ARE PHYSICIANS REQUIRED TO CHARGE SALES TAX FOR NUTRITIONAL SUPPLEMENTS, ORTHOTICS, AND OTHER MEDICAL APPLIANCES?
Yes. The State of Illinois imposes sales tax on a seller’s receipts from sales of tangible personal property for use or consumption. Nutritional supplements, orthotics, and other medical appliances are taxed at 1%. The tax rules specifically list medical appliances as qualifying for this rate, and nutritional supplements also qualify for the 1% rate as food that has not been prepared for immediate consumption.
Physicians must collect the tax from patients and pay it to the Illinois Department of Revenue (DOR).
Sales of these items by Illinois physicians are not exempt from this tax. The DOR’s list of exemptions does not include sales of nutritional supplements, orthotics, and other medical appliances.
Certain qualified organizations, such as charities and nonprofits are exempt from paying sales and use taxes on most purchases in Illinois. However, physician offices and sales do not qualify.
Some physicians mistakenly believe that they are exempt from paying Illinois sales tax if they have paid tax to the seller who provided the supplements, orthotics, or appliances. These payments do not relieve the physician’s obligation to the State of Illinois. To avoid paying sales tax to the supplier, physician sellers must first register with the Illinois Department of Revenue (DOR) as a retailer. Access the online registration form here. Presentation of this document to the supplier allows the doctor to avoid paying sales tax at the time of purchase. However, the doctor must collect the appropriate tax from the patient at the time of sale and remit the tax to DOR.
MOST MUNICIPALITIES HAVE HIGHER RATES
Often, municipalities add a local tax to the state percentage. You must collect the full rate for your municipality. To determine if there are additional local sales tax collection requirements, please visit DOR here.
Additionally, sellers must keep an actual record of all sales and must report taxes at the applicable rate, based on sales reflected in the records. Records must be maintained in sufficient detail to support all receipts reported with regard to supplements, orthotics, and other medical appliances.
Lastly, chiropractic physicians who sell nutritional supplements, orthotics, and other medical appliances must file sales tax forms (ST-1) according to the schedule defined by DOR.