SALT Report 1710 – The Missouri Department of Revenue issued a Letter Ruling regarding a Taxpayer that manufactures and sells embolization products. The Taxpayer’s embolization device is a pre-formed product that is inserted through a catheter into hyper-vascular tumors and arteriovenous malformations. Once inserted into the affected area, the device blocks the flow of blood by swelling to a specific swell size.
Missouri law provides an exemption for prosthetic or orthopedic devices. These devices must be used to “replace all or part of the function of a permanently inoperative or malfunctioning internal body organ” or they must be a “rigid or semi-rigid leg, arm, back or neck brace that is directly used for the purpose of supporting a weak or deformed body member or restricting or eliminating motion in a diseased or injured part of the body.” Missouri Code of State Regulations 12 CSR 10-110.013(2)(A) and 12 CSR 10-110-013(2)(D).
The Department determined that the Taxpayer’ embolization product is neither a prosthetic device nor an orthopedic device for the following reasons:
- It is used to treat medical conditions by blocking the blood flow within a vein or artery
- It does not replace the function of a permanently inoperative or malfunctioning internal body organ
- It is not a rigid or semi-rigid casting material used to support a body member, and
- It does not restrict or eliminate motion in a diseased or injured part of the body
Based on the above facts, the Department ruled that sales of the Taxpayer’s embolization product are subject to sales and use tax.
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