006.05.06 Ark. Code R. 005-GR-38

Current through Register Vol. 49, No. 10, October, 2024

Rule 006.05.06-005-GR-38 - EXEMPTIONS FROM TAX - PRESCRIPTION DRUGS AND OXYGEN

A. The gross receipts or gross proceeds derived from the sale, purchase, or use of prescription drugs by licensed pharmacists, hospitals, or physicians when the drugs are sold, purchased, or administered for human use shall be exempt from tax.

B. DEFINITIONS.

1. "Drug" means a compound, substance, or preparation, and any component of a compound, substance, or preparation, other than "food and food ingredients," "dietary supplements," or "alcoholic beverages" that is the following:

a. Recognized in the official United State Pharmacopoeia, official Homeopathic Pharmacopoeia of the United States, or official National Formulary, and supplement to any of them; or

b. Intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease; or

c. Intended to affect the structure or any function of the body.

d. Examples of drugs include, but are not limited to, the following: radioactive isotopes; medical grade gases; vaccines; and legend drugs.

2. "Physician" means a licensed medical practitioner authorized by Arkansas law to prescribe drugs that are used for human consumption. Physicians include surgeons, dentists, podiatrists, and osteopaths. (See GR-38.2.)

3. "Prescription" means an order, formula, or recipe issued in any form of oral, written, electronic, or other means of transmission by a physician.

C. The exemption applies to sales of drugs that can only be legally dispensed by prescription. Drugs that may be purchased without a prescription are not eligible for the exemption even if the drug is prescribed by a physician.

D. The gross receipts tax does not apply to the sale of oxygen for human use when prescribed by a licensed physician.

E. Ambulance services which have a physician director, with written medical protocols for the administration of oxygen or prescription drugs by employees of the service, may purchase oxygen and prescription drugs exempt from sales and use tax.

F. All licensed pharmacists selling prescription drugs and all persons selling oxygen must maintain adequate records to substantiate tax exempt sales.

G. The withdrawal of prescription drug samples for free distribution from a stock or inventory, whether located within or outside the state is not subject to the tax.

006.05.06 Ark. Code R. 005-GR-38

Ark. Code Ann. § 26-52-406