In Virginia P.D. 13-116 (June 27, 2013), the Department of Taxation evaluated whether a taxpayer’s sales of intrauterine copper contraceptive devices (“devices”) were exempt from Virginia retail sales and use tax. The Virginia Tax Commissioner had previously ruled that these devices were not exempt from sales tax pursuant to Virginia’s durable medical equipment exemption. However, the Taxpayer argued the devices were exempt pursuant to Virginia Code §58.1-609.10(9), which exempts from sales and use tax medicines and drugs sold by licensed physicians and controlled drugs purchased by licensed physicians.
The controlling issue was whether the devices constitute controlled drugs. The Food and Drug Administration classifies the devices as prescription drugs. The Virginia Board of Pharmacy agreed with the federal classification and noted that the devices are a “Schedule VI controlled substance under the Virginia Drug Control Act.” Thus, the Department of Taxation ruled in favor of the Taxpayer and held that sales of the devices to a licensed physician, licensed nurse practitioner, or licensed physician assistant for use in a professional practice are exempt from sales tax.
Taxpayers who sell medical devices that are prescription drugs according to the FDA should evaluate if they qualify for this exemption in Virginia.
The views expressed in this article are those of the authors and do not necessarily reflect the position or policy of Berkeley Research Group, LLC.
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