SALT Report 1644 – The Tennessee Department of Revenue issued a Letter Ruling regarding a Taxpayer’s sales of single-use vein catheters used to treat venous reflux disease (VRD). VRD is a condition in which vein valves that are supposed to stop blood from flowing backwards do not function properly. As a result, blood collects in the legs causing the veins to expand. This condition is commonly referred to as varicose veins.
The Taxpayer sells three different types of surgery-based procedure packs that combine all the supplies necessary to treat venous reflux disease into a single use, sterile package with an Rx label. For the retail sale of the single use catheters to be exempt from sales and use tax under Tennessee Code § 67-6-314(1), the catheters must:
- Be for human use,
- Be a replacement, corrective or supportive device,
- Be worn in or on the body, and
- Be used to artificially replace a missing portion of the body, prevent or correct physical deformity or malfunction, or support a weak or deformed portion of the body.
The Department determined that the catheter’s met the first requirement because the catheter is for human use. The second requirement is also met because the catheter is a device used to correct venus reflux disease. The fourth requirement is met because the catheter is used to correct a malfunction in the diseased vein.
However, the third requirement is not met because the catheter is not worn in or on the body. The catheter is inserted and used to ablate the varicose vein, then removed during the same medical procedure. The catheter does not remain “in or on the body.” Because the Taxpayer’s catheter does not meet all four requirements the catheter is not exempt from Tennessee sales and use tax as a prosthetic device.
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