California Sales and Use Tax Exemption for PPE and Related Supplies

Hopefully you are all staying safe, healthy and sane during this unprecedented time.  We want to make you aware of a new, limited-duration, sales and use tax exemption in California for items such as personal protection equipment (PPE) and the like, when these items are sold to the State during this emergency declaration period.

Additional details are included below, but in short, sales to the State of California of PPE and related items are exempt from sales and use tax until Governor Gavin Newsom amends or resends the current State of Emergency order (N-46-20) he issued in response to the current […]

Which States Tax Medical Devices?

Continuing in the vein of addressing fairly broad topics early on with this blog, I will focus this particular posting on the taxability of medical devices.  I will address the topic by looking at each individual state to determine what constitutes a medical device by definition and whether items fitting that definition are taxable or non-taxable pursuant to the applicable law.

Clarifying details and/or exceptions will be noted below, but in general, all 45 taxing states (jurisdictions) follow the United States Federal Drug Administration’s (FDA) definition of a medical device:

A medical device is “an instrument, […]

Where and When are Medical Services Taxable?

I was recently asked by a fellow tax professional whether medical services in general were exempt from sales, use or equivalent taxes in jurisdictions that have an active taxing scheme in place.  I thought I would share my research on the matter just in case the topic presents itself to others in the future.

Medical services can be generally defined as services provided by a state board licensed professional in the medical industry, including dentistry, that improve the physical and/or mental well-being of a patient.  While most states exempt medical services, there are a few that choose […]

Leases of Mobile Medical Imaging Equipment

I’ve been assisting a taxpayer with multistate sales and use tax issues pertaining to their subleases of mobile medical imaging equipment.  Since similar problems can arise in connection with multistate leasing in general, some details of the case are worth noting.  

The taxpayer leases imaging equipment such as MRI and PET scanners from prime lessors and then subleases it to various hospitals throughout the nation.  The hospitals, in turn, use the equipment to enhance and/or supplement their ability to diagnose ailments and injuries. (Subleasing these units is generally cheaper than buying them outright.)  The units may remain […]

Which States Tax Prescription and Over-The-Counter Medicine?

The legal definition of a medicine varies slightly from state-to-state, but it generally includes any pill, powder or substance that is intended to treat, cure or mitigate human disease or ailments and has medicinal qualities.  For the purposes of this blog post, the definition does not include medical devices, prostheses, supplies (including bandages), personal hygiene products or medicinal marijuana, all of which will be addressed in subsequent postings.  Finally, a prescription medicine is one that is ordered by a licensed member of the medical profession, and an over-the-counter

Amendment to California Regulation 1591

The California State Board of Equalization recently amended Regulation 1591 with little to no fanfare. The revision went through the amendment process in relative obscurity, probably because it only added three words to the regulation. The potential impact of those three words, however, could be material for those in the medical products industry.

The proposal for this revision came out of the Board’s Business Tax Committee which is headed by Ms. Diane Harkey. Ms. Harkey, who represents the Fourth Equalization District (Orange County), and her staff have been a great resource for taxpayers, and through this committee have brought about several […]

Hospitals & Medical Services: Proposed Changes to CA Reg 1503

Last month I participated in an Interested Parties Meeting (IPM) with the California Department of Tax and Fee Administration (CDTFA) to discuss proposed revisions to California Code of Regulations, title 18 (Regulation), section 1503- Hospitals and other Medical Service Facilities, Institutions and Homes for the Care of Persons.  I want to share my thoughts on the proposed revisions because they will have a material impact on hospitals and other medical facilities’ ability to claim refunds of tax related to their Medicare Part A sales.

Currently, Regulation 1503, subdivision (b)(2), contemplates a transaction where title to the tangible personal property (TPP) in […]

Sales & Use Tax Refund Opportunities: Durable Medical Equipment

logo-v2This month, James R. Dumler, a senior sales tax specialist at McClellan Davis and featured contributor at Sales Tax Support provides a multistate sales and use tax update related to the medical industry. Sales Tax Support publishes articles written by experts and thought leaders in the specialized field of sales and use tax with small and medium sized business owners in mind.

Visit salestaxsupport.com to read James’ informative article “Sales & Use Tax Refund Opportunities: Durable Medical Equipment

Questionable Tax Audit Procedures for California Marijuana Dispensaries

Marijuana dispensaries have become one of the primary targets for sales and use tax audits performed by the State Board of Equalization. The historical treatment of marijuana as an illegal drug (which is still the case at the federal level), auditors’ underlying political beliefs, and the unusual audit methodologies employed for marijuana dispensaries, can often result in overstated liabilities. A general awareness of the audit procedures and the issues to look out for can help marijuana dispensaries avoid unnecessary and lengthy disputes with the Board of Equalization audit staff. This article addresses some of the intricacies and pitfalls of observation […]