Legislature Exempts Items Used for Diabetes Treatment from Sales and Use Taxes by Overriding Governor’s Veto

June 2012

In the 2012 regular session, Alabama’s legislature exempted insulin and diabetic equipment and supplies from state and local sales and use taxes.  Specifically, Act 2012-309 provides that

any items used for the treatment of diabetes purchased by or on behalf of an individual pursuant to a valid prescription shall be exempt from state, county, and municipal sales and use taxes, including, but not limited to, any of the following: insulin and insulin syringes, and any equipment, supplies, devices, chemical reagents, and any related items that may be used by a diabetic to treat diabetes or to test or monitor blood or urine.

(Insulin already was exempt from state sales tax as a “drug,” pursuant to § 40-23-4.1.)

Importantly, the Act applies retroactively to all open tax periods and to all periods for which a tax assessment could be entered.  However, the exemption cannot be used to generate refunds for any period prior to the effective date of the Act.

Because of the retroactive application of the Act, Governor Bentley vetoed the bill (HB 307).  But, the legislature overwhelmingly overrode the veto by a vote of 75-0 (with 4 abstentions) in the House and by a vote of 29-1 (3 abstentions) in the Senate.

If any of your clients have pending audits or assessments involving the sale or use of diabetic equipment or supplies, Act 2012-309 should resolve the matter in favor of your client.  Contact my firm if you have any questions.

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Jeff Patterson practiced law inside the Alabama Department of Revenue for more than 13 years.  In 2006, he formed his own firm to represent taxpayers.  Jeff may be contacted by calling 334.215.4446, by visiting his firm’s website at www.jeffpattersonlaw.com or by e-mailing jeffpatterson@jeffpattersonlaw.com.