SALT Report 1945 – The Virginia State Tax Commissioner issued a ruling regarding the taxability of suture materials. The Taxpayer is an out-of-state retailer who sells sutures, surgical mesh, surgical staple, and other types of wound closure materials. Some of the suture materials are non-medicated and some are coated or infused with antiseptic or antibacterial products.
The suture materials are labeled “Rx” and can only be purchased by physicians, hospitals, nursing homes, medical clinics, and surgical centers. The Taxpayer requested guidance as to whether it is required to collect and remit the sales tax on the sale of suture materials to healthcare practitioners in Virginia.
In its decision, the Tax Commissioner discusses the FDA’s ruling that classifies both medicated and non-medicated sutures as medical devices. In addition, the Virginia Board of Pharmacy accepted the FDA’s classification and has categorized the suture materials as a Schedule VI medical device under the Virginia Drug Control Act found in Virginia Code § 54.
Because of this, the Taxpayer may sell its suture materials exempt from tax when the product is purchased by, or on behalf of, an individual for use by the individual. At the time of purchase, the Taxpayer is required to obtain documentation that shows the patient’s information to verify that the purchase was made on behalf of an individual. Alternatively, sales of suture materials in bulk, and suture materials not purchased on behalf of an individual for use by the individual, are subject to tax.
In addition, the Taxpayer may sell suture materials to non-profit hospitals and non-profit clinics, including non-profit surgery centers, exempt from sales and use tax, even if the products are sold in bulk, if the Taxpayer receives a Sales and Use Tax Certificate of Exemption letter from the Department of Taxation.
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