Sales Tax

Signed 9/19/01







Petitioner, )

) Appeal No. 01-0474

v. )




COMMISSION, ) Judge: Phan


Respondent. )




Jane Phan, Administrative Law Judge


For Petitioner: PETITIONER

For Respondent: Mark Wainwright, Assistant Attorney General

Julie Halvorson

Inez Thomas

Tamara Billingsley




This matter came before the Utah State Tax Commission for an Initial Hearing pursuant to the provisions of Utah Code Ann. '59-1-502.5, on June 20, 2001. At the request of Respondent, the Initial Hearing was scheduled to reconvene on August 20, 2001. Although present on June 20, 2001, Petitioner did not attend on August 20, 2001.

Petitioner is requesting a refund of sales tax in the amount of $$$$$ which he paid to COMPANY A drugstore on the purchase of blood sugar testing supplies.

There is no dispute as to the facts. In several COMPANY A advertisements, coupons offered a free glucose test meter with the purchase of a specified amount of the glucose test strips. The coupons state specifically that they are manufacturer's coupons and that coupon redemption would be paid by the manufacturer. The glucose test strips are used in the meter and can not be used separately from the meter, nor can the meter be used without the test strips. Petitioner made several purchases of the test strips and received the free meters. With each purchase COMPANY A did not charge sales tax on the glucose test strip; the receipt indicated that it was a pharmacy item. However, even though the glucose meter was a free item, COMPANY A did charge sales tax based on its regular value. It is this sales tax for which Petitioner seeks a refund. However, as Respondent points out the correct amount of the sales tax paid according to the receipts presented by Petitioner was $$$$$. Petitioner's calculation of $$$$$ included two duplicate receipts and included sales tax on other taxable items.

Petitioner agues that the coupons were store coupons and not subject to sales tax, pointing to Utah Admin. Rule R865-19S-68. However, the coupons which Petitioner used were not store coupons for the purposes of the rule, they were clearly manufacturer's coupons because the store, COMPANY A, was reimbursed by the manufacturer for the glucose testing meter. The Commission agrees with Respondent on this issue. The coupons are clearly manufacturers coupons which are subject to sales tax pursuant to Utah Admin. Rule R865-19S-68 (D).

At the Initial Hearing, Petitioner offered a second argument. Petitioner argued that the meters should be exempt from sales tax as a pharmacy item, pointing to the fact that sales tax was not charged on the glucose test strips. He indicated that in other drugstores the meters were treated as a pharmacy item and no sales tax was charged.

Respondent had requested that the Initial Hearing be reconvened because at the June 20, 2001 hearing Respondent had not considered this second issue. At the August 20, 2001 hearing, Respondent stated that the glucose test meters were exempt from sales tax pursuant to Utah Code Ann. Sec. 59-12-104 (39) which provides an exemption for sales of home medical equipment and supplies. Some further requirements for this exemption are set out at Utah Code Ann. Sec. 59-12-102 (12), which include the eligibility for payment under Title 18 of the federal Social Security Act and that they be prescribed or authorized in writing by a license physician. Respondent acknowledged that the glucose test meters sufficiently met these requirements so that it came under this exemption.


The following sales and uses are exempt from the taxes imposed by this chapter: . . . (39) sales or rentals of home medical equipment and supplies. (Utah Code Ann. Sec. 59-12-104 (39).)

"Home medical equipment and supplies" means equipment and supplies that: (i) a licensed physician prescribes or authorizes in writing as necessary for the treatment of medical illness or injury or as necessary to mitigate an impairment resulting from illness or injury: (ii) are used exclusively by the person for whom they are prescribed to serve a medical purpose; and (iii) are listed as eligible for payment under Title 18 of the federal Social Security Act or under the state plan for medical assistance under Title 19 of the federal Social Security Act . . . (Utah Code Ann. Sec. 59-12-102(12).)

If a retailer accepts a coupon for part or total payment for a taxable product and is reimbursed by a manufacturer or another party, the total sales value, including the coupon amount, is subject to sales tax. (Utah Admin. Rule R865-19S-68(D).)


Based on the foregoing, although the purchases of the glucose meters at issue do not qualify for exemption from sales tax due to the store coupon exemption, they do qualify for exemption from sales tax based on the exemption for home medical equipment and supplies. (Utah Code Ann. Sec. 59-12-104 (39).) The Commission orders Respondent to refund to Petitioner $$$$$ plus applicable interest. It is so ordered.

This decision does not limit a party's right to a Formal Hearing. However, this Decision and Order will become the Final Decision and Order of the Commission unless any party to this case files a written request within thirty (30) days of the date of this decision to proceed to a Formal Hearing. Such a request shall be mailed to the address listed below and must include the Petitioner's name, address, and appeal number:

Utah State Tax Commission

Appeals Division

210 North 1950 West

Salt Lake City, Utah 84134


Failure to request a Formal Hearing will preclude any further appeal rights in this matter.

DATED this 19th day of September, 2001.



Jane Phan

Administrative Law Judge




The Commission has reviewed this case and the undersigned concur in this decision.

DATED this 19th day of September, 2001.


Pam Hendrickson R. Bruce Johnson

Commission Chair Commissioner




Palmer DePaulis Marc B. Johnson

Commissioner Commissioner