The South Carolina Supreme Court ruled that a hospital's purchases of orthopedic prosthetic devices were taxable.
A hospital provided surgeries to implant orthopedic prosthetic devices in patients. Before the surgeries, a doctor would choose the appropriate device from a prosthetic device vendor. The hospital paid for the device and paid tax on the purchase. It later asked for a refund of the taxes it paid, claiming that the sales were exempt.
South Carolina taxes hospitals' purchases of items used to provide services unless an exemption applies. The sale of a prosthetic device is exempt when the sale requires a prescription. The Court explained that these sales did not require a prescription because federal regulations permitted the doctors to purchase the devices without a prescription. As a result, the Court concluded that the sales were taxable.