Virginia – Dental Equipment, Supplies, and Implants were Taxable

SALT Report 2541 – The Virginia Tax Commissioner issued a letter ruling regarding a sales and use tax assessment that was imposed on untaxed sales of durable medical equipment. The Taxpayer in this case, sells dental equipment, supplies and implants to Dentists and dental offices in Virginia. The Taxpayer appealed the assessment claiming that the items were exempt pursuant to Va. Code § 58.1-609.10 10 and filed a request for redetermination.

Virginia Code § 58.1-609.10 10 provides an exemption from sales and use tax for “prosthetic devices, orthopedic appliances, catheters… durable medical equipment and devices, and related parts and supplies specifically designed for those products…when such items or parts are purchased by or on behalf of an individual for use by such individual.”

In addition to the above tax law, the Commissioner referred to title 23 of the Virginia Administrative Code 10-210-500 which provides additional guidance regarding the application of sales and use tax to dentists, dental laboratories and dental supply houses. Specifically, the regulation provides that for purchases on behalf of an individual, “The tax applies to sales to a dentist by a dental laboratory or supplier of dentures, plates, braces and similar prosthetic devices, or the component parts thereof, unless such dentures, braces, etc. are purchased on behalf of a specific patient.” Therefore, the exemption will not apply if the items are purchased in bulk and then dispensed to a particular patient. If this type of bulk sales occurs, the original purchase will be subject to tax even if the items are subsequently removed from inventory and modified for a specific patient.

Based on the above regulations, the Commissioner determined that the sales tax exemption for prosthetic devices and durable medical equipment does extend to dental devices and equipment. However, it only applies to sales made by, or on behalf of, an individual. Because of this, the Taxpayer was given 30 days to provide documentation that would prove that the durable medical equipment was purchased for specific patients.

During that 30 day period, the Taxpayer failed to provide any supporting documentation, and as a result the Commissioner ruled that the Taxpayer had not met its burden of proof. Accordingly, the Taxpayer’s sales of dental equipment, supplies, and implants were taxable and the assessment was upheld.

For Further Information

Virginia Department of Taxation – Ruling of the Tax Commissioner #PD 13-68