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Ruling 2017-7, Sales and Use Taxes - Medical Equipment


A medical device (the “Product”) is designed to correct “benign prostatic hyperplasia,” a physical deformity in the male urinary tract that can increase resistance to the flow of urine from the bladder. A health care provider corrects this deformity using the Product as a permanent adjustable transprostatic implant. The Product consists of an implant that is contained within its own sterile, single-use housing that is essential to the placement and deployment of the implant into the patient. Each housing includes a handle for positioning the implant and coupling to an urethroscope, a retractable needle for puncturing the capsule of the prostate gland, and a tensioning spring within the handle for adjusting the implant during placement. The Food and Drug Administration approved the implant and housing to be used together as an indivisible unit, and the Product can only be sold as an indivisible unit.


Are sales of the Product exempt from sales and use taxes pursuant to the exemption set forth in Conn. Gen. Stat. § 12-412(19)?


Sales of the Product are exempt from sales and use taxes under Conn. Gen. Stat. § 12-412(19)(C) because the Product is a correction for a functioning portion of the body.


Retail sales of tangible personal property in Connecticut are subject to sales and use tax, unless specifically exempt. Conn. Gen. Stat. §§ 12-407 and 12-408. Gross receipts from the sale of “artificial limbs, artificial eyes and other equipment worn as a correction or substitute for any functioning portion of the body” are specifically exempt from tax. Conn. Gen. Stat. § 12-412(19)(C); Conn. Agencies Regs. § 12-426-14(5). The Product is implanted into the male urinary tract to correct a deformation of the urethra. Therefore, the Product qualifies for the sales and use tax exemption because it is “a correction or substitute for any functioning portion of the body.”[1] 


October 2, 2017

[1] Although the housing would not be exempt if sold on its own, the implant can only be sold as an indivisible unit with the housing, which is required for the placement and deployment of the implant. As a result, the exemption of the Product includes the housing as an indivisible component of the Product.