Sales Tax Exemption For Prescription-Required Single-Use Medical Devices in Louisiana

One Louisiana sales tax exemption for medical purchases made by hospitals and health care facilities provides an opportunity for both Louisiana sales and use tax savings at the state tax rate of 5%. This Louisiana sales tax exemption applies to medical devices that are required to be issued under a physician’s prescription and are used personally and exclusively by a single patient.

Louisiana Rev. Stat. Ann. 47:305(D)(1)(s) states that, “solely for purposes of the state sales and use tax, any and all medical devices used exclusively by the patient in the medical treatment of various diseases or administered exclusively to the patient by a physician, nurse, or other health care professional or health care facility in the medical treatment of various diseases under the supervision of and prescribed by a licensed physician” is specifically exempted from tax imposed by taxing authorities. These devices were exempt from the state rate of 4% through March 31, 2016.  The devices then became taxable at the state rate of 5% from April 1, 2016 through June 30, 2016 and then transitioned to being subject to a reduced state rate of 3% from July 1, 2016 through June 30, 2017. Effective July 1, 2017, this Louisiana sales tax exemption provides a complete exemption from taxation for these medical devices at the current state rate of 5%.

The most effective way to determine if a medical purchase qualifies for this Louisiana sales tax exemption is to review the product label for the item in question. The FDA’s product labeling requirements necessitate that all medical device product labels must contain either symbols or statements that assures that the devices are used safely and effectively.

To designate that a device is prescription-required the label most frequently includes the symbol.  Alternatively, the product label may contain the following statement to indicate that a device is prescription required, “Caution: Federal law restricts this device to sale by or on the order of a physician, dentist, or other licensed practitioner.”

The symbol most frequently used to indicate that a device is intended for use on a single patient appears as .  Again, similar to the prescription requirement notice, there is an alternative statement that may be used to convey the single patient use message.  The product label may instead contain one of the following two statements, “For single patient use only” or “Do not reuse, this is a single use device.” On the rare occasion, when the product label does not contain the relevant symbols or statements, then the device’s Instructions for Use (“IFU”) that comes with most medical purchases will contain these symbols or statements.

Vendors and distributors making sales of these prescription-required, single-use items are often still charging tax to their customers. However, if the purchaser provides the vendor or distributor with the appropriate Louisiana sales tax exemption certificate R-1041, the seller will stop charging sales tax on future purchases of medical devices that are prescription-required and single-use. This certificate may be found on the Louisiana Department of Revenue’s website.  f sales tax has already been paid to vendors or distributors, or is remitted directly to the Louisiana Department of Revenue on a taxpayer’s own sales and use tax returns, the purchaser can apply for a sales and use tax refund from the Louisiana Department of Revenue.

Have a question? Contact Aaron Giles

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Aaron C. Giles is the Founder and President of Agile Consulting Group. Aaron spent five years working within the specialty niche of Sales & Use Tax at Brown & Associates before forming his own firm in 2005. He has worked hundreds of audits in states all across the U.S. during that time and has delivered savings of over $75M in the form of refunds and credits to his clients. Today, he leads a group of talented, detail-oriented colleagues who focus exclusively on Sales & Use Tax.

Some of our firms’ greatest achievements have come in successfully arguing new and unique perspectives to existing tax law in various states enabling our clients to claim exemptions on categories of purchases previously held to be taxable. Included in these victories are: communication services taxes for religious nonprofit hospitals in FL, bulk purchases of drugs in VA, specific surgical tools and instruments for healthcare providers in TX, printing plates in GA, railroad utilities in KY, and most recently software in AL.

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