Michigan Sales Tax Exemption For Implants

The Michigan sales tax exemption for implants was expanded when the Michigan Governor signed into law Public Act #46 with an effective date of 3/3/2020. This law modified the definition of prosthetic devices that qualify for exemption when purchased by a Hospital, or Freestanding Surgical Outpatient Facilities that are licensed under Part 208 of Michigan’s Public Health Code. The tax professionals at Agile Consulting Group recently filed a request for a Technical Advice Letter to obtain additional clarification as to what will qualify for exemption.

Prosthetic Implant Exemption: Prior To March 2020 Law Change

Prior to this law change in March 2020, the Michigan sales tax exemption for implants was limited to purchases of prosthetic devices that were “resold” to patients of Hospitals and Freestanding Surgical Outpatient Facilities. Prosthetic devices are defined in Mich. Comp. Laws Ann. Sec. 205.51a(q) as a “replacement, corrective, or supportive device, other than contact lenses and dental prosthesis, dispensed pursuant to a prescription, including repair or replacement parts for that device worn on or in the body” that does one or more of the following:

  • Artificially replace a missing portion of the body;
  • Prevent or correct a physical deformity or malfunction of the body; or
  • Support a weak or deformed portion of the body.

The prior rule stated that implantable prosthetic devices were only “dispensed” when sold to a patient. Consequently, the implantable prosthetic devices needed to be administered contemporaneously with, or prior to, the transaction for which the exemption is claimed, rather than some future transaction for the exemption to apply. Michigan Letter Ruling 2019-2 offers a more detailed explanation of the exemption requirements prior to 3/3/2020.

Prosthetic Implant Exemption: After March 2020 Law Change

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