Insertable Cardiac Monitors are Taxable in Arizona

Oct 21st, 2020

The Arizona Department of Revenue recently advised in a private letter ruling that sales of insertable cardiac monitors (ICM) were taxable. This was because the ICMs did not qualify as prosthetic devices or durable medical equipment (DME). ICMs are temporarily implanted under the skin to record cardiac arrhythmias.

To qualify as an exempt prosthetic, the device must (1) support or take the place of a part of the body, or (2) increase the function of a sense organ. Here, the ICM does not serve any purpose other than to record cardiac events. It does not qualify as an exempt prosthetic device.

To qualify as DME, the device must (1) be reimbursable by Medicare, (2) be prescribed by a physician, (3) be able to withstand repeated use, (4) primarily serve a medical purpose, (5) not be useful in the absence of illness or injury, and (6) be used in the home. Here, the Department found that the ICM did not qualify as DME because it was not covered by Medicare and was not used in the home.

Note that ICMs are likely exempt when sold to qualifying exempt entities such as hospitals, health care organizations, and community health centers.