99-042
Response April 22,
2000
REQUEST LETTER
July 2, 1999
REQUEST FOR ADVISORY OPINION
To Whom May Concern:
I am writing this Request For Advisory Opinion to get details on the new Hearing Aid Sales Tax
Exemption. I have some specific questions about the exemptions that are not covered in the tax bulletin I spoke with a sales tax auditor today who was unable to answer these questions and said it would be best to submit them in writing.
I would like to know if the following are covered as exemptions:
‑ Factory warranty extensions and factory repairs?
‑ Materials we use to make impressions of patients' ears for custom hearing aids?
‑ Payments on equipment leases (equipment used to program, modify, and test hearing aids)?
‑ Accessories used with hearing aids (lubricants, air blowers, hearing aid moisture removal kits)?
‑ Phone attachments for use with a hearing aid?
Please let me know about these specifies and any other information that will help us implement the new hearing aid tax exemption.
Thank you,
NAME
RESPONSE LETTER
April 26, 2000
NAME
ADDRESS
RE: Sales Tax Exemption for Hearing Aids
Dear NAME,
You have requested information concerning the 1999 Utah Legislature=s passage of Senate Bill 19, which became effective on July 1, 1999. This bill exempts from taxation sales of hearing aids and hearing aid accessories. You ask if a number of specific transactions and items associated with the sale of hearing aids are considered exempt from taxation under the bill. We shall separately address these questions.
Factory warranty extension and factory repairs. While the bill does exempt hearing aids and hearing aid accessories, the bill does not exempt repairs made to hearing aids. Utah Code Ann. ' 59-12-103(g) dictates that a tax is to be levied on the purchaser for Aservices for repairs or renovations of tangible personal property. . ..@ As a hearing aid is tangible personal property, the repair of a hearing aid is subject to sales tax unless a specific exemption relates to that repair. Senate Bill 19 provides no such exemption, and, accordingly, the repair of hearing aids remains a taxable transaction.
Utah Admin. Rule R865-19S-78(D) provides that a sale of an extended warranty is taxable because that sale is considered to be for future repairs. Had the Legislature exempted the repair of hearing aids from taxation, any extended warranty (i.e., the sale of future repairs) related to hearing aids would also be exempt. However, the Legislature did not exempt the repair of hearing aids from taxation, and, accordingly, the sale of an extended warranties related to a hearing aid is a taxable transaction, even though the hearing aid itself may be exempt.
Materials used to make ear impressions. Materials used to make impressions are consumed by the hearing aid professionals in providing their services to their patients. Accordingly, unless an exemption applies, these materials are taxable when purchased by the hearing aid professional. The hearing aid and hearing aid accessory exemption of Utah Code Ann. '59-12-104(49) does not extend to these items.
Payments on equipment leases. You lease equipment to program, modify, and test hearing aids. This equipment is not a hearing aid or hearing aid accessory, as defined in Senate Bill 19, and, accordingly, does not qualify for the sales tax exemption. This is equipment you lease in order to provide your services, and any such lease payments are taxable.
Accessories - lubricants, air blowers, moisture removal kits. Section '59-12-102(10)(b) provides a non-exclusive list of hearing aid accessories that receive the sales tax exemption, as follows:
(b) AHearing aid accessory@ includes:
(i) a hearing aid neck loop;
(ii) a hearing aid cord;
(iii) a hearing aid ear mold;
(iv) hearing aid tubing;
(v) a hearing aid ear hook; or
(vi) a hearing aid remote control.
Under common canons of statutory construction, the general language of that subsection should be interpreted in light of the specific items listed. The specific items listed include only items of a permanent nature that generally are in constant use with the hearing aid. The items you specifically ask about differ from these listed items. Lubricants, air blowers, and moisture removal kits are items used to maintain the hearing aid and do not become a constant part of it. These items are also generally consumable in nature. Accordingly, these Aaccessories@ are not hearing aid accessories as defined in the subsection and are, consequently, subject to sales tax.
Phone attachments for use with a hearing aid. Utah Code Ann. '59-12-102(9)(a)(iii) specifies that a Atelephone amplifying device@ is considered a tax-exempt hearing aid. If the phone attachment you ask about is an amplifying device or if it qualifies as an accessory, as defined in subsection 59-12-102(10), of a telephone amplifying device, then that phone attachment would be exempt from taxation. However, determining whether a phone attachment qualifies under either of these definitions would require an analysis of the facts concerning the specific phone attachment. Without additional information concerning a specific phone attachment, we are unable to determine if it is exempt from taxation.
The Commission plans to enact an administrative rule that will include the above opinion and address other issues relating to the hearing aid exemption. Please let us know if you have any other questions.
For the Commission,
Marc B. Johnson
Commissioner
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