Retail sales tax/retailing B&O tax

All sales of personal goods or charges for retail services to a consumer are subject to retail sales tax and are taxable under the retailing B&O tax classification.

Transactions subject to retail sales tax

Podiatric physicians must pay retail sales tax on items purchased for their own use, unless the purchase is tax exempt (e.g., prosthetics and prescription drugs). When items are used/consumed in providing medical services to patients, the doctor is considered the end user, not the patient.

Examples of taxable products include, but are not limited to:

• Medical supplies:
  • Lab supplies
  • Empty tubes, syringes, and vials
  • Liquids (alcohol, iodine, and peroxide)
  • X-rays and x-ray processing chemical
    
• Durable medical equipment:
  • Reusable delivery syringes
  • Medical gas tanks, pump machines, and related parts, except
  • oxygen delivery systems for patient.
    
• Consumables:
  • Masks, synthetic gloves
  • Toilet paper
  • Bandages
  • Cotton gauze
  • Items sent home with patients
    
• Office equipment, software, and supplies:
  • Computers, printers
  • Charts, paper
  • Computer equipment
  • Prewritten software and maintenance contracts that include updates to prewritten software.

If a podiatric physician purchases items from catalogs, the Internet, or other sources and does not pay Washington sales tax at the time of purchase, then use tax is owed on the value of the tangible personal property purchased for use in Washington. See WAC 458-20-178.

Example: If a podiatric physician applies corn pads to a patient during the course of treatment, that represents an intervening use of the corn pads by the physician. The physician must pay sales or use tax on the corn pads. When the physician bills the patient, the physician cannot collect retail sales tax on the amount for the medical services or the corn pad; even if the bill is itemized.

If the physician merely sells corn pads in her office, she can use a reseller permit and purchase the corn pads exempt from retail sales tax. Purchase of corn pads with a reseller permit is only allowable when there is no intervening use by the physician. The physician is then responsible for collecting sales tax from the customer and remitting the tax to the state.

Retail Sales Tax Exempt Transactions

Certain purchases by podiatric physicians are exempt from retail sales tax. The two primary exemptions are purchases of prosthetic devices and pharmaceutical drugs.

Prosthetic devices

According to Washington State law, neither retail sales nor use tax applies to sales of prosthetic devices prescribed, fitted, or furnished for an individual by someone who is properly licensed to do so. The exemption includes repair and replacement parts, as well as labor and services rendered in respect to repairing, cleaning, altering, or improving prosthetic devices. (RCW 82.08.0283)

Prosthetic devices include, but are not limited to the following:

• Drainage devices for single patient use.
• Sutures, staples, and skin glue for closing wounds.
• Slings, braces, casts, splints, embolism stockings, arch pads, traction pulley clamp assemblies and cords, supports, post-operation shoes, cast shoes, specialized orthotic shoes, diabetic shoes and inserts.

Pharmaceutical drugs

Pharmaceutical drugs are exempt from sales/use tax to the podiatric physician when administered to the patient pursuant to a prescription. RCW 82.08.0281(1). “Drugs” which meet the statutory definition and are administered in the physician’s office are presumed to meet the prescription requirement. RCW 82.08.0281(4)(b). The exemption also applies to disposable syringes, tubing, and similar items when they are used by the physician to administer the drug.

A B&O exemption is available under RCW 82.04.620 for prescribed drugs infused or injected by licensed physicians or their agents for human use (as long as they meet the other requirements in that statute). See our Special Notice on the pharmaceutical drug B&O deduction.

Purchases for resale

Generally, only items that are purchased for the purpose of being resold to patients without intervening use may be purchased without paying sales tax. A reseller permit must be presented to the seller to document the transaction as wholesale.

Retail sales tax must be paid by podiatric physicians when purchasing products that will be used in providing medical treatment.

Prosthetics

When prosthetics are sold to consumers without medical services being provided, the podiatric physician can use a reseller permit to purchase the prosthetics without paying retail sales tax.

Example: A podiatric physician uses his reseller permit to purchase arch support slippers tax exempt that he will resell to his customers in the lobby of his office. A patient buys a pair of these arch support slippers separate from medical treatment. The podiatric physician collects retail sales tax on the purchase from the patient. He reports the amount of the sale on his tax return under the retailing B&O classification and the retail sales line.

Pharmaceutical drugs

Purchases of over-the-counter pharmaceutical drugs for resale to patients are exempt from the retail sales/use tax. The podiatric physician must provide the vendor with a resellers permit at the time of purchase. Sales tax must be collected when the product is sold to the end user. The gross amount of retail sales is reported on the excise tax return under the retailing B&O classification.