SALT Report 1452 – The New York Department of Taxation and Finance has issued a sales and use tax memorandum regarding the taxability of botulinum toxin, dermal fillers and other similar products. The Department determined that these products are primarily cosmetic in nature and generally do not qualify for an exemption from sales tax under Tax Law §1115(a)(3) which exempts drugs and medicines, but excludes cosmetics and toiletry articles, even if these products contain medicinal ingredients.
The Department determined that botulinum toxin (Botox) and dermal fillers are cosmetic products, as they are not used to cure, mitigate, treat or prevent illnesses or diseases in human beings. Furthermore, under Tax Law §1115(a)(3), these products do not qualify as medical devices, equipment or prosthetic aids even when purchased for use in a medical or other such facility. Therefore, these products are subject to sales tax, without regard to who purchases them or where they will be used.
Section 1115(a)(4) of the Tax Law provides an exemption for prosthetic aids, artificial devices and component parts purchased to correct or alleviate physical incapacity in humans. However, Section 528.5 specifically excludes items that are “generally useful in the absence of illness, injury or physical incapacity” from the exemption.
While these products are predominately used for cosmetic purposes, they are on occasion used by physicians to treat certain medical conditions, illnesses or diseases in patients. The Department has provided guidance for those occasions when botulinum toxin and dermal fillers may be non-taxable.
Botulinum toxin compounds are used to temporarily paralyze a targeted muscle group and under certain FDA-approved guidelines, these products can be injected into a patient to temporarily minimize or reverse medical conditions such as:
- Oromandibular dystonia: spasms of the face, jaw, neck, tongue, larynx and respiratory system
- Hyperhidrosis: excessive sweating
- Blepharospasm: involuntary closure of the eyelids
- Strabismus: misalignment of the eyes
- Hemifacial spasm: sudden contraction of the muscles on one side of the face
- Spasmodic torticollis or cervical dystonia: muscle spasm in the neck
- Urinary retention: an inability to urinate that requires catheterization
- Spasmodic dysphonia: spasm of the vocal cords that causes a disruption of speech
- Voice tremor, and
- Limb spasticity following a stroke
- Facial lipoatrophy – a common occurrence in people suffering from HIV, and
- Facial reconstructions