Response July 21, 1994
Request
March 21, 1994
Governor Mike Leavitt
210 State Capitol
Salt Lake City, Utah
Dear Governor Leavitt:
For the past several
years, I have been saving money to purchase an insulin pump. In case you are
not familiar with this product, it is a device which continually infuses
insulin, causing blood sugar levels in diabetics to approach normal levels more
consistently. Recent research has shown this will prevent or significantly
delay many complications of diabetes, including blindness, kidney failure,
amputation, and even early death. The price of the pump is $$$$$$. With my
insurance coverage, I would need to pay XXXXX approximately $$$$$$.
I have managed to
finally get nearly $$$$$$ together to purchase the pump. Imagine my surprise
when I learned that I must wait longer, because I must pay sales tax on
the pump. This amounts to approximately another $$$$$$.
I think I speak for a
great many people when I tell you I find this tax on medical products such as
this very difficult to understand, and very difficult to pay. Insulin pumps
could save many dollars by providing preventative measures for very expensive
problems, problems which have been proven to respond to such therapy. Now, I'm
not sure when or if I will be able to purchase the pump. I'm sure there are
many others with similar concerns, i.e., paying sales tax on medically necessary
products.
With the government
interested in controlling health care costs, it seems only logical to me to
help the consumers as much as possible by at least not taxing essential medical
products.
I would appreciate
hearing from you on this matter. I would be interested in knowing the rationale
for taxing medical equipment.
Sincerely,
XXXXX
P.S. I 'm a XXXXX.
Thanks for the $$$$$. A little more and maybe I could get the pump!
Re: Advisory Opinion -
Sales Tax Application to Purchase an Insulin Pump for Treatment of Diabetes
Dear XXXXX:
Your request (copy
attached) for an advisory opinion as to whether the purchase of an insulin pump
described in your letter and its supporting enclosures is exempt from sales tax
was referred to the Auditing Division for their analysis.
The division's staff
recommendations are as follows:
1.
Utah Code Annotated Section 59-12-104 (copy attached) exempts “sales of
medicine” from the sales tax.
2.
UCA Section 59-12-102 defines medicine as:
(I) insulin, syringes, and any medicine
prescribed for the treatment of human ailments by a person authorized to
prescribe treatments and dispensed on prescription filled by a registered
pharmacist, or supplied to patients by a physician, surgeon, or podiatrist;
(ii) any medicine dispensed to patients in
a county or other licensed hospital if prescribed for that patient and
dispensed by a registered pharmacist or administered under the direction of a
physician; and
(iii) any oxygen or stoma supplies
prescribed by a physician or administered under the direction of a physician or
paramedic.
(b) “Medicine” does not include:
(I) any auditory, prosthetic, ophthalmic,
or ocular device or appliance; or (ii) any alcoholic beverage.
3.
The courts have mandated that exemptions are to be narrowly construed.
4.
While the pump as described does contain a syringe, the device is
substantially an appliance not included in the definition of “medicine.”
5.
The purchase of an insulin pump of the type described is not, therefore,
exempt from the tax.
6. Insulin purchased to refill the pump is
exempt from the tax.
I have discussed this
matter with the full Commission. While there is unanimous sympathy for your
position, they concur in this decision based on the facts given.
Several bills to
exempt “home medical equipment” from sales tax have been introduced in the
legislature in recent years. The most recent was HB 27 sponsored by Rep. XXXXX
in the 1994 session. This bill, like its predecessors, did not pass. Until the
legislature acts favorably on this measure or a similar one, no exemption can
be given because none is authorized.
You may appeal to the Tax
Commission for a formal hearing on this matter. The results of that hearing
would constitute a declaratory judgment and be appealable to the Utah State
Supreme Court. A Notice of Appeal Rights and a copy of the Utah Taxpayer Bill
of Rights are attached.
For the Commission,
Alice Shearer
Commissioner