I am upgrading my Konso to the Konso 2 by self pay and am surprised that I must pay a 9% sales tax in SC. I don’t understand why processors are not exempt since it is a ‘medical device’. In the past, I did not pay tax on my hearing aids. Can anyone verify that the taxability of a cochlear processor is accurate?
Thank you!
Bob
I also thought medical devices were not taxed. Accessories yes.
It looks like medical devices are taxable in South Carolina. This quote is from Salestaxhelp.com
Thank you for your reply. So, I question why the manufacturers of CI implants have not petitioned the FDA to approve the processors as an exempt medical device. It seems very inconsistent that there is no tax on HA or contact lenses but one on a CI processor.
I think it’s a state issue, not a federal one. Sounds like South Carolina has determined that people should pay sales tax on medical devices. I would think that would include hearing aids.
Eyeglasses, contact lens, hearing aids and orthopedic appliances, such as
braces, wheelchairs and orthopedic custom-made shoes, do not come
within the exemption at Code Section 12-36-2120(28). However, sales of
hearing aids are exempt pursuant to Code Section 12-36-2120(38).
Good find. Interesting that surgically implanted devices are taxable except for dental prosthesis. I expect if somebody wanted to lobby for an exemption for cochlear implant processors making the case that they’re equivalent to a hearing aid that one might have success, but I expect it would take some lobbying. I’m pretty sure that’s how the hearing aid exemption came about.
If it were New York I would request an advisory opinion. I am not very familiar with SC, but it seems if the implant was prescribed it would be exempt. There is another exemption that seems to apply if it were sold as part of a service.
“The principles established in Associated Medical, also apply to prosthetic devices. The
exemption does not exempt prosthetic devices. It only exempts “prosthetic devices sold
by prescription.” Therefore, in order for the prosthetic devices to be exempt, the retail
sale must be one in which a prescription is used to purchase the prosthetic device. In
addition, the statute specifically exempts “dental prosthetic devices.” This provision
would have been unnecessary if the exemption for “prosthetic devices sold by
prescription” exempted dental prosthetic devices purchased by dentists from dental labs
for the benefit of a particular patient of the dentist. However, the exemption only applies
to prosthetic devices when sold by prescription.
Therefore, sales of prosthetic devices, other than dental prosthetic devices, to a hospital,
nursing home, or a similar institution or doctor are not exempt since such sales do not
require a prescription and are not sold by prescription.
In addition, in Home Medical Systems, Inc. v. South Carolina Department of Revenue,
Opinion No. 26638 (April 20, 2009) the South Carolina Supreme Court upheld the
Department’s longstanding definition of a “prosthetic device,” as set forth in SC
Regulation 117-332, as “an artificial device to replace a missing part of the body.” A
device that merely replaces a missing function is not exempt.
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Finally, Code Section 12-36-2120(63) exempts from the tax, effective June 7, 2005,
“prescription and over-the-counter medicines and medical supplies, including diabetic
supplies, diabetic diagnostic equipment, and diabetic testing equipment, sold to a health
care clinic that provides medical and dental care without charge to all of its patients.”
Again, the “prescription medicine” portion of this exemption would have been
unnecessary if the exemption for “medicine … sold by prescription” exempted all
prescription medicines purchased by doctors or hospitals or similar institutions for the
benefit of a patient of the doctor, hospital or institution. On the contrary, all prescription
medicines purchased by hospitals, similar institutions or doctors are not exempt, and an
interpretation of the statute in such a way would cause subsection (63) to become
superfluous. It is well settled law in this state that all provisions in a statute must be given
meaning. See, SC Coastal Conservation League v. SC Department of Health and
Environmental Control, 380 SC 349, 3698, 669 S.E.2d 899, 909 (Ct. App. 2008) [The]
court must presume the legislature intended to accomplish something with an enacted
statute and did not intend for a section or provision to by purposeless or futile.”
Thank you, Sholk, for your detailed information. Once I have my processor I will request an opinion from the State. I have been in a dispute with Cochlear over paying the tax ($699) but have no choice if I want the processor. I would think a CI would fall into the same classification as HA. I pulled my old HA invoices and can verify no sales tax was paid. BTW, a script was necessary from my audiologist.
The following link shows several written determinations on Purchase of Exempt Prosthetic Device. I have written a few requests for opinion in NY, I am sure you can write one for NCDOR. Too bad the manufacturer hasn’t.
https://www.ncdor.gov/taxes-forms/sales-and-use-tax/written-determinations-sales-and-use-tax
Noth Carolina charges $500 for a request for written determination. That would only make sense for Cochlear, not one individual buyer.
Agree it is not worth $500. The device is delivered tomorrow and I now consider this issue ‘water under the bridge.’ I’ll drop a note to Cochlear…
Thanks for your input.