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Colorado Exemptions: Medical Supplies, Equipment

  • Sep 28, 2012 | Gail Cole

The Colorado Department of Revenue has made public general information about the state sales and use taxation of medical and dental fields. FYI Sales 68 stipulates that individual cities and counties may tax these items. An extensive list of local tax rates is available at Colorado Sales/Use Tax Rates (DR 1002).

Certain items in the medical field are exempt from Colorado sales and use tax. Others are not. The Colorado Department of Revenue makes it clear that, when in doubt, sales tax must be paid.

"Any time a question exists as to whether a sale is taxable or exempt; (sic) the law requires that the vendor charge the sales tax and the purchaser pay the tax."

Vendors are liable for sales tax on all sales, and "the burden of proof" rests on the vendor.

Vendors and retailers who sell to medical service providers must collect sales tax on nonexempt items, because those service providers are the consumers of the equipment and supplies they purchase. These sales are therefore considered retail, not wholesale. Medical service providers include, but are not limited to, doctors, nursing homes, and hospitals.

Read on for a list of items exempt from Colorado sales and use tax, per §39-26-717 C.R.S. This list is incomplete:

  • Blood and urine testing kits and materials
  • Durable medical equipment, including repair and replacement parts, dispensed pursuant to a prescription. Includes, but is not limited to, trapeze bars, standing aids, and hospital beds.
  • Mobility enhancing equipment, including but not limited to, scooters, grab bars, and canes
  • Oxygen delivery equipment and related disposable medical supplies
  • Prescription drugs dispensed in accordance with a prescription from a licensed provider
  • Prosthetic devices

Items purchased by hospitals and nursing homes are divided into three categories:

  1. Tax-Exempt Supplies. Patient supplies that are used on or by the patient.
  2. Taxable Supplies. Supplies used directly by the hospital.
  3. Supplies that are used on or by the patient and sold to the patient are taxable. The items may be purchased wholesale by hospitals and nursing homes, if resold to patients.

Changes to the exemption status of medical supplies and equipment in Colorado last took place in 2011, as a result of SB11-263 and HB11-1091.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.