08/06/2019

Tax On Eyewear Eliminated

As of July 1, there is no longer state sales tax applied to the purchase of corrective eyeglasses and contact lenses. The change was contained in a bill signed at the end of 2018 by former Gov. John Kasich.

The new law also now classifies prescription eyeglasses and contact lenses as medical devices. The tax exempt status also applies to repair and replacement parts for the prescription eyewear and for prescription sunglasses. Over-the-counter reading glasses and sunglasses without a prescription are taxable.

The tax exempt status is expected to save Ohioans $29 million annually. The Ohio Department of Taxation issued the following guidance regarding the change in state statute for taxes related to glasses and contact lenses:

What the New State Statute Says

Generally speaking, all sales of tangible personal property are subject to Ohio's sales tax unless specifically exempt. R.C. 5739.02 governs sales tax exemptions and includes:

• R.C. 5739.02(8)(19) Sales of prosthetic devices, durable medical equipment for home use, or mobility enhancing equipment, when made pursuant to a prescription and when such devices or equipment are for use by a human being.
• R.C. 5739.01 contains definitions of terms used throughout the sales tax chapter. The term "prosthetic device" is defined as:
• R.C. 5739.0l(JJJ) "Prosthetic device" means a replacement, corrective, or supportive device, including repair and replacement parts for the device, worn on or in the human body to artificially replace a missing portion of the body, prevent or correct physical deformity or malfunction, or support a weak or deformed portion of the body. As used in this division, before July 1, 2019, "prosthetic device" does not include corrective eyeglasses, contact lenses, or dental prosthesis. On or after July 1, 2019, "prosthetic device" does not include dental prosthesis but does include corrective eyeglasses or contact lenses.

Because the exemption in R.C. 5739.02 requires that a prosthetic device (defined, as of July 1, 2019, to include eyeglasses or contact lenses in R.C. 5739.0l (JJJ)) must be issued pursuant to a prescription, the term "prescription" is defined as:

• (GGG) "Prescription" means an order, formula, or recipe issued in any form of oral, written, electronic, or other means of transmission by a duly licensed practitioner authorized by the laws of this state to issue a prescription.
• The term eyeglasses are not defined by the Streamlined Sales and Use Tax Agreement or the Ohio Revised Code. However, the term would generally include the lenses worn to aid vision as well as the corresponding frames.

Exemption Certificates:

Any person claiming an exemption from sales tax for sales of prosthetic devices must complete an exemption certificate as required by R.C. 5739.03(8)(1). So, to the extent a vendor or seller of corrective eyeglasses or contact lenses does not solicit a customer to file a blanket exemption certificate to alleviate the responsibility of determining the actual liability of the consumer, this provision will continue to protect the vendor or seller of corrective eyeglasses or contact lenses.

Additionally, upon audit, the Department will make reasonable attempts to work with the vendor or seller to determine taxability, regardless of the exemption certificate. To the extent that a vendor or seller of corrective eyeglasses or contact lenses can identify on the invoice that the sale of corrective eyeglasses or contact lenses is pursuant to a prescription the sale will meet the requirements of R.C. 5739.02(8)(19).

Questions and Answers:

Q: If there is a sale of frames and lenses together on the same invoice, are both items exempt?

A: If the items can be easily identified as a sale pursuant to a prescription, both items sold together are exempt.

Q: If there is a sale of frames only, are the frames taxable?

A: Unless there is a fully-completed exemption certificate on file for the frames or there is evidence that the sale of the frames is a repair or replacement part for previously-exempted corrective eyeglasses, the sale of frames separately is taxable.

Q: If there is a sale of lenses only, are the lenses taxable?

A: If the lenses can be easily identified as a sale pursuant to a prescription, the sale of lenses is considered exempt.

Q: Are "readers" subject to sales tax?

A: Nonprescription "readers" are always taxable unless another exemption would apply. However, the Department would require a fully-completed exemption certificate associated with the sale of this nonprescription item to show the alternative exemption.

Q: Are repair and replacement parts to eyeglasses exempt?

A: Repair and replacement parts of corrective eyeglasses that previously met the exemption are also considered exempt.

Q: Are contact lenses that change the color of the eye considered exempt?

A: If the lenses can be easily identified as a sale pursuant to a prescription, the sale of lenses is considered exempt.

Q: Do I have to get an exemption certificate for each sale of corrective eyeglasses or contact lenses purchased pursuant to a prescription?

A: Ideally, the receipt of the exemption certificate would provide the most protection for the vendor. However, if your records provide clear evidence that the sale of the corrective eyeglasses or contact lenses was issued pursuant to a prescription, the Department would consider those sales exempt.