SALT Report 1686 – Maine Revenue Services released a sales and use tax bulletin regarding recent revisions to the taxability of prescription medicines, prosthetic aids, and diabetic supplies.
36 MRSA § 1760 sub-§ 5 provides an exemption for sales of medicines sold with a doctor’s prescription. Medicines includes antibiotics, analgesics, antipyretics, stimulants, sedatives, antitoxins, anesthetics, antipruritics, hormones, antihistamines, dermal fillers such as Botox, injectable contrast agents, vitamins, oxygen, vaccines or anything used to prevent, diagnose or treat diseases or injuries and that either:
- Require a prescription in order to be purchased or administered to the retail consumer or patient, or
- Are sold in packaging that contains a U.S. Food and Drug Administration OTC Drug Facts Label
Sales of over-the-counter drugs without a written prescription are taxable, even if the drug is purchased on the advice of a physician. Sales of medicines originally prescribed by a doctor on a refillable prescription are exempt when the prescription is refilled. However, there is no tax on nonprescription medicines purchased by a doctor for use in the doctor’s practice.
Under 36 MRSA § 1760 sub-§ 33, the sale of equipment or supplies used to diagnose or treat diabetes is exempt from tax.This includes all sales of insulin, diabetes testing supplies, anti-diabetic drugs, or any other item used only to diagnose or treat diabetes.
Sales of items that are not used only in the diagnosis or treatment of diabetes, such as hypodermic syringes and needles, and that are not prescribed by a doctor, are not covered by this exemption unless the purchaser provides written evidence, such as a statement from a doctor, that the patient has been diagnosed as diabetic, and that the items being purchased are to be used in the treatment of diabetes. The retailer must maintain the written evidence provided by the purchaser.
Under 36 MRSA § 1760 sub-§ 5-A sales of “prosthetic aids” are exempt from sales tax. Prosthetic aid is defined as a “device or repair or replacement part that is worn on or in the human body to replace a missing portion of the body or to correct a physical malformation or malfunction.” Prosthetic aid includes but is not limited to artificial limbs and eyes; ostomy appliances; enteral feeding devices; dentures, crowns, caps and materials used to repair or replacement teeth; and cardiac pacemakers.
Orthopedic or therapeutic devices and appliances that do not replace a malfunctioning part of the human body or do not correct physical malformation or malfunction are not considered prosthetic aids and sales of this type are not covered by the exemption.
Hearing Aids – Sales of hearing aids, batteries, and repair and replacement parts for hearing aids are exempt from sales tax.
Eyeglasses – Sales of corrective eyeglasses and contact lenses as well as sales of repair or replacement parts and lenses are exempt from sales tax.
For Further Information:
Maine Revenue Services – Sales and Use Tax Instructional Bulletin No. 41