March 8, 2005

I. INTRODUCTION

You request a letter ruling regarding the application of the Massachusetts sales tax, G.L. c. 64H, to the sale or lease of a "****************************" (V.A.C.), which you describe as a wound closure device. According to the information you supplied, the V.A.C. device is used to promote the wound healing process and is indicated for flaps and grafts. Applying the V.A.C. to the wound site before a flap or graft procedure can help promote early healing of the site, even for wounds previously considered non-responsive. The device is also instrumental in encouraging granulation tissue formation in the wound. [1]

The device operates by applying localized sub-atmospheric pressure that, in turn, promotes wound healing. V.A.C. therapy is applied to a special dressing positioned in the wound cavity or over a flap or graft. This press-distributing wound packing helps to remove fluids from the wound and promote the normal healing process. The V.A.C. dressing helps provide a moist wound environment and helps prevent contamination of the wound site from outside bacteria. Negative pressure applies non-compressive mechanical forces to the wound site, mechanically drawing the tissue inward and subjecting the tissue and its arterioles to sub-atmospheric pressure. The negative pressure allows enhanced evacuation of excess wound fluid. Federal law restricts the sale or rental of the device to the order of a physician.

II. RULING

For reasons set forth below, we rule that the sale or rental of the V.A.C. device is exempt from sales tax pursuant to G.L. c. 64H, § 6(l).

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. [2] Section 6(l) exempts:

[s]ales of medicine, unsulin 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 individuals; sales of artificial limbs, artificial eyes, hearing aids and other equipment worn as a correction or substitute for any functioning portion of the body; sales of artificial teeth by a dentist and the materials used by a dentist in dental treatment; sales of eyeglasses, when especially designed or prescribed by an ophthalmologist, oculist or optometrist for the personal use of the owner or purchaser; sales of crutches and wheel chairs for the use of invalids and crippled persons; and sales of baby oil, and the rentals, sales and repairs of kidney dialysis machines, enteral and parental feedings, and feeding devices, suction machines, oxygen concentrators, oxygen regulators, oxygen humidifiers, oxygen masks, oxygen cannulas, ultrasonic nebulizers, life sustaining resuscitators, incubators, heart pacemakers, canes, all types of hospitals beds for home use, tripod quad canes, breast prosthesis, alternating pressure pad units and patient lifts, when prescribed by a physician.

The device is not expressly exempt under G.L. c. 64H, §6(l). This notwithstanding, the Commissioner has ruled that certain items not specifically exempt under this provision may nonetheless be exempt if their purpose and function is consistent with the purposes of items that are specifically enumerated in the statute. See, e.g., LRs 02-6, 99-15, 99-18, 98-6, 98-5.

In Letter Ruling 02-6, the Department ruled on the taxability of sales and rentals of kidney dialysis machines and various medical supplies and equipment to patients who were receiving dialysis. While the kidney dialysis machine itself was specifically exempt when prescribed by a physician, other items used in the dialysis process were not expressly exempt. In analyzing the taxability of those items, we examined whether they were directly integrated with the purpose and function of the machine. We concluded that if an item was so inextricably connected to the use of the kidney dialysis machine that dialysis could not be performed without it, then the item was exempt ( e.g., the water system [3] used in connection with the dialysis unit), because it fell within the scope and purpose of the exemption for the kidney dialysis machine.

In Letter Ruling 98-18, we concluded that the purpose of certain implant products such as bone plates, nails and external fixators that are surgically inserted or attached to the bone for the purpose of bracing and/or supporting fractured bones was "consistent with an artificial device individually designed as a brace, correction or substitute for the bodily structure of a crippled person" and therefore exempt.

In Letter Ruling 98-6, we concluded that a product used in the treatment of Osteoarthritis to restore the natural elastic and viscous properties of synovial joint fluid was exempt as "medicine" because it is used in the treatment of a disease. Under the same reasoning, we concluded in Letter Ruling 99-15 that radioactive seeds implanted directly into a cancerous tumor were exempt as "medicine."

In Letter Ruling 98-5, we concluded that a medical device that assisted the female bladder by preventing accidental leakage of urine was within the scope of the clause exempting "artificial limbs, artificial eyes, hearing aids, and other equipment worn as a correction or substitute for any functioning portion of the body…." Similarly, in Letter Ruling 98-8, we concluded that the purpose of an orthopedic brace which is inserted into a person's shoes to correct structural problems with the back, feet, or legs was "consistent with an artificial device individually designed as a brace, correction or substitute for the bodily structure of a crippled person" and therefore qualified for the exemption under G.L. c. 64H, § 6(l).

IV. CONCLUSION

Based on the facts as you state then, we conclude that the V.A.C. device and related supplies used in connection with the device act as a correction or substitute for the skin during the wound healing process. Although the V.A.C. device is not worn in the precise sense that a hearing aid or prosthetic device might be worn, the device and the associated therapy are used in such a manner as to protect the body from contamination and to act as a substitute for the skin during the wound healing process. As such, we rule that its purpose and use is consistent with items worn as a correction or substitute for a functioning part of the body, i.e., the skin. Therefore, the V.A.C. device and related supplies fall within the scope of the § 6(l) exemption.

Very truly yours,

/s/Alan LeBovidge

Alan LeBovidge
Commissioner of Revenue

AL:LEM:wrd

LR 05-1



[1] In comparing the healing rate of chronic wounds to traditional saline-wet-to-moist dressing, you note that V.A.C. therapy resulted in granulation tissue formation in 64% of those wounds.

[2] 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. See also, G.L. c. 64H, § 6(e), which 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.

[3] We also considered whether such items were exempt on an independent ground, i.e. whether they qualified as "medicine," as defined in Department of Revenue Directive 91-5. (Medicine is "a substance or preparation used in treating disease or "for direct medication of patients;" "something that affects well-being"). Because we conclude that the device is exempt under the clause exempting equipment worn as a correction or substitute for any functioning portion of the body (i.e. the skin), we do not address whether the items used in V.A.C. therapy might also qualify for exemption as medicine.