Medically prescribed oxygen

Medically prescribed oxygen, including oxygen concentrators, enrichers and liquid or bottled oxygen systems, is exempt from Washington sales and use tax, as are repairs to it. The prescription must come from a physician or osteopathic physician. The exemption ends where the oxygen system connects to anything taxable, such as a CPAP machine or a transport cart.

Who qualifies

• The oxygen must be prescribed for an individual by a person licensed under chapter 18.57 RCW (osteopathic physicians) or chapter 18.71 RCW (physicians), for that individual's medical treatment. The statute names only those two chapters.
• Providers buying oxygen systems use form REV 27 0055.

What qualifies

• Oxygen, oxygen concentrator systems, oxygen enricher systems, liquid oxygen systems, and gaseous, bottled oxygen systems (RCW 82.08.0283(1)(c)).
• WAC: the equipment's primary use must be generating or storing oxygen. Systems include regulators, cannulae, masks and similar items that deliver oxygen from the exempt device.
• Rentals: WAC example, a prescribed oxygen concentrator can be rented exempt.
• Labor and services to repair, clean, alter or improve exempt oxygen systems (RCW 82.08.0283(2)).
• The matching use tax exemption is RCW 82.12.0277(1)(c).

Not covered

• A separate cart used to transport the system (durable medical equipment).
• CPAP systems, which supply room air under pressure. A CPAP designed to be wholly worn on the body can qualify as a prosthetic device instead.
• Masks, tubing and other items from the point where the oxygen system connects to a taxable system. With an oxygen trickle into a CPAP, the oxygen, tank and tubing are exempt only up to the CPAP.
• Other durable medical equipment and mobility enhancing equipment (RCW 82.08.0283(3)).

What the buyer gives

Form REV 27 0055, Sales Tax Exemption Certificate for Health Care Providers (revision 7/23/24), line 6, "Medically prescribed oxygen." The instructions describe oxygen "prescribed for an individual by an Osteopathic Physician or Physician licensed under RCW chapter 18.57 and 18.71." The buyer ticks single use or blanket (valid while buyer and seller have at least one sale within 12 months), names the seller and the date, ticks the line for the exemption, and completes the signature block: type of entity, name of buyer, name of business, Account ID if any, signature, date, mailing address, title and phone. Only practitioners who can legally prescribe under Washington law may use the form; the form names chiropractors, East Asian medicine practitioners and massage practitioners as unable to use it.

What the seller keeps

Form REV 27 0055 says the seller or marketplace facilitator "must retain the original of this certificate for their records" and not send a copy to the Department of Revenue. WAC 458-20-18801(304): sellers to medical practitioners, nursing homes and hospitals must obtain an approved exemption form, capture the streamlined sales tax data elements, or otherwise meet RCW 82.08.050(7) for any exempt sale. If the oxygen system and a cart are rented for one unitemized price, the rental may be a bundled transaction (WAC 458-20-18801 Example 12); itemize them. RCW 82.32.070(1) requires taxpayers to "keep and preserve, for a period of five years, suitable records as may be necessary to determine the amount of any tax for which the taxpayer may be liable." Under RCW 82.08.050(4) a seller is not relieved of the tax unless it keeps proper records of exempt sales and provides them when the department asks; (7)(a) relieves a seller that obtains a fully completed certificate within 90 days after the sale, and (7)(b) allows 120 days after a department request to prove the sale was not taxable or obtain a fully completed certificate taken in good faith.

Common mistakes

• Renting the cart tax-free with the concentrator. The cart is taxable durable medical equipment.
• Selling a CPAP tax-free as oxygen equipment. It does not generate or store oxygen.
• Accepting a prescription from a prescriber outside chapters 18.57 and 18.71 RCW. The statute names only those chapters.

Common questions

Is renting a home oxygen concentrator taxable in Washington?

No, when the oxygen is prescribed by a physician or osteopathic physician for the patient. The WAC says the concentrator can be rented exempt, but a separate cart is taxable.

Is a CPAP machine with an oxygen line exempt?

The CPAP is not. The oxygen, the tank and the tubing up to the CPAP are exempt; from the point of connection to the patient, items are part of the taxable CPAP system.

Sources

• RCW 82.08.0283 (1)(c), (2), (3)
• RCW 82.12.0277 (1)(c), (2)
• WAC 458-20-18801 (304); (403)(h)(i)-(iii) Examples 12-14
• DOR form REV 27 0055 (7/23/24), Sales Tax Exemption Certificate for Health Care Providers Line 6; page 3 instructions, line 6
• RCW 82.08.050 (4), (7)(a)-(c) seller records and certificate timing
• RCW 82.32.070 (1) five-year record retention