February 13, 1998

You request a letter ruling regarding the application of the Massachusetts sales tax, G.L. c. 64H, to sales, rentals, and leases by (1) *************** [1] (2) *************** and (3) *************** of various air support therapy beds and products. In particular, you request a ruling as to whether sales, leases, rentals, or leases by these companies of these products are subject to sales tax. In support of your request, you state the following facts.

I. FACTS

The Company's products include (1) *************** (Product #1); (2) *************** (Product #2); (3) *************** (with SC Mattress or Turning Overlay and Theraderm Comforter) (Product #3); (4) *************** frame and mattress combination (with various size variations such as *************** (Product #4); (5) *************** (Product #5); and (6) *************** ICU Critical Care Bed". (Product #6). The trade name *************** is used for a variation of the above products with alternating pressure/pulsations as an added air support therapy modality and the *************** frame is the frame to which all of the *************** and *************** air support therapy units may be attached.

All of the above products are used by and in hospitals, and under the care of registered nurses for home patients, exclusively on a prescription by a physician basis. These air support therapy units are primarily available on a rental basis rather than for sale, although occasional sales are made of the units. With the exception of sales directly to hospitals, all transactions are under doctor's prescription. A ruling is requested that each of the products and models of hospital beds and mattresses, mattresses, and mattress overlays described in this ruling request, as well as future products and modifications with the same or similar function, as well as parts for repair and upkeep of these products, are exempt from Massachusetts sales tax.

II. RULING

Based on the facts as you state them, and based on their primary purpose as specialized air support therapy systems, we rule that sales and rentals of Products # 1-5 are exempt from sales tax as "alternating pressure pad units," under G.L. c. 64H, § 6(l), when 1) such products and their components are sold or rented as a single unit for a single price, and 2) such products are sold or rented pursuant to a written prescription of a registered physician.

If the bed frames, mattresses, and similar components are sold or rented separately without the alternating pressure pad units they constitute "hospital beds" under G.L. c. 64H, § 6(l). Such hospital beds are exempt only when 1) sold or rented for home use, and 2) sold or rented pursuant to a written prescription of a registered physician.

Sales or rentals of Product # 6 are exempt as "hospital beds," provided that 1) such beds are sold or rented for home use, and 2) such beds are sold or rented pursuant to a written prescription of a registered physician.

Sales and rentals of hospital beds and their components not sold or rented for home use are not exempt under G.L. c. 64H, § 6(l). However, sales or rentals of hospital beds and their components may be exempt under other exemption provisions of Chapter 64H, regardless of whether such beds and their components are for home use. For example, sales to the United States, the Commonwealth, or any of its political subdivisions, are exempt under G.L. c. 64H, § 6(d). Additionally, sales to qualifying 501(c)(3) organizations are exempt under G.L. c. 64H, § 6(e), provided that all other requirements for these exemptions are met.

With respect to parts for repair and upkeep of these products, sales of such parts are exempt from sales tax, provided that the requirements discussed above are met. With respect to future products and modifications purported to have the same or similar function as the products described in this ruling, the Commissioner declines to issue a ruling. See 830 CMR 62C.3.2(3)(f).

With respect to Medicare sales of the products described in this ruling, see Letter Rulings 79-22, 81-57, 82-95, 83-83, and 84-19. See also Department of Revenue Directive 91-5.

III. DISCUSSION

Massachusetts imposes a five percent sales tax on sales and rentals of tangible personal property in Massachusetts by any vendor, unless otherwise exempt. See G.L. c. 64H, § 2. The exemptions to the sales tax are found in section 6 of Chapter 64H. Under G.L. c. 64H, § 6(l), the sale or rental of certain medical equipment is expressly exempt from sales tax, depending on the type of equipment and, in some cases, whether the equipment is prescribed by a registered physician. These exemptions include, in relevant part, an exemption for the following:

[s]ales of medicine, . . . all types of hospital beds for home use... [and] alternating pressure pad units ..., when prescribed by a physician.

Id. When an item has two or more functions, the Department in the past has looked to the primary function of the item for purposes of determining whether it qualifies for exemption. If the item's primary function qualifies it for exemption under G.L. c. 64H, § 6(l), it is exempt, provided that any other requirements for exemption are met. See Letter Ruling 92-5.

General Laws c. 64H, § 6(l) exempts alternating pressure pad units on prescription of registered physicians, regardless of whether for home use or other use. Section 6(l) also exempts hospital beds, but only when they are sold or leased for home use pursuant to a registered physician's prescription. See TIR 85-7.

Although hospital beds not sold or leased for home use are not exempt under G.L. c. 64H, § 6(l), they may be exempt under other exemption provisions, provided that the requirements for those exemptions are met. See, e.g. G.L. c. 64H, § 6(d), exempting sales to the United States, the commonwealth or any political subdivision thereof, or their respective agencies.

Another separate exemption provision, G.L. c. 64H, § 6(e), exempts sales to organizations that are exempt from taxation under Section 501(c)(3) of the Internal Revenue Code, provided the requirements of G.L. c. 64H, § 6(e) are met. Under G.L. c. 64H, § 6(e), sales or leases of hospital beds to a nonprofit organization meeting all other requirements for exemption would be exempt, whether or not the beds are for home use. Sales to for- profit organizations are not exempt under this provision. Thus, with respect to sales or leases of hospital beds to for-profit organizations, such sales or leases are taxable, unless sold or leased for home use pursuant to the written prescription of a registered physician.

1. *************** (Product #1):

This product, which uses existing bedframes, is described as "a frameless air support therapy low air loss alternating pressure relief overlay system," providing patients with enhanced static, pulsation, and rotational pressure-relieving therapies. It consists of an air supply controller, an air mattress overlay, an overlay cover, and a mattress/overlay comforter. Based on this description, we rule that this product constitutes an "alternating pressure pad unit" within the meaning of G.L. c. 64H, § 6(l). Sales of such products are exempt when prescribed by a registered physician. For a discussion of the term "registered physician", see DOR Directive 91-5.

2. *************** (Product #2):

This product, which is described as an "air support therapy mattress replacement," provides precise control of individual cushion pressures which allows the clinician to minimize the pressure under any sites which are vulnerable to pressure ulcers. Based on this description, and based on its primary function, we rule that the product constitutes an "alternating pressure pad unit" within the meaning of G.L. c. 64H, § 6(l). Sales of such products are exempt when prescribed by a registered physician.

3. *************** (Product #3):

This product, which uses an existing hospital bed, is described as a "frameless air support therapy altered rotational mattress replacement system capable of up to 40 degrees side to side rotation providing advanced pressure relief." Based on this description, and based on its primary function, we rule that the product constitutes an "alternating pressure pad unit" within the meaning of G.L. c. 64H, § 6(l). Sales of such products are exempt when prescribed by a registered physician.

4. *************** (Product #4):

This product, which is described as a "low air loss air support therapy bed," consists of a bed frame featuring multiple therapies, low air loss technology, and a pressure control system that customizes the support surface to each patient. Based on this description, and based on its specialized primary function as an "alternating pressure pad unit," rather than as an ordinary hospital bed, we rule that the product constitutes an "alternating pressure pad unit," within the meaning of G.L. c. 64H, § 6(l), but only if the entire apparatus is sold as a single unit for a single price. If the bedframes, mattresses and similar components of a bed, are sold or leased separately from the alternating pressure pad units, the sale or rental of such bed frames, mattresses and similar components constitute the sale or rental of "hospital beds". Sales of such items are exempt as "hospital beds" within the meaning of G.L. 64H, §6(l), but only 1) when sold or rented for home use, and 2) on prescription of a registered physician. Such components are not exempt when sold or rented for other uses, unless another exemption applies. See, e.g., G.L. c. 64H, § 6(d), (e).

5. *************** (Product #5):

This product, which is available as a fully electric or semi-electric synchronizer bed, is described as a fully integrated system that disassembles into three sections for easy installation without tools. These sections include bed frame, full-length adjustable side rails, and an air support system "providing maximum relief for decubitus care in home and extended care applications." Based on this description, and on its specialized primary function as an alternating pressure pad unit rather than as an ordinary hospital bed, we rule that the product constitutes an "alternating pressure pad unit," within the meaning of G.L. c. 64H, § 6(l). Sales of such products are exempt as "alternating pressure pad units" only if the conditions required for Product # 4, above, are met. If sales of Product #5 constitute sales of hospital beds, such sales are exempt only if the conditions set forth for Product # 4, above, are met.

6. *************** ICU Critical Care Bed (Product #6):

This product is described as a "full frame ICU bed" which can be converted to an air bed for combined air support therapies that customize the support surface to each patient. Based on this description, and on its primary function as a critical care hospital bed, we rule that the product qualifies under G.L. c. 64H, § 6(l) only if 1) sold or rented for home use, and 2) on prescription of a registered physician. See TIR 95-7. This product is not exempt when sold or rented for other uses, unless another exemption applies. See, e.g., G.L. c. 64H, § 6(d), (e).

Very truly yours,

/s/Mitchell Adams

Mitchell Adams
Commissioner of Revenue

MA:HMP:wrd

LR 98-3



[1] *************** is included in this request inasmuch as it manufactures and sells parts to owners of the units described for repair and upkeep of these units.