Medical Clinics and Related Businesses
Iowa Sales and Use Tax Information

The information in this publication applies only to medical clinics and similar businesses, not to nonprofit hospitals or hospices.

 

Hospice Exemption

The sale or rental of tangible personal property and the sale of services to a freestanding nonprofit hospice facility that operates a hospice program are exempt from sales tax.

Nonprofit Hospital Exemption

Sales to nonprofit hospitals are exempt from tax.

Exempt Sales/Purchases

Prescription Drugs

Prescription drugs are defined as medication, oxygen, or insulin intended to be dispensed to an ultimate user pursuant to a prescription drug order or medication order from a practitioner. This means that any drug requiring a prescription is exempt upon a doctor’s order, whether or not there is actually a prescription; for example, drugs administered in an emergency situation. "Doctors" include, but are not limited to, dentists, optometrists, chiropractors, podiatrists, osteopaths, and advanced registered nurse practitioners, as well as medical doctors.

Also included within the meaning of prescription drug is any drug or medication dispensed under a prescription, even if there is no requirement for a prescription. For example, a doctor writes a prescription detailing dosage and intervals for 200 mg tablets of ibuprofen. If a pharmacist fills and labels the order, it is exempt from sales tax. If the pharmacist instructs a person to choose ibuprofen sold "over the counter," it is a taxable sale.

Ultimate User

In order for prescription drugs or medical devices to be exempt from sales or use tax, the sale or rental must be to an ultimate user. An "ultimate user" is an individual who has lawfully obtained and possesses a prescription drug or medical device. An ultimate user cannot be a corporation or partnership. The drug or device must be prescribed, dispensed, or administered for placement on or into the body of the ultimate user to be exempt.

For example, a wheelchair prescribed for human use and sold by a medical supply store to an individual is exempt from tax. A sale of a wheelchair to a medical clinic for its own use is subject to tax because the clinic is not the ultimate user. The ultimate user must be an individual.

Prescription Not Required

The following is a non-exclusive list of items exempt from sales tax with or without a prescription, when dispensed for human use:

  • anesthesia trays
  • biopsy trays and needles
  • cannula systems
  • catheter trays and invasive catheters
  • diabetic testing materials
  • dialysis machines
  • dialyzers
  • drug infusion devices
  • fistula sets
  • hemodialysis devices
  • hypodermic syringes and needles
  • insulin
  • insulin infusion devices
  • irrigation solutions
  • intravenous administering sets, solutions and stopcocks
  • myelogram trays
  • nebulizers
  • oxygen
  • oxygen equipment
  • rental of oxygen equipment
  • small vein infusion kits
  • spinal puncture trays
  • transfusion sets
  • venous blood sets
  • video capsules/capsule endoscopes

Durable Medical Equipment

Sales or rental of durable medical equipment prescribed for human use are exempt from sales tax.

"Durable medical equipment" means equipment, including repair and replacement parts, to which all of the following apply:

Mobility Enhancing Equipment

Sales or rental of mobility enhancing equipment prescribed for human use are exempt from sales tax.

"Mobility enhancing equipment" means equipment, including repair and replacement parts, to which all of the following apply:

Prosthetic Devices

"Prosthetic device" means a replacement, corrective, or supportive device including repair and replacement parts worn on or in the body to do any of the following:

The term "prosthetic device" includes, but is not limited to, orthopedic or orthotic devices, ostomy equipment, urological equipment, tracheostomy equipment, and intraocular lenses.

The following is a nonexclusive list of exempt prosthetic devices. They are exempt with or without a prescription.

  • Artificial arteries
  • Artificial breasts
  • Artificial ears
  • Artificial eyes
  • Artificial heart valves
  • Artificial implants
  • Artificial larynx
  • Artificial limbs
  • Artificial noses
  • Artificial teeth
  • Cardiac pacemakers
  • Contact lenses
  • Cosmetic gloves
  • Dental bridges and implants
  • Drainage bags
  • Hearing aids
  • Ileostomy devices
  • Intraocular lenses
  • Karaya paste
  • Karaya seals
  • Organ implants
  • Ostomy belts
  • Ostomy clamps
  • Ostomy cleaners and deodorizers
  • Ostomy pouches
  • Ostomy stoma caps and paste
  • Penile implants
  • Prescription eyeglasses
  • Stoma bags
  • Tracheal suction catheters
  • Tracheostomy care and
    cleaning starter kits
  • Tracheostomy cleaning
    brushes
  • Tracheostomy tubes
  • Urinary catheters
  • Urinary drainage bags
  • Urinary irrigation tubing
  • Urinary pouches

Orthotic and Orthopedic Devices

An "orthotic device" is defined as a piece of special equipment designed to straighten a deformed or distorted part of the human body, such as corrective shoes or braces. An orthotic device is an orthopedic device.

An "orthopedic device" is a piece of special equipment designed to correct deformities or to preserve and restore the function of the human skeletal system, its articulations and associated structures. A hot tub or spa is not an orthopedic device.

Following is a nonexclusive list of orthotic / orthopedic devices exempt from tax.

  • Abdominal belts
  • Alternating pressure mattresses
  • Alternating pressure pads
  • Anti-embolism stockings
  • Arch supports
  • Arm slings
  • Artificial sheepskin
  • Bone cement
  • Bone nails
  • Bone pins
  • Bone plates
  • Bone screws
  • Bone wax
  • Braces
  • Canes
  • Casts
  • Cast heels
  • Cervical braces
  • Cervical collars
  • Cervical pillows
  • Clavicle splints
  • Corrective braces
  • Corrective shoes
  • Crutch cushions
  • Crutch handgrips
  • Crutch tips
  • Crutches
  • Decubitus prevention devices
  • Dorsolumbar belts
  • Dorsolumbar supports
  • Elastic bandages
  • Elastic supports
  • Exercise devices
  • Head halters
  • Hernia belts
  • Iliac belts
  • Invalid rings
  • Knee immobilizers
  • Lumbosacral supports
  • Muscle stimulators
  • Nerve stimulators
  • Orthopedic implants
  • Orthopedic shoes
  • Patient lifts
  • Plaster (surgical)
  • Rib belts
  • Rupture belts
  • Sacroiliac supports
  • Sacrolumbar belts
  • Sacrolumbar supports
  • Shoulder immobilizers
  • Space shoes
  • Splints
  • Traction equipment
  • Transcutaneous electrical
    nerve stimulators (tens units)
  • Trapezes
  • Trusses
  • Walkers
  • Wheelchairs

Related Devices

Sales or rental of devices which are used exclusively in conjunction with prosthetic, orthotic, or orthopedic devices are exempt from tax.

Power Devices

Sales or rental of power devices especially designed to operate prosthetic, orthotic, or orthopedic devices are exempt from tax. This exemption does not include batteries which can be used to operate a number of devices, but batteries designed solely for use in hearing aids are exempt.

Purchases and Sales for Resale

Medical clinics and similar businesses may make rentals or purchases tax-free for resale to patients if the following circumstances are met:

  1. the drug, device, or other property is actually transferred to the patient;
  2. the drug, device, or property is transferred in a form or quantity capable of a fixed or definite price value;
  3. the medical clinic and the patient intend the transfer to be a sale; and
  4. the sale is separately itemized on the patient’s bill.

For example, a medical clinic may not purchase surgical knives and blades for resale because the patient does not take possession of them, and there is no intent by either the medical clinic or the patient for a sale to occur. On the other hand, a medical clinic may purchase a box of tissues for resale if all four conditions listed above are met.

Taxable Sales/Purchases

Medical Equipment and Supplies

Not all medical equipment and supplies are exempt from sales tax.

Following is a nonexclusive list of items that are medical devices or medical supplies. Their sales are taxable.

  • Adhesive bandages
  • Aneurysm clips
  • Arterial bloodsets
  • Aspirators
  • Athletic supporters
  • Atomizers
  • Autolit
  • Back cushions
  • Bathing aids
  • Bathing caps
  • Bedpans
  • Bedside rails
  • Bedside tables
  • Bedside trays
  • Bedwetting prevention devices
  • Belt vibrators
  • Blood cell washing equipment
  • Blood pack holders
  • Blood pack trays
  • Blood pack units
  • Blood pressure meters
  • Blood processing supplies
  • Blood tubing
  • Blood warmers
  • Breast pumps
  • Breathing machines
  • Cardiac electrodes
  • Cardiopulmonary equipment
  • Chair lifts
  • Clamps
  • Clip-on ashtrays
  • Commode chairs
  • Connectors
  • Contact lens cases
  • Contact lens solution
  • Convoluted pads
  • Corrective pessaries
  • Cotton balls
  • Diagnostic kits
  • Dialysis chairs
  • Dialysis supplies
  • Dietetic scales
  • Disposable diapers
  • Disposable gloves
  • Disposable underpads
  • Donor chairs
  • Dressings
  • Dry aid kits for ears
  • EKG paper
  • Ear molds
  • Electrodes (other than tens units)
  • Emesis basins
  • Enema units
  • First-aid kits
  • Foam slant pillows
  • Gauze bandages
  • Gauze packings
  • Gavage containers
  • Geriatric chairs
  • Grooming aids
  • Hand sealers
  • Hearing aid carriers
  • Hearing aid repair kits
  • Heart stimulators
  • Heat lamps
  • Heat pads
  • Hemolators
  • Hospital beds
  • Hot water bottles
  • Ice bags
  • Ident-a-bands
  • Incontinent garments
  • Incubators
  • Infrared lamps
  • Inhalators
  • Iron lungs
  • Irrigation apparatus
  • IV connectors
  • Laminar flow equipment
  • Latex gloves
  • Leukopheresis pumps
  • Lymphedema pumps
  • Manometer trays
  • Massagers
  • Maternity belts
  • Medigrade tubing
  • Modulung oxygenators
  • Moist heat pads
  • Myringotomy tubes
  • Nebulizers (hypodermic)
  • Overbed tables
  • Page turning devices
  • Pap smear kits
  • Paraffin baths
  • Physicians’ instruments
  • Pigskin
  • Plasma extractors
  • Plasma pheresis units
  • Plastic heat sealers
  • Prescribed device repair kits and batteries
  • Respirators
  • Resuscitators
  • Sauna baths
  • Security pouches
  • Servipak dialysis supplies
  • Shelf trays
  • Shower chairs
  • Side rails
  • Sitz bath kit
  • Specimen containers
  • Sponges (surgical)
  • Stairway elevators
  • Staples
  • Steri-peel
  • Stools
  • Suction equipment
  • Sunlamps
  • Surgical bandages
  • Surgical equipment
  • Suspensories
  • Sutures
  • Thermometers
  • Toilet aids
  • Tourniquets
  • Transfer boards
  • Tube sealers
  • Underpads
  • Urinals
  • Vacutainers
  • Vacuum units
  • Vaporizers
  • Vibrators
  • Whirlpools
  • X-ray film

06/17/09