In a recent ruling by the tax commissioner, Virginia has confirmed that its sales tax exemption for prosthetic devices and durable medical equipment does extend to cover dental devices and equipment, but it only applies to sales to an individual and generally not to sales to a dentist. Va. Rul. of the Tax Commr. No. 13-68 (May 10, 2013).
The ruling addressed a seller of dental equipment, supplies, and implants. Virginia's Department of Taxation audited the dental supplier and assessed tax on its sales of durable medical equipment. The dental supplier disputed the assessment and claimed that its sales were exempt sales of durable medical equipment.
Virginia generally taxes sales of tangible personal property. Va. Code Ann. secs. 58.1-602, 58.1-603(1)-(3), 58.1-604(1)-(3). But, Virginia exempts sales of "prosthetic devices . . . other durable medical equipment and devices, and related parts and supplies specifically designed for those products . . . when such items or parts are purchased by or on behalf of an individual for use by such individual." Va. Code Ann. sec. 58.1-609.10(10). Virginia's sales tax regulations explain that sales to dentists are taxable when the items are purchased in bulk by a dentist and then dispensed to a particular patient, even if the items withdrawn from the bulk inventory are modified for a specific patient. 23 Va. Admin. Code 10-210-500.
In this case, the dental supplier did not provide the Department of Taxation documentation to prove that the contested durable medical equipment was purchased on behalf of a specific patient. Therefore, despite the dental supplier's protests, the commissioner ruled that the dental suppliers sales were taxable.