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Policy Letter; Catheter Control Unit; March 26, 2013

Topic Code: M081 Medical Devices (ST)          Document Reference: 13300015

March 26, 2013


sent via electronic mail


            Re: Tax Ruling on Specific Business Situation


Dear :


The Department of Revenue (Department) has received your inquiry regarding a potential use tax liability. Specifically, you ask whether use tax is due on a control unit which is necessary to operate catheters, is owned by your out-of-state company, but used by hospital staff in Iowa. 


Iowa Code section 423.5(1) imposes a tax on the purchase price of tangible personal property purchased for use, and actually used, in Iowa.  Iowa Code section 423.1(51) defines “purchase price” as “the total amount of consideration, including cash, credit, property, and services, for which personal property . . . [is] sold, leased, or rented . . . .” “Purchase price” has the same meaning as “sales price”. Iowa Code section 423.1(41).  Exempted from sales and use tax is the “sales price from the sale or rental of prescription drugs, durable medical equipment, mobility enhancing equipment, prosthetic devices, and other medical devices intended for human use or consumption.” See Iowa Code sections 423.3(60), .6(6). “Sales or rental of power devices especially designed to operate prosthetic, orthotic or orthopedic devices shall be exempt from tax.”  701 IAC 231.8.     


According to your letter, “[t]he control unit is like a computer which controls the ultrasound speed, duration, data capture, etc. of the drug being delivered through the catheter and into the patient.”  The control unit is shipped by common carrier out of Washington directly to a hospital located within Iowa. The equipment is useless for any other purpose without the catheters and vice versa.


The control unit controls catheters which appear to be prosthetic devices under 701 IAC 231.8.  The control unit is useless for any other purpose without the catheter, so it is especially designed to operate the catheter.  Therefore, the control unit is exempt from use tax under 701 IAC 231.8.


I hope this information is of assistance to you.  Please be advised that this letter is an informal opinion and is only applicable to the factual situation referenced and to the statutes in existence at the time of issuance.  Because of this, the Department could, in the future, take a position contrary to that stated in the letter.  Any written advice or opinion rendered to members of the public by Department personnel that is not pursuant to a Petition for Declaratory Order under 701 IAC 7.24 is not binding upon the Department.  If you have any additional questions regarding this matter, please do not hesitate to contact me.





Cody J. Edwards

Attorney—Policy and Communications Division

Iowa Department of Revenue







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