Virginia – Taxability of Contraceptive Devices

SALT Report 2691 – The Virginia Department of Revenue issued a letter ruling regarding a Taxpayer’s sales of certain contraceptive devices. The device is an intrauterine copper contraceptive device that releases copper ions into the body and provides the contraceptive protection.  The Taxpayer is the manufacturer of the device and sells them to physicians, hospitals, and clinics.

The Taxpayer requested a ruling to clarify a previous Department decision, P.D. 01-180, in which the Commissioner determined that intrauterine copper contraceptive devices were not classified as medical devices for sales tax purposes.  However, the Taxpayer points out that the device is approved by the federal Food and Drug Administration as a prescription drug, and because of this the device should qualify for the sales and use tax exemption for prescription drugs in Virginia Code § 58.1-609.10 9.

In its response, the Commissioner stated that in P.D. 01-180 that Taxpayer claimed an exemption for durable medical equipment on its purchases of intrauterine copper contraceptive devices.  In that ruling, the Commissioner ruled that the device did not meet all of the criteria for the durable medical equipment exemption.  Additionally, whether the device qualified as a prescription drug was not addressed in that case, because the Taxpayer did not raise the question.

In the case at hand, the Comptroller stated that the Taxpayer’s sales of its intrauterine copper contraceptive device are exempt from sales and use tax as prescription drugs under Virginia Code § 58.1-609.10 9 when they are sold to licensed physicians, licensed nurse practitioners, or licensed physician assistants for use in a professional practice.

Further, the Department notes that they consider all federal Food and Drug Administration guidelines regarding the classification of products for purposes of the exemption.  Based on the FDA’s guidelines, the Taxpayer’s device is classified as a prescription drug.  This classification, was also addressed by the Virginia Board of Pharmacy, who agreed with the FDA’s guidelines that the device qualifies as a controlled substance.

For Further Information

Virginia Department of Taxation – Ruling of Commissioner, P.D. 13-116