October 12, 1983

You request a ruling as to the application of the Massachusetts sales tax or use tax to the sales of disposable balloon catheters in Massachusetts by __________ ("Company").

Disposable surgical balloon catheters are used in conjunction with an intra-aortic balloon pumping system. The system assists a failing heart by increasing diastolic pressure and coronary heart flow and by lowering ventricular pressure, thus decreasing the work of the heart.

Two types of disposable balloon catheters are sold, surgical balloons and percutaneous balloons. Both types are inserted into the large femoral leg artery and advanced to the aorta. The surgical balloons require an incision to be inserted; percutaneous balloons are pushed through the skin into the artery. The balloons are made of a plastic material and are disposed of after use.

Chapter 64, Section 6(1) exempts from the sales tax

"[s]ales of medicine, insulin needles and insulin syringes on prescriptions of registered physicians and sales of insulin; sales of oxygen, blood or blood plasma; sales of artificial devices individually designed, constructed or altered solely for the use of a particular crippled person so as to become a brace, support, supplement, correction or substitute for the bodily structure including the extremities of the individual; sales of artificial limbs, artificial eyes, hearing aids, and other equipment worn as a correction or substitute for any functioning portion of the body…." (G.L. c. 64H, § 6(1)).

Also exempt from the sales tax are

"[s]ales to any corporation, foundation, organization or institution, which is exempt from taxation under the provisions of section five hundred and one (c)(3) of the Federal Internal Revenue Code, as amended, and in effect for the applicable period; provided, however, that such sales shall not be exempt unless (1) the tangible personal property which is the subject of such sales is used in the conduct of such religious, charitable, educational or scientific enterprise, (2) such corporation, foundation, organization or institution shall have first obtained a certification from the commissioner, stating that it is entitled to such exemption, and (3) the vendor keeps a record of the sales price of each such separate sale, the name of the purchaser, the date of each such separate sale, and the number of such certificate." (G.L. c. 64H, § 6(e)).

Based on the foregoing, it is ruled that sales of disposable surgical balloon catheters and disposable percutaneous balloon catheters are subject to the Massachusetts sales and use taxes. However, the sales of such balloon catheters to a hospital exempt from taxation under Section 501(c)(3) of the Internal Revenue Code are not subject to the sales and use taxes, if the items are used in the conduct of the hospital's activities, the hospital has obtained a certification from the Commissioner, and the Company keeps complete records of such sales.

Very truly yours,

/s/Ira A. Jackson

Ira A. Jackson
Commissioner of Revenue

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LR 83-83