Mich. Admin. Code R 205.87 — Hospitals

Rule 37. (1) Sales, not for resale, of tangible personal property to hospitals not
operated for profit, are not taxable. A "hospital," for the purpose of this rule, means
only a separately organized institution or establishment, the primary purpose of
which is to provide medical, obstetrical, psychiatric, or surgical attention and
nursing to persons requiring the same. The sales tax exemption for sales to a hospital
which is not operated for profit does not apply to an institution,
establishment, or organization that is not a hospital as defined above, notwithstanding
the fact that it may not be operated for profit. "Not operated for profit" means that
the income or benefit from the operation of
the hospital does not inure, in whole or in part, to individuals or private
shareholders, directly or indirectly, and that the activities of the entity or agency are
carried on exclusively for the benefit of the public at large, and are not limited to
the advantage, interests, and
benefits of its members or a restricted group.
(2) If an exemption is claimed, then, at the time of transfer of the tangible
personal property, the seller shall retain, as part of the seller's records, an
executed exemption certificate which reads as follows:

CERTIFICATE TO BE EXECUTED WHEN TAX EXEMPT SALE IS
MADE TO AN EXEMPT INSTITUTION OR AGENCY

The undersigned hereby certifies that the item or items being purchased are to be
used or consumed in connection with the operation of the exempt institution or
agency named in the space provided below and that the consideration for the
purchase moves from the funds of the designed institution or agency. In the event
this claim is disallowed, the transferee promises to reimburse the seller for the amount of
tax involved.

Date __________________
_________________________________________________
Name of exempt institution or agency

_________________________________________________
Courtesy of Michigan Administrative Rules
Signature and title of person making certification

(3) A hospital claiming an exemption shall prove by its articles of association
and bylaws that it is not directly or indirectly operated for profit, and that its income
and assets may not inure, in whole or in part, directly or indirectly, to the benefit of any
individuals, members, or private shareholders whatsoever. A copy of the articles of
association and bylaws shall be submitted to the revenue division of the department
of treasury for determination as to whether the hospital is entitled to the exemption.
(4) Sales by hospitals which are taxable retail sales include, but are not limited
to, the following:
(a) Meals sold to visitors and employees.
(b) Nonprescription drugs, nonprescription medicines, and supplies sold to
patients, doctors, employees, and the general public for consumption off the premises.
(c) Sales of cosmetics, souvenirs, and other similar merchandise.
(5) Sales by hospitals which are not taxable retail sales include, but are not
limited to, the following:
(a) Drugs, medicines, insulin, and meals furnished patients and consumed on the
premises.
(b) Charges for oxygen, blood plasma, and blood administered to patients.
(c) Dressings and bandages applied in the hospital.
(d) Charges for X-ray radiation treatments, braces, splints, cases, therapeutic
diets, and intravenous solutions furnished patients.
(e) Charges for anesthesia supplies and laboratory tests.
(f) Sales of eyeglasses prescribed or dispensed to correct a person's vision by an
ophthalmologist, optometrist, or optician, and repair and replacement parts for such
eyeglasses. (See R 205.104.)
(6) Hospitals making sales at retail shall be licensed and shall pay the sales tax,
where applicable, whether organized for profit or not.