Earlier today, the Appellate Tax Board (“ATB”) released its Findings of Fact and Report in Excel Orthopedic Specialists, Inc. v. Commissioner, holding that orthopedic braces—rigid and semi-rigid knee, elbow, ankle, wrist, and back braces—were exempt from sales and use tax when sold by a medical practice of orthopedic surgeons.  The ATB concluded that the braces were “individually designed, constructed or altered” to be used as a brace for a “particular crippled person” within the meaning of G.L. c. 64H, § 6(l).

The Commissioner argued that the braces were not individually created for each patient because they could be purchased by the practice’s patients over-the-counter without a prescription.  The ATB disagreed, however, because each brace has a unique function and is individually fitted to each patient by a certified orthotics fitter.  The fit is made following a detailed set of instructions from the prescribing physician regarding the type of brace required; the desired range of motion; the patient’s injury history; and the patient’s physical attributes.  Accordingly, the ATB found the braces indistinguishable from the orthopedic foot braces the Commissioner ruled were exempt in Letter Ruling 98-8.  Therefore, the ATB ruled in favor of the taxpayer.

This holding is consistent with the broad application of the medical device exemption in Letter Ruling 14-3, released April 11, 2014.  Click here for a copy of the Decision: Excel Orthopedic Specialists, Inc. v. Commissioner.