exemption for "prosthetic devices and . . . other durable medical equipment and devices, and related parts and supplies specifically designed for those products . . . when such items or parts are purchased by or on behalf of an individual for use by such individual. Prosthetic devices are defined in Title 23 of the Virginia Administrative Code 10-210-940 to mean "devices which replace a missing part or function of the body and shall include any supplies physically connected to such devices."

The Department addressed the taxability of breast and chin implants in Public Document 94-127 (4/25/94). The Tax Commissioner ruled that breast and chin implants that are used to replace a missing body part, as in reconstructive surgery may be purchased exempt from the tax when such purchases are made by or on behalf of specific individuals. However, implants used for cosmetic purposes are not replacing a missing body part or function and thus do not qualify for exemption from the tax, regardless of whether they are purchased by or on behalf of an individual.

Based on the information provided, the aesthetic injectable implant for the treatment of facial wrinkles is used for cosmetic purposes. Because the implant does not meet the mandatory requirements set out in the statute, it does not qualify for exemption. This determination is consistent with the Department's prior decision as reflected in P. D. 94-127. Accordingly, in this instance the injectable implant is taxable in Virginia at the 5% retail sales and use tax rate.

The ruling is based on the facts presented as summarized above. Any change in the facts or the introduction of new facts may lead to a different result.

The Code of Virginia section, regulation and public document cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's website. If you have any questions about this response, you may contact * in the Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Janie E. Bowen

Tax Commissioner

AR/1-1799110303.T