Missouri – Taxability of Product Used to Heal Musculoskeletal Injuries and Diseases

SALT Report 1777 – The Missouri Department of Revenue issued a letter ruling regarding the taxability of a biotechnology company’s product that is used by hospitals and surgery centers to heal musculoskeletal injuries and diseases.  The product is a sterile, synthetic, non-pyrogenic material used in combination with bone marrow to fuse bones, fill gaps, and repair fractures.

Missouri Code of State Regulations provides an exemption for orthopedic devices under 12 CSR 10-110.013(2)(A).  The regulation defines an orthopedic device as “a rigid or semi-rigid leg, arm, back or neck brace and casting materials which are 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.”

The Department determined that the Taxpayer’s product did not meet the requirements of the exemption because the product isn’t a rigid or semi-rigid brace used to support or restrict movement, it isn’t a casting material, and it isn’t used to replace a malfunctioning internal body organ. Therefore, the Taxpayer’s product is subject to Missouri sales and use tax unless the hospital or surgery center provides an exemption certificate stating that it as an exempt, nonprofit organization.

For Further Information:

Missouri Department of Revenue – Letter Ruling LR 7123