On August 20, the New York Department of Taxation and Finance issued ruling TSB-A-14(28)S indicating that the software used to control devices used by patients with debilitating diseases such as ALS qualifies as a prosthetic device and is not subject to sales tax. The party submitting the ruling request produces a software product that enables a disabled person to utilize a single switch such as an eye blink, eye brow twitch breath puff, inhale/sip or head rock to operate a standard Windows based computer to restore some ability to communicate visa the computer. The company argued that the software replaces or compensates for permanently inoperative or malfunctioning body parts rendered so by a disease or injury sustained by the patient. http://www.salestaxstrategies.com/sales-tax-issues.html
The ruling states that because the software replaces the disabled person’s motor skills to type of otherwise control a computer’s buttons or mouse, is used primarily for this purpose, and is not useful in the absence of the user’s disability, then the software meets the definition of a prosthetic device. I think this is a very sensible and meaningful ruling by the Department of Taxation. With the advance of medical technology and the incorporation of software into more devices, I would expect to see more states adopt this same position.
Ned Lenhart, President