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Thread: Sales Tax Question

  1. #1
    Sawptician PAkev's Avatar
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    Sales Tax Question

    Our state (PA) typically does not impose sales tax on eyewear since it is a medically valued product. Therefore we do not impose, collect, or report sales tax on RX eyewear or sunwear. However, interesting dialogue developed recently: If a patient only purchases a frame without RX lenses, is it technically still a medically valued product ?

    We debated that since the frame portion isn't taxed in a comprehensive package than sales tax shouldn't be imposed. However it could also be argued that without an RX the frame doesn't carry any medical value.

    Your thoughts?

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    Do you charge tax on non-rx sunglasses? Same deal.

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    Master OptiBoarder OptiBoard Silver Supporter Now I See's Avatar
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    I charge sales tax on sunglasses (unless the pt is getting a prescription pair), clips, cleaner, cloths, readers, etc. The only things I don't charge sales tax on are frames and lenses.
    ___________________________________________

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    Sawptician PAkev's Avatar
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    Quote Originally Posted by AdmiralKnight View Post
    Do you charge tax on non-rx sunglasses? Same deal.

    Not quite.......

    If patient has an RX slip from a Dr. indicating "UV Protection" it is technically an RX........ no sales tax and in addition may be elgible for collective frame and lens insurance benefits/reimbursement.

    Therefore that same pair of sunglasses from a mall kiosk that cost $199 plus tax may only end up only costing $100 from an optical provider.

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    Fair enough, in that situation. But the other 99% of the time, when someone wants to buy a non-rx sun, there's tax, yes? Frames with no Rx should be treated the same way. There's no Rx, there's no UV, nada. They're not a medical device at that point, so should be treated as such.

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    Master OptiBoarder varmint's Avatar
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    I,ve worked both in Pa and Az and both states have similar laws concerning eyewear taxes. I never charged sales tax on frames and or lenses as the frame is useless without lenses, therefore it can be considered a durable medical product. Even all the vision plans as well as medicare have coding & allow for frame only benefits. I would vote no on sales tax for frame only.
    Non-rx sun's are not a comparable item for this consideration.

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    Quote Originally Posted by PAkev View Post
    Not quite.......

    If patient has an RX slip from a Dr. indicating "UV Protection" it is technically an RX........ no sales tax and in addition may be elgible for collective frame and lens insurance benefits/reimbursement.

    Therefore that same pair of sunglasses from a mall kiosk that cost $199 plus tax may only end up only costing $100 from an optical provider.
    I sure wouldn't touch that one, not as an Rx .

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    I'm not quite following the logic... the way I look at is like this. Take safety frames. If you put non-safety lenses into a safety frame, they're not safety glasses, right? Well, if you don't put rx lenses into a frame, it shouldn't be exempted from taxes for that reason.

    That being said, there are going to be situations where getting a frame only would be able to submit to insurance, for instance, if a patient was getting a new frame, putting existing lenses in, some insurance plans will cover that.

    Now, obviously, I have no idea how the actual law works, but that's my take on it. :D

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    Quote Originally Posted by AdmiralKnight View Post
    I'm not quite following the logic... the way I look at is like this. Take safety frames. If you put non-safety lenses into a safety frame, they're not safety glasses, right? Well, if you don't put rx lenses into a frame, it shouldn't be exempted from taxes for that reason.

    That being said, there are going to be situations where getting a frame only would be able to submit to insurance, for instance, if a patient was getting a new frame, putting existing lenses in, some insurance plans will cover that.

    Now, obviously, I have no idea how the actual law works, but that's my take on it. :D
    Look at it this way, if I prescribed you a certain eye drop, and I sold you the drops but squeezed all the fluid out until there was nothing left would it still be taxed b/c it has no medical value in an empty vial?

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    It wouldn't be taxed, because there wouldn't be a charge period for it. :P

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    In Michigan there is no tax on lenses only or lenses and frame together. There is on just a frame because a frame is not in and of itself an aid to vision unless lenses are inserted. Contact lenses have always been taxed for some reason.

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    Sawptician PAkev's Avatar
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    Quote Originally Posted by AdmiralKnight View Post
    Fair enough, in that situation. But the other 99% of the time, when someone wants to buy a non-rx sun, there's tax, yes? Frames with no Rx should be treated the same way. There's no Rx, there's no UV, nada. They're not a medical device at that point, so should be treated as such.
    Unless patients/customers get a free RX for UV protection with sunwear purchase over $159:idea:

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    Quote Originally Posted by AdmiralKnight View Post
    It wouldn't be taxed, because there wouldn't be a charge period for it. :P
    No charge on the samples, you're right. I'm just saying...

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    In Ontario, we face a similar situation with Clip Ons. If Clip Ons come with RX glasses, then no taxes. If they are sold separately, then they are taxed.

    I think by that understanding, then yes the frame with no lenses would be taxed.

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    PAkev, you should visit the website of your tax board, I'm sure the answers are there.

    Here's what the state of CA does. NOTE: rx lenses are with a CORRECTION!

    (b) Dispensing Opticians. (l) In General. A registered dispensing optician is the consumer of ophthalmic materials including eyeglasses, frames, and lenses dispensed pursuant to a prescription prepared by a physician and surgeon or optometrist. Tax applies with respect to the sale of such materials to the dispensing optician. (2) Replacement Lenses and Frames. A dispensing optician is also the consumer of lenses and frames furnished as duplications or replacements of parts of eyeglasses or contact lenses which were previously prescribed by a physician and surgeon or optometrist. (3) Plano Lenses or Sunglasses (Without Correction). When plano lenses and frames or plano sunglasses, including clip-on sunglasses, are dispensed pursuant to a prescription prepared by a physician and surgeon or optometrist for a particular class of plano, the dispensing optician is the consumer of the lenses and frames or sunglasses, and tax applies to the sale thereof to him/her. In all other instances the dispensing optician is the retailer of such lenses and frames or sunglasses, and tax applies to the gross receipts from such a retail sale.

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    Rising Star OptiBoard Silver Supporter walleye's Avatar
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    sales tax question

    How about this for a shocker. I recently received a call from a national wholesale lab asking if I had a tax exemption number. They said WHOLESALE lab work is taxable in Pennsylvania. She insisted their law dept said it was so. I told her it is absolutely, positively not true and their lawyers should research this some more. Then I reported the call to the Pennsylvania Optometric Association and our president said I was right and he would be calling the national lab that called me and set them straight.
    CAN YOU IMAGINE WHOLESALE LAB WORK BEING TAXED!!!

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    It depends

    We had the same arguement in our office.

    I think non-Rx suns should be taxed because we are retailer offering a non-medical retail product. However our tax advisor disagrees. Because we are a DR's OFFICE, we are exempt in KS. But there is still research going on just to make sure.

    Apparently the answer is different if it isn't a Dr's office.
    The answer differs state-to-state.

    And yes, I have heard of wholesale lab work being taxed. Apparently in MO for example, they must collect tax on Rx lenses.

    So what about lens cleaner? Cloths? Cases? Vitamins? Apparently as a Dr's office, we have an unfair competitive advantage over other retailers.

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    OptiBoard Professional OptiBoard Silver Supporter RT's Avatar
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    CAN YOU IMAGINE WHOLESALE LAB WORK BEING TAXED!!!
    In quite a few states, wholesale lab work is indeed subject to sales tax.

    In other states, there are exemptions for sales tax on items for resale. In those states, typically you need to demonstrate that the items are indeed for resale. Otherwise, the taxing authority has no idea that it was a wholesale transaction.
    RT

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    In CA, we pay sales tax at the wholesale level. Every pair of surfaced or stock lenses, we pay it. Same with frames, we pay it.

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    Actually in Mississippi OD's and OMD's pay sales tax on wholesale work and frames. (One wouldn't want them to appear to be selling merchandise would one?) Independent opticals must collect sales tax at time of sale.
    This also amounts to Independents collecting 7% on the full retail price, while doctors pay in only 5% of the wholesale cost.

    Chip

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    Quote Originally Posted by chip anderson View Post
    Actually in Mississippi OD's and OMD's pay sales tax on wholesale work and frames. (One wouldn't want them to appear to be selling merchandise would one?) Independent opticals must collect sales tax at time of sale.
    This also amounts to Independents collecting 7% on the full retail price, while doctors pay in only 5% of the wholesale cost.

    Chip
    Which means the doctors are getting screwed 5% worth. The independents aren't paying the 7%, the customer is. They are getting their stuff cheaper. I pay sales tax for a plano sunglass, but when Nordstrom buys the same article, they get it 8.75% cheaper than do I (plus any quantity discounts, etc.).

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    Quote Originally Posted by finefocus View Post
    Which means the doctors are getting screwed 5% worth. The independents aren't paying the 7%, the customer is. They are getting their stuff cheaper. I pay sales tax for a plano sunglass, but when Nordstrom buys the same article, they get it 8.75% cheaper than do I (plus any quantity discounts, etc.).
    You should not be charged sales tax on plano suns!!! The consumer is charged the sales tax on plano suns!

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    Redhot Jumper In Canada.....................

    Quote Originally Posted by AdmiralKnight View Post
    Fair enough, in that situation. But the other 99% of the time, when someone wants to buy a non-rx sun, there's tax, yes? Frames with no Rx should be treated the same way. There's no Rx, there's no UV, Canada. They're not a medical device at that point, so should be treated as such.

    Optical Retailers
    Social Service Tax Act

    Do you sell glasses, contact lenses or other optical goods?
    Do you sell sunglasses or optical accessories?
    This bulletin provides specific tax information to help optical retailers understand how the social service tax, also called the provincial sales tax (PST), applies to their businesses.
    For general PST information that applies to all businesses, such as who needs to register, when general exemptions apply, and how to charge and collect the PST, please read our Small Business Guide to Provincial Sales Tax (PST

    http://www.rev.gov.bc.ca/documents_l...ns/sst_125.pdf
    Chris Ryser
    ________________________________________
    DLO. NA.IC.I.T.PO

    http://optochemicals.com............................. http://arcoatings.com

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    Acutally the doctor is only paying 2.5% of retail in sales tax and it is included in his wholesale bill which he passes on to the customer. He's just not having to call it a sale.

    Chip

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