The Wisconsin Tax Appeals Commission recently ruled that specialized tool kits used to install prosthetic devices were not exempt as accessories for prosthetic devices.
The taxpayer was a manufacturer of prosthetic implant devices such as artificial hips, knees, and elbows. When the taxpayer sold a prosthetic device to a customer, it provided a specialty instrument kit free of charge. The kits contained specialized instruments used to implant prosthetic devices into patients.
Wisconsin provides exemptions for durable medical equipment (DME), prosthetic devices, and accessories for each. The ruling determined that the DME exemption did not apply to the kits because they were not used in a person's home. The ruling determined that the kits did not qualify as accessories for prosthetic devices because the tools were physically and functionally separate from the prosthetic devices.