SALT Report 2812 – The Indiana Department of Revenue issued a letter ruling regarding a medical facility’s purchases of urethral stents. In 2011, the Department conducted an audit of the Taxpayer’s business records. According to the audit report, the Taxpayer purchased the urethral stents without paying sales or use tax but was unable to provide invoices or records that would support the exemption.
Consequently, the auditor concluded that the Taxpayer owed sales and use tax on its purchases of stents. The Taxpayer disagreed with the assessment and submitted a protest claiming that it is not required to pay sales tax because the stents are exempt as durable medical equipment under IC § 6-2.5-5-18(a). The Taxpayer also provided copies of the requested invoices.
Upon review of the case the Department stated that IC § 6-2.5-1-18(a) defines durable medical equipment as, “equipment, including repair and replacement parts for the equipment, that:
- Can withstand repeated use,
- Is primarily and customarily used to serve a medical purpose,
- Generally is not useful to a person in the absence of illness or injury, and
- Is not worn in or on the body
Also, 45 IAC 2.2-5-28 provides that sales of prescribed “durable medical equipment” are exempt if they are necessary to “correct or alleviate injury to, malfunction of, or removal of a portion of the purchaser’s body.”
Based on these regulations, the Department concluded that the Taxpayer established that the stents were durable medical equipment because they:
- Were prescribed to patients,
- Fell within the definition of durable medical equipment,
- Are required to alleviate injury to, or malfunction of, the purchaser’s body, and
- Were not medical supplies consumed in professional use
As a result, the Taxpayer was not held liable for sales or use tax on its purchases of urethral stents because they were exempt durable medical equipment. Additionally, because the Taxpayer provided copies of invoices for other transactions in dispute, the Department granted a supplemental audit review.
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