Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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425.0000 PRESCRIPTION MEDICINES—Regulation 1591

Annotation 425.0508


425.0508 Medical Gases and Delivery Systems. The medical oxygen delivery system exemption does not apply where direction and control of the equipment never passes to the patient—e.g., the patient merely use the hospital's system. For equipment to qualify as a medical oxygen delivery system, it must deliver air or oxygen into the breathing systems of the patient. In general, devices that only assist the patient in breathing and do not deliver air or oxygen directly to the patient do not qualify as medical oxygen delivery system. Delivery systems for other medical gases are considered to be appliances for delivering treatment to a patient and are excluded from the term "medicine."

Anesthetics for internal or external application to the human body are "medicines" since they are preparations for the treatment of disease. Both oxygen, including liquid oxygen, and nitrous oxide are "medicines" when used for internal or external application to the human body. A surgery center is not a health facility as defined in Regulation 1591, but a convalescent home is, with the result that sales of medicines for the treatment of a human being to a nursing or convalescent home are not subject to tax but that sales to surgery centers are subject to tax. 6/17/91.