Sales Tax Slice: Varying Treatment of Walk-in Bathtubs Illustrates States’ Struggle to Achieve Uniformity


“Is a walk-in bathtub taxable?” Even for sellers unrelated to bathtubs or the health-care industry, understanding the general issue that this question raises can help ensure that a company complies with state sales tax laws and avoids taking a bath at tax time.

Recall that most states tax retail sales of tangible personal property by default unless a valid exemption exists. These exemption lists are extensive, but identifying an exemption is just the first step. Often, the real issue is to understand how states define the terms contained within.

Historically, states have not defined terms uniformly. Sellers and purchasers alike have grown frustrated with the challenges and burdens inherent to learning and complying with the differences. Enter the Streamlined Sales and Use Tax Agreement (SSUTA).

Standardizing Definitions via SSUTA

The SSUTA is a cooperative effort among many states and other parties to simplify and modernize the difficult, multijurisdictional array of state sales taxes in the U.S. The SSUTA focuses on several primary areas, one of which is to standardize important defined terms among the states. The idea is to make “X” mean “X” whether a seller sells it in State A or in State B. With respect to health-care products, for example, SSUTA Rule 327.3 defines terms like “drugs,” “durable medical equipment,” “mobility enhancing equipment,” and so on. To become a SSUTA member state, a state must do the same. Sellers and purchasers alike benefit from the resulting uniformity.

Continuing with the walk-in bathtub example, if the transaction were to happen in a SSUTA member state, then we might consider whether the tub is exempt as mobility enhancing equipment. The SSUTA defines “mobility enhancing equipment” as equipment that is:

  • primarily and customarily used to provide or increase the ability to move from one place to another and which is appropriate for use either in a home or a motor vehicle;
  • is not generally used by persons with normal mobility; and
  • does not include any motor vehicle or equipment on a motor vehicle normally provided by a motor vehicle manufacturer.

The rule also allows member states to limit the definition slightly by requiring a medical prescription or by basing the exemption on Medicare or Medicaid payments or reimbursements. These options provide flexibility without sacrificing much uniformity.

Difficulties Posed by Nonstandard Definitions

In the past few years, states have increasingly begun to acknowledge that walk-in bathtubs present nuanced and challenging taxability questions. For example, New Jersey—a SSUTA member state—recently offered guidance to a company that sells the tubs. The New Jersey Division of Taxation explained that if a qualified person purchases a walk-in bathtub with a powered chair or lift, then the tub is tax-exempt as mobility enhancing equipment. However, if the person purchases a walk-in tub without a powered chair or lift, then the tub is taxable because it is “generally used by people with normal mobility and do[es] not, therefore, satisfy the requirements for exemption from tax.”

Vermont—another SSUTA member state—addressed a similar question in a recent formal ruling. Vermont explained that walk-in tubs with lifts or ramps are tax-exempt mobility enhancing equipment, whereas tubs without lifts or ramps are taxable items. The rationale was the same as in New Jersey: tubs without lifts or ramps might be “more generally marketed and available to anyone with ‘normal mobility’ and who does not suffer from illness or injury.”

Contrast New Jersey and Vermont’s similar analyses with what we see in non-SSUTA member states. Maine is a good example. Maine does not exempt purchases of mobility enhancing equipment but provides a limited exemption for qualified purchases of crutches, wheelchairs, and certain “adaptive equipment” on motor vehicles. Further, Maine specifically identifies toilet, tub, and shower aids as taxable products.

Moving to SSUTA

States like Maine are working hard to identify the potential impact of adhering to the SSUTA, but it is not an easy process. Shifts that might seem minimal to a casual observer can cause big impacts to state revenues. For example, if Maine were to expand “mobility enhancing equipment” to match the SSUTA definition (i.e., to cover not only canes, walkers, and wheelchairs, but also more expensive purchases), then Maine could miss out on about $750,000 every year, as shown in a 2014 Staff Report to the Joint Standing Committee on Taxation. Alternatively, Maine could increase revenues by $300,000 by taxing all mobility enhancing equipment, including canes, walkers, and wheelchairs. (Watch out, Grandma!) Similar changes to the definition of “durable medical equipment” could cause state revenues to swing about $1.2 to $1.5 million annually. Multiply these changes by the many nonstandard defined terms in Maine’s sales tax law, and the implications are staggering.

It remains to be seen whether more states will adopt the SSUTA’s standardized definitions. In the meantime, sellers should understand and comply with current law, even if does so is challenging when selling in multiple states.

Continue the discussion on LinkedIn: Would complying with the SSUTA benefit non-member states?

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by Ryan J. Voorhees