N.Y. Comp. Codes R. & Regs. tit. 20 § 528.4

Current through Register Vol. 46, No. 45, November 2, 2024

Section 528.4 - Drugs and medicines; medical equipment and supplies

Tax Law, § 1115(a)(3) and (g)

(a)Exemption.

(1) Drugs and medicines intended for the use, internally or externally in the cure, mitigation, treatment or prevention of illnesses or diseases in human beings, medical equipment (including component parts thereof) and supplies required for such use or to correct or alleviate physical incapacity, and products consumed by humans for the preservation of health are exempt.

(2) Services performed upon exempt medical equipment are also exempt.

(3) Cosmetics or toilet articles notwithstanding the presence of medicinal ingredients therein are taxable. Medical equipment (including component parts thereof) and supplies, other than drugs and medicines, purchased at retail for use in performing medical and similar services for compensation are not included in the exemption.

(4) The Sales Tax Bureau publishes lists, by brand name, of taxable and exempt drugs, medicines, cosmetics and toilet articles. It also publishes a list of medical equipment, supplies and prosthetic aids. Such lists are available upon request at any district tax office or directly from the bureau's main office in Albany.

(b)Drugs and medicines.

(1)Drugs and medicines mean:

(i) articles, whether or not a prescription is required for purchase, which are recognized as drugs or medicines in the United States Pharmacopeia, Homeopathic Pharmacopeia of the United States, or National Formulary, and intended for use in the diagnosis, cure, mitigation, treatment or prevention of disease in humans;

(ii) articles (other than food) intended to affect the structure or any function of the human body.

(2) The base or vehicle used (oil, ointment, talc, etc.) and the medium used for delivery (disposable wipe, syringe, saturated pad, etc.) of a drug or medicine will not affect its exempt status.

(3) Products consumed by humans for the preservation of health include other substances used internally or externally, which are not ordinarily considered drugs or medicines.

Example 1:

Analgesics, antiseptics, antacids, cough and cold remedies, laxatives, aspirin, boric acid ointment, cod liver oil and castor oil are exempt.

Example 2:

Antibiotics, sulfa drugs, and birth control pills are exempt.

Example 3:

Insulin that is packaged with disposable syringes is exempt.

Example 4:

Acne preparations, including acne soaps, are exempt provided they contain a recognized drug or medicine.

Example 5:

All dandruff preparations, including dandruff shampoos, are exempt provided they contain a recognized drug or medicine.

Example 6:

Any diagnostic drug, chemical or other substance which is used internally or externally on a human, such as a barium product for gastric X-rays, is exempt.

Example 7:

Vaginal creams, foams, ointments, douches, jellies, powder, and sprays provided they function as treatments for specific conditions are exempt, but products that only deodorize are taxable.

Example 8:

Foot powders that eliminate excessive perspiration and prevent athletes foot or other fungus infections are exempt, but foot powders which act only as deodorants are taxable.

Example 9:

Lip ice that treats or prevents chapped lips is exempt, but products that color the lips are taxable.

Example 10:

Products used to kill lice which infest humans are exempt. Similar products which prevent or treat mange or ringworm in humans are also exempt.

Example 11:

Products used for treatment of burns and products used to relieve pain from burns are exempt.

Example 12:

Gelatin capsules, blood and its derivatives are exempt.

Example 13:

Medical oxygen and nitrous oxide are exempt.

(c)Cosmetics.

Articles intended to be rubbed, poured, sprinkled or sprayed on, introduced into, or otherwise applied to the human body for cleansing, beautifying, promoting attractiveness, or altering the appearance, and articles intended for use as a component of any such articles are subject to tax.

Example:

Cold creams, suntan lotions and makeup are taxable cosmetics.

(d)Toilet articles.

Any article advertised or held out for grooming purposes and those articles which are customarily used for grooming purposes, regardless of the name by which they may be known are subject to tax.

Example:

Soap, toothpaste and hair spray are taxable toilet articles.

(e)Medical equipment.

(1)Medical equipment means machinery, apparatus and other devices (other than prosthetic aids, hearing aids, eyeglasses and artificial devices which qualify for exemption under section 1115[a][4] of the Tax Law), which are intended for use in the cure, mitigation, treatment or prevention of illnesses or diseases or the correction or alleviation of physical incapacity in human beings.

(2) To qualify, such equipment must be primarily and customarily used for medical purposes and not be generally useful in the absence of illness, injury or physical incapacity.

Example 1:

Items such as hospital beds, wheel chairs, hemodialysis equipment, iron lungs, respirators, oxygen tents, crutches, back and neck braces, trusses, trapeze bars, walkers, inhalators, nebulizers and traction equipment are exempt medical equipment.

Example 2:

A medical patient purchases an air conditioner to be used to lower air temperature to alleviate his illness. Since an air conditioner is nonmedical in nature, it is not exempt from the tax.

Example 3:

Orthodontic appliances are medical equipment.

Example 4:

The purchase of a birth control device commonly known as an I.U.D. or intrauterine device is the purchase of medical equipment.

(3) Replacement parts for medical equipment are exempt from tax provided such replacement parts are identifiable as medical equipment replacement parts. If a replacement part is not identifiable as a part for medical equipment, the purchaser must pay the tax at the time of purchase. The purchaser may then apply directly to the Sales Tax Bureau for a refund of the tax paid provided he can show that the part was used to replace a defective part on exempt medical equipment.

(4) Medical equipment is not exempt if purchased by a person performing medical or similar services for compensation. (See subdivision [g] of this section.)

(f)Orthopedic or corrective shoes.

(1) Shoes made to specifications prescribed by a podiatrist, orthopedist or other physician for the purpose of treating or preventing illness or disease, or to correct physical incapacity are deemed to be medical equipment and exempt from tax.

Example:

Shoes made from a mold of a foot or shoes with special devices to straighten malformed bones are exempt.

(2) Shoes made to order for special fitting problems, such as narrow heels or extra large feet, do not qualify for exemption and are subject to appropriate New York State and local tax.

(3) When an ordinary shoe is modified to specifications prescribed by a podiatrist, orthopedist or other physician by the insertion of a lift, a wedge, or arch support for the purpose of treating or preventing illness or disease, or to correct physical incapacity, the charge for the ordinary shoe is subject to appropriate New York State and local tax. However, any reasonable separately stated charge for the modification is exempt. If no separate charge is made for the modification, the entire charge is subject to appropriate New York State and local tax.

(4) When an ordinary shoe is modified for more comfortable fit (e.g., heel pad inserted, insole added, etc.) improved styling or similar purposes, the entire charge is taxable, including any separately stated amount for modification.

(5) When a stock orthopedic shoe (i.e., special shoes necessary to accommodate molded inlays, custom-made arch supports, etc.) is modified to specifications prescribed by a podiatrist or orthopedist, or other physician, the entire charge is exempt.

(g) Supplies.

(1) Supplies used in the cure, mitigation, treatment or prevention of illnesses or diseases or for the correction and alleviation of physical incapacity are exempt.

Example 1:

Colostomy bags and the necessary accoutrements required for attachment are medical supplies.

Example 2:

Bandages, gauze and dressings are medical supplies.

Example 3:

Disposable hypodermic syringes and litmus paper used by diabetics are medical supplies.

(2) Medical supplies are not exempt if purchased by a person performing medical or similar services for compensation. (See subdivision [h] of this section.)

(h)Taxable medical equipment and supplies.

(1) Medical equipment and supplies purchased for use in performing medical or similar services for compensation are not exempt from tax.

Example 1:

Stethoscopes, syringes, wheel chairs, etc. purchased by physicians are not exempt.

Example 2:

Resuscitators, stretchers and other such equipment purchased by an ambulance service are not exempt.

Example 3:

Bandages, gauze, dressings, etc., are not exempt when purchased by a physician, ambulance service or other person who will use them in performing a medical service for compensation.

Example 4:

Dental supplies such as porcelain, mercalloy, gold, silver, acrylic denture base, amalgam, composite resin, silicate, and dental floss are not exempt when purchased by a dentist who will use them in performing a dental service for compensation.

(2) Medical services for human beings include but are not limited to the practices of medicine, dentistry, physical therapy, chiropractic, nursing, podiatry, optometry and radiology, whether performed by a private practitioner, clinical laboratory, hospital, nursing home, ambulance service, clinic, or health maintenance facilities.

(3) It is immaterial whether the compensation is paid to the practitioner or institution by the patient or another source.

(i) Servicing and repairing medical equipment.

(1) Servicing and repairing medical equipment which is exempt from tax under subdivision (e) of this section is exempt from the tax imposed by paragraph (3) of subdivision (c) of section 1105 of the Tax Law.

(2) Servicing and repairing medical equipment which is not exempt is subject to the tax imposed by paragraph (3) of subdivision (c) of section 1105 of the Tax Law.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 528.4