30 May Mississippi Sales and Use Tax Exemption for Drugs, Medicine, Medical Equipment and Supplies
Mississippi sales and use tax law allows health care providers to claim a Mississippi sales and use tax exemption on various types of purchases, including drugs, medicines, durable medical equipment and home medical equipment and supplies. The Mississippi sales and use tax exemption for hospitals and health care has been expanded in recent years, so Agile Consulting Group’s sales tax consulting services are ideally suited to ensure that your organization is positioned to take advantage of these law changes.
Mississippi Code Ann. 27-65-111(h) exempts from sales tax the retail sales and the use or consumption of drugs and medicines. Medicines are defined in this statute as, “any substance or preparation intended for use by external or internal application to the human body in the diagnosis, cure, mitigation, treatment or prevention of disease and which is commonly recognized as a substance or preparation intended for such use.” This definition of medicine includes any item that is permanently implanted in the human body to and remains or is absorbed by the body after implantation. Some examples of permanently implanted items that qualify for the Mississippi sales and use tax exemption as a medicine are sutures, bone screws, bone pins, and pacemakers. Sales of splints, bandages, wound care dressings are not considered to be a medicine under this definition.
To qualify for the Mississippi sales and use tax exemption, the drug or medicine must meet one of the following criteria:
- The drug or medicine must be prescribed by a person authorized to write prescriptions
- It must be furnished by a licensed physician or surgeon to their own patient for treatment of that patient
- It must be furnished by a hospital for treatment of any person pursuant to a prescription by licensed physician or surgeon
- It must be sold to a licensed physician, surgeon, or hospital for treatment of a human being
- It must be sold to a medical facility or clinic affiliated or associated with the state of Mississippi or any political subdivision or municipal corporation thereof
Essentially, the drug or medicine must be required by a prescription and sold to a licensed physician or hospital for human treatment. For the purposes of this exemption, a hospital is defined in Mississippi Code Ann. 41-9-3 as, “a place devoted primarily to the maintenance and operation of facilities for the diagnosis, treatment and care of individuals suffering from physical or mental infirmity, illness, disease, injury or deformity, or a place devoted primarily to providing obstetrical or other medical, surgical or nursing care of individuals, whether or not any such place be organized or operated for profit and whether any such place be publicly or privately owned.” Hospitals do not include facilities that only provide room and board.
Effective on July 1, 2016, House Bill 1687 amended Mississippi Code Ann. 27-65-111 to expand the sales tax exemption. The expanded exemption includes sales of durable medical equipment (DME) and home medical supplies (HMS) that are listed as eligible for payment under either Medicare or Medicaid. These sales are exempt when ordered in writing or prescribed by a licensed physician for the medical purposes of a patient. The durable medical equipment and home medical supplies that qualify for the sales tax exemption in Mississippi Code Ann. 27-65-111(dd) do not need to be billed to Medicare, Medicaid or any insurance policy, contract or plan. The entire sale qualifies for a Mississippi sales and use tax exemption regardless of who makes the payment now as a result of House Bill 1687.
Durable medical equipment is defined as having the following characteristics:
- Withstands repeated use
- Used or operated by a person without specialized training
- Primarily used to serve a medical purpose
- Only useful to persons with illness or injury
- Not worn in or on the body
Home medical supplies are defined as having all the characteristics above, except they can be disposable or single-use items and can be worn in or on the body. Some examples of items that qualify as either DME or HMS are catheters, dialysis equipment, hospital beds, ventilators, prosthetics, and orthotics. Any health care provider can claim a sales tax exemption on these items, including home health service providers and hospice services, as long as these items are prescribed by a licensed physician and paid through Medicare or Medicaid.
Agile Consulting Group can provide your healthcare organization with the sales tax consulting knowledge and expertise to leverage the benefits of these Mississippi sales and use tax exemptions going forward. Our sales tax consulting team will work with your finance and accounting staff to discover areas for improvement, from identifying overpayments to delivering the proper exemption documentation to your vendors. Agile’s sales tax consulting team has extensive healthcare industry experience from working with hospitals and clinics throughout the country and this makes their sales tax consulting services a valuable resource to supplement your organization’s current approach to sales and use tax.
As with all sales and use tax research, the specifics of each case need to be considered when determining taxability. Additional advice from Agile Consulting Group’s sales tax consulting team can be found on our page summarizing Mississippi sales and use tax exemptions. If you have questions, comments or would like to discuss the specific circumstances you are encountering regarding this issue or any other sales and use tax issue, please contact any of Agile Consulting Group’s sales tax consulting experts at (888) 350-4TAX (4829) or via email at email@example.com.