Indiana: Sales Tax and the Medical Profession
- Nov 18, 2015 | Gail Cole
In May 2015, legislation was enacted that affects the application of Indiana sales tax to the medical profession. House Enrolled Act 1472-2015 specifically exempts a number of items sold to patients and clarifies when sales tax applies to purchases by licensed practitioners.
The following items are exempt when prescribed to patients by a licensed practitioner:
- Durable medical or mobility enhancing equipment (including repairs or replacement parts)
- Prosthetic devices, including artificial limbs, orthopedic devices, dental prosthetic devices, eyeglasses, and contact lenses (including repairs or replacement parts)
- Other medical supplies or devices that are used exclusively for medical treatment of a medically diagnosed condition, including one due to
- Bodily dysfunction
- Hearing aid devices (and accessories, attachments, batteries, parts) that are worn on the body and designed to aid, improve, or correct defective human hearing
- Legend and nonlegend drugs if
- A registered pharmacist makes the sale to a patient upon the prescription of a licensed practitioner; or
- A licensed practitioner makes the sale to a patient
- A nonlegend drug if
- It is dispensed upon an original prescription or a drug order
- The ultimate user of the drug is a person confined to hospital or health care facility
- Food, food ingredients, and dietary supplements that are sold by a licensed practitioner or pharmacist
The following are exempt even when not prescribed:
- Hearing aid devices that are worn on the body and designed to aid, improve, or correct defective human hearing if fitted or dispensed by a licensed dispenser
- Colostomy and ileostomy bags and equipment and supplies
- Insulin, oxygen, blood or blood plasma if purchased for medical purposes
- Sales of blood glucose monitoring supplies and necessary related supplies, when purchased by a patient or a medical practitioner in the course of rendering professional services in treating patients, or for resale to patients
See HEA 1472-2015 for additional details, including the definition of legend and nonlegend drugs.
Purchases by licensed practitioners
Purchases of tangible personal property by licensed practitioners are generally subject to sales and use tax. These include:
- Bandages, splints, and all other medical supplies consumed in professional use
- Drugs not requiring a prescription and used in the course of rendering services
- Office equipment, furniture, supplies
- Orthodontic supplies
- Surgical equipment, instruments, supplies
- X-ray, diathermy, diagnostic equipment
However, drugs, insulin, oxygen, blood, and blood plasma consumed in the course of rendering professional services and administered by a licensed practitioner or agent are exempt from sales tax.
Services rendered by licensed practitioners are also exempt from Indiana sales tax.
The above changes took effect July 1, 2015. Additional information is available in Indiana Department of Revenue Information Bulletin #48.
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