Illinois Sales Tax on Medical Devices Audit

Rule on Sales Tax for Medical Resources

Qualifying Medical Appliances

  • Prescription medicines and nonprescription items claimed to have medicinal value, such as:
    • Aspirin
    • Cough medicine
    • Medicated hand lotion
    • Excluding grooming and hygiene products
  • Prescription and nonprescription medical appliances that directly replace a malfunctioning part of the human body, such as:
    • Corrective eyewear
    • Contact lenses
    • Prostheses
    • Insulin syringes
    • Dentures

Audit Challenges

This is where the problem starts on an audit: The doctor’s office buys supplies from an out-of-state vendor and does not pay sales tax, thinking that the appliances purchased are all qualifying medical appliances.

This is not always true. For example:

  • If a Cardiologist purchases a treadmill to help perform tests for their patients,
    That is fully taxable.

Professional Support

Contact our firm to discuss your audit and your duties to report sales and/or use tax in Illinois.

By: Mansoor Ansari J.D., LL.M. (TAX)