June 29, 1981

Your company sells and rents oxygen and related equipment, rehabilitation devices, crutches and wheelchairs to individuals. You inquire whether these transactions are exempt from the Massachusetts sales tax.

80% of the charge for most of these purchases or rentals is covered by Medicare under 42 U.S.C.A. s. 1395( l). Your company sends bills payable by Medicare to Blue Shield of Massachusetts which has entered into an agreement with the Secretary of Health and Human Services to pay and process Medicare claims pursuant to 42 U.S.C.A. s. 1395( u).

Section 2122.2 of Part 1 of the Providers Reimbursement Manual issued by the Medicare Bureau, Health Care Financing Administration states in part that:

"Certain taxes which are levied on providers are not allowable costs. These taxes are: ....G. Taxes, such as sales taxes, levied against the patient and collected and remitted by the provider."

The following sales are exempt from the Massachusetts sales tax:

(1) "sales to the United States, the commonwealth or any political subdivision thereof, or their respective agencies" (G.L. c. 64H, s. 6(d).); and,

(2) "sales of medicine...on prescriptions of registered physicians...sales of oxygen ...sales of crutches and wheelchairs for the use of invalids and crippled persons..." (G.L. c. 64H, s. 6(1).)

"Sale" is defined in relevant part as:

"[a]ny transfer of title or possession, or both, exchange, barter, lease, rental, conditional or otherwise, of tangible personal property for a consideration, in any manner or by any means whatsoever." (G.L. c. 64H, s. 1(12)(a).)

Based on the foregoing, it is ruled that:

1. Sales or rentals of oxygen, crutches and wheelchairs are exempt from the Massachusetts sales tax.

2. Sales or rentals of rehabilitation devices and of equipment used with oxygen are subject to the Massachusetts sales tax. The tax is computed on the entire sales price, including that portion reimbursable under the Medicare Act.

Very truly yours,

/s/Daniel B. Breen

Daniel B. Breen

Acting Commissioner of Revenue

DBB:DHB:mf

LR 81-57