In a recent General Information Letter (ST 24-0035-GIL) dated October 29, 2024, the Illinois Department of Revenue responded to a request for clarification regarding the sales tax applicability of dental fluoride varnish sold exclusively to licensed dental professionals. A dental supply company wrote to the Department asking if their fluoride varnish is exempt from Illinois sales tax or qualifies for the reduced 1% medical device tax rate. Their product is a Class II medical device, FDA-regulated and only used by dental professionals during patient visits. The product is not sold over the counter or sent home with patients.
Under Illinois law sales tax is due on all tangible goods. However, there are exceptions. Some health-related items are taxed at a lower 1% rate. To qualify for the reduced rate, an item must meet strict criteria:
The fluoride varnish in question is a Class II medical device, not Class III, and does not directly substitute for a malfunctioning body part. Because of this, it does not meet the state’s definition of a qualifying medical appliance for the reduced tax rate. The Department did not explicitly say the fluoride varnish is taxed at the standard rate, but it strongly suggested that because it does not meet the necessary criteria, it would likely not qualify for the reduced 1% rate.
It is important to note that this response is a General Information Letter (GIL). As such, it is not binding on the Department and does not offer legal protection or a definitive ruling for the taxpayer. For a binding determination, businesses may request a Private Letter Ruling (PLR) under the procedures outlined in 2 Ill. Adm. Code 1200.110. For more information, you can visit tax.illinois.gov.
(General Information Letter ST 24-0035-GIL, Illinois Department of Revenue, October 29,2024)