United States

New York: Transfer of Human Tissue Not Subject to Sales Tax

Feb 05, 2018
From KPMG TaxWatch

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The New York Department of Taxation and Finance recently issued guidance on the proper sales tax treatment of consideration received by a taxpayer for providing non-transplantable human tissue to medical facilities and laboratories for use in medical research and training. The taxpayer at issue provided medical facilities and laboratories with complete, intact cadavers and/or portions of human tissue that had been donated to the taxpayer by the deceased or their next of kin. The taxpayer then sold these items, for consideration, to customers. The taxpayer’s duties included preparing the necessary legal documents regarding body donations, maintaining the viability of any donated tissue, preparing requested tissues to meet customer specifications, and transporting the requested tissue specimen to clients.

Under New York law, sales and use tax is imposed on the retail sales of tangible personal property and certain enumerated services. However, under state law, “there is no right of property in a dead body . . . in the commercial sense.” The Department determined that when the taxpayer transferred a tissue specimen for consideration, it was not making a sale of tangible property. Rather, in the Department’s view, the taxpayer was performing a service. This service, the Department concluded, was not an enumerated service subject to sales tax. Therefore, the taxpayer’s receipts were not subject to tax. For more information on this advisory opinion, please contact Judy Cheng at (212) 872-3530.

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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.