TAA 14A-014 - MEDICAL MOBILITY SCOOTERS EXEMPT FROM SALES TAX

TAA 14A-014 – Medical Scooters Avoid FL Sales Tax

On June 5, 2014, the Florida Department of Revenue issued a Technical Assistance Advisement (TAA) on the taxability of scooters in TAA 14A-014 as well as the other prosthetic devices in TAA 14A-029. The purpose of this article is to discuss the advisements and the medical exemptions from Florida sales and use tax in general.

Before we dig into the TAA, are you aware that certain medical items are exempt from Florida sales tax and others are not? In DR 46-NT (available at the end of this article), the Department provides a list of items exempt from sales tax with or without a prescription. Medical products are divided into the following categories:

• Chemical Compounds and Test Kits,
• Common Household Remedies,
• Cosmetics and Toilet Articles,
• Prosthetic Appliances or Orthopedic Appliances,
• Other Exempt Medical Items, and
• Optical Goods.

Within each above category is an arbitrary and often confusion division between items that are automatically exempt, those items that are exempt only with a prescription, and those items that might be exempt if deemed for the diagnosis or treatment of disease, illness, or injury. Furthermore, the items themselves leave room for confusion. For example, under the list for exempt Common Household Remedies, the department lists "[l]ip balms, ices, and salves." Meanwhile, under "Cosmetics and Toilet Articles," makeup and cosmetics are clearly classified as taxable. I don't know about you, but I've always considered lip stick as makeup (taxable), but isn't also a lip balm (exempt)?

An analysis of the statute from which DR 46-NT was drawn further reveals that the easy-to-read charts of DR 46-NT are not as clear or logical as they appear at first glance. Section 212.08(2), Florida Statute (F.S.), addresses tax exemptions for medical supplies and products. Generally, the statute exempts most medical supplies or products that are obtained by a legitimate prescription written by a qualified individual. Additionally, a variety of prosthetics are exempt. The Department's generosity goes so far that it exempts our own organs as well. Not included are any cosmetic or toiletry items, that at first glance appear to be a very separate group but ultimately in Rule 12A-1.020, Florida Administrative Code (F.A.C.) are clarified to include many products intended to prevent illness including suntan lotion and feminine-specific hygiene products that few women would ever consider "cosmetic." They say death and taxes are the only constants in life. In 212.08, the department confuses the maxim completely by exempting funerals. Living funeral directors, however, are subject to one of life's constants and must pay taxes on any of their tangible personal property.

Rule 12A-1.020 goes on further to clarify the terminology used in Florida Statute 212.08(2). Using their extensive knowledge of the medical field, they determine which tests and products (and thereby, which disabilities and illnesses) will be tax exempt. While they do admit their list for tests is not exhaustive, the arbitrary application of an exemption status is glaring in sections such as Rule 12A-1.020(6)(c)(1)(b), which states that an exempt device sold to a hospital or other health care provider cannot be intended to be reusable. The Department apparently doesn't support the recycling of medical products.

Using their vast expertise in the medical field, the Department further clarifies the exemption status of prosthetic and orthopedic appliances in Rule 12.A-1.021. Such products are defined clearly as:

"any apparatus, instrument, device, or equipment used to replace or substitute for any missing part of the body, used to alleviate the malfunction of nay part of the body, or used to assist any disabled person in leading a normal life by facilitating such a person's mobility."

Eyeglasses are identified as exempt in prior sections but are noticeably absent from the apparently exhaustive list of prosthetic devices, under which they should fall according to the definition provided by the Department. But a huge variety of other prosthetic devices that are left out of Rule 12A-1.021(1)(b) are not protected elsewhere in the statutes and rules. Where is the exemption for hair prosthetics for chemo patients or those with the autoimmune disease alopecia? Why are mastectomy pads exempt but not post-mastectomy prosthetic breasts? The insoles for your shoes are exempt but the Department will tax the prosthetic hair you wear to prevent sunburns and skin cancer or to keep warm when the anemia caused by chemotherapy makes you cold all the time.

The status of exemptions for medical products has been taking one step forward and two steps back since the Department began drawing these lines. Recent clarifications in TAAs only perpetuate that trend. This past year, the Department of Revenue has addressed technological advancements in the medical products industry in two technical assistance advisements. It is worthy not note here that TAA's cannot be used by anyone other than the taxpayer to whom the TAA is issues. TAA's are binding on both that taxpayer and the DOR as long as the facts and law stay the same as discussed in the TAA.

In the first advisement, TAA14A-014, they adopt a broader reading of the definition of "wheelchair" under Rule 12A-1.021, which states that "[w]heelchairs, including powered models, their parts and repairs" are exempt. Include under the definition now are motorized scooters that are "of the type commonly used by the handicapped or the infirmed" (TAA 14A-014). In the second advisement, TAA 14A-029, the Department has excluded many mobility products from exemption without an individual, properly authorized prescription. The subsection they rely upon, 212.08(k) is ambiguous at best and suggests a narrower category of medical products than the one that is listed in TAA 14A-029.

TAA-14A-014 is a definite win for the taxpayer and, at first glance, gives hope to the millions of retirees and mobility challenged residents of Florida as well as the scooter, wheelchair, and, could it be possible, Segway industries. The answer in the TAA specifically states that motorized scooters only "of the type commonly used by the handicapped or the infirmed, are medical devices" (emphasis removed) (TAA 14A-014). Never does the author clarifying exactly what types of motorized scooters are "commonly used" by disabled people. The key ambiguity there is the phrase "used by," which is noticeably not the same as "needed by" or "required for basic mobility by." In fact, "used by" appears to be broad enough to include "preferred by." Therefore, if disabled people choose to use a particular motorized scooter, it is a medical device regardless of its characteristics. Such an interpretation would give broad discretion to the disabled in deciding which "medical device" they want or

need without the fear of having to pay sales tax. This ambiguity conjures images of a whole gang of retirees dressed in their black riding leathers cruising on the sportiest scooters money can buy through the streets of The Villages in central Florida – free from the confines of life, children, work, and, best of all, sales tax.[i]

As hopeful as this ambiguity might be, it should be cautioned that the DOR might not interpret the statute as broadly for everyone. It might also be worthy of note that most of the people that might be qualified to buy a scooter for medical mobility reasons can probably get one paid for by insurance or Medicare. We have all seen the commercials for the retiree riding care free on a scooter through the park with their grandchildren, all potentially paid for by Medicare, according to the commercial. Perhaps this is just intuition, but it is likely that the type of scooters Medicare is willing to cover will likely be the same type of scooters the DOR will consistently find exempt under Rule 12A-1.021, F.A.C.

TAA 14A-029 addresses other medical products and provides a list of which items are tax exempt only if they are purchased with a prescription. The relevant statute is as follows: "Section 212.08(2)(k): Parts, special attachments, special lettering, and other like items that are added to or attached to tangible personal property so that a handicapped person can use them are exempt when such items are purchased by a person pursuant to an individual prescription." The Department's interpretation of that statute justified the taxation of, among other things, ramps used to get wheelchairs into vehicles or houses. So the wheelchair itself is exempt, but the ramp to get it inside your house is not. Perhaps this seemly nonsensical result is because the ramp is attached to real property, not tangible property as required by the statute. You have to love our legislature.

For your convenience, both TAA's are available to download below as well as links to the relevant statutes and rules citied herein. If you have any other questions or comments, then please do not hesitate to contact any of the attorneys at the Law Offices of Moffa, Sutton, & Donnini, P.A. for a free initial consultation.

About the Author: Jeanette Moffa is a third year law student at Florida International University College of Law and is looking forward to joining The Law Offices of Moffa, Sutton, & Donnini, P.A. upon graduation in May 2015. Currently she is an adjunct professor at Palm Beach State College where she teaches a variety of English courses. Throughout law school, she has taught at Broward College and Miami-Dade College as well. Prior to law school, she received a Master of Fine Arts in Creative Writing with a specialization in creative nonfiction from Florida Atlantic University. Before that, she attended the University of Florida for her B.A. in English.

AUTHORITY

Sec. 212.08(2)(k), F.S.

Rule 12A-1.021, F.A.C.

TAA 14A-014 (exempt medical mobility devices)

TAA 14A-029 (other exempt medical devices with a prescription)

ADDITIONAL RESOURCES

IS RENT SUBJECT TO FLORIDA SALES TAX?, published January 26, 2015, by Jerry Donnini, Esq.

FL DOR – THE MAGIC BEHIND THE CURTAIN, published November 10, 2014, by James Sutton, CPA, Esq.

WHERE IS MY 2015 FL SALES TAX RESALE CERTIFICATE?, published January 6, 2015, by James Sutton, CPA, Esq.

MIAMI RESTAURANT OWNER – 5 YEARS FOR SALES TAX FRAUD, published May 28, 2014, by James Sutton, CPA, Esq.

© 2015 the Law Offices of Moffa, Sutton, & Donnini, P.A. All Rights Reserved