Policy Correction Regarding Ultrasound Equipment and Section 151.338 Exemption for Environment and Conservation Services

A recent inquiry concerning an exemption from tax, as provided in Texas Tax Code Section 151.338, for labor to repair, maintain, restore and remodel ultrasound equipment has led us to reconsider our position as previously discussed in STAR document 201009943L and STAR document 201112317L (December 2011 Tax Policy News).

The exemption provided in Texas Tax Code Section 151.338 states:

“The services involved in the repair, remodeling, maintenance, or restoration of tangible personal property are not taxable under this chapter if the repair, remodeling, maintenance, or restoration is required by statute, ordinance, order, rule, or regulation of any commission, agency, court, or political, governmental, or quasi-governmental entity in order to protect the environment or to conserve energy.”

Our previous position erroneously considered that ultrasound equipment emitted radiation and was subject to oversight by the Radiation Control Act administered by the Texas Department of State Health Services (DSHS). This led us to erroneously conclude that ultrasound equipment was eligible for the sales tax exemption found in Section 151.338.

Information available on the DSHS website specifically states that ultrasound equipment and Magnetic Resonance Imaging (MRI) equipment DO NOT use radiation or radioactive materials. This information was confirmed with personnel at DSHS along with confirmation that the Radiation Control Act as administered by DSHS provided no oversight or regulation of persons repairing, maintaining, restoring or remodeling ultrasound equipment and Magnetic Resonance Imaging (MRI) equipment.

In light of this new information, STAR document 201009943L and STAR document 201112317L will be superseded as they relate to ultrasound equipment.

The correction regarding ultrasound equipment is effective as of Sept. 28, 2012, and applies on a prospective basis. All refund requests related to the repair, maintenance, restoration and remodeling of equipment subject to the Radiation Control Act received after Sept. 28, 2012, will be governed by STAR document 201209577L. This corrected response does not impact any valid refund requests that were submitted prior to Sept. 28, 2012.

*Originally published in Tax Policy News; a monthly newsletter about Texas tax policy at http://window.state.tx.us/taxinfo/taxpnw/tpn2012/tpn1210.html