Missouri – Taxability of Medical Grade Oxygen and Nitrous Oxide

SALT Report 1563 – The Missouri Department of Revenue issued a Letter Ruling regarding a dental office’s purchases of medical grade oxygen and nitrous oxide.   Missouri provides an exemption for medical grade oxygen for use in a general dentistry practice under section 144.030.2(18).  The statute states that, “all sales of medical oxygen, home respiratory equipment and accessories” are exempt from state and local sales tax.  Furthermore, Missouri Code of State Regulations 12 CSR 10-110.013(3)(A) states that “sales of prescription drugs, insulin, medical grade oxygen, drug samples and materials used to manufacture samples, which may be dispensed by a licensed practitioner are exempt from tax.”  Therefore, the taxpayer’s purchases of medical grade oxygen are exempt from sales tax.

However, the Department determined that the taxpayer’s purchases of nitrous oxide are taxable. The Department reviewed the FDA’s list of approved drug and it does not list nitrous oxide as a prescription drug requiring approval by the FDA. Additionally, section §144.030.2(18), RSMo, only exempts medical grade oxygen. Therefore, the taxpayer’s purchases of nitrous oxide are subject to sales tax.

For Further Information:

Missouri Department of Revenue – Letter Ruling #LR 7101