Publication 45, Hospitals and Other Medical Facilities
Other Sales

Equipment Rentals and Leases

In general, when you rent equipment to patients, you are acting as a leasing company and must:

  • Pay tax to your vendor when you purchase the item, or
  • Collect use tax from the lessee based on rental receipts, or
  • Timely elect to report and pay use tax based on your purchase cost for the equipment (this must be done in the reporting period in which the equipment is first placed into rental service).

Tax must be paid based on rental receipts if (1) you did not pay tax to the vendor at the time of purchase, or (2) you did not report and pay use tax based on your purchase cost in the reporting period when the equipment was first placed into rental service, or (3) you rent the equipment in a form that is substantially different from the form in which you acquired it.

Exceptions

Tax does not apply to leases of equipment considered to be medicines under the Sales and Use Tax Law (for example, tax does not apply to leases of kidney dialysis machines to patients). Tax may not apply to leases of wheelchairs, crutches, canes, quad canes, walkers, CPM machines, and medical oxygen delivery systems. See Medical oxygen delivery systems.

For additional information, please read Regulation 1660, Leases of Tangible Personal Property—in General, and publication 46, Leasing Tangible Personal Property.

Gift Shops, Bookstores, and Newsstands

Generally, gift shop, bookstore, and newsstand sales of tangible personal property are subject to tax, even if the store is operated by auxiliaries or other volunteer organizations (see next section). Typical nontaxable items sold by gift shops include candy, gum, confectionery, and other cold food products.

Please note: Carbonated beverages are not considered food products. Sales of these beverages are subject to tax.

Volunteer Organizations (Auxiliaries)

Generally, volunteer organizations working in conjunction with hospitals organize and perform volunteer work in the hospital. In many instances, hospital volunteer organizations will operate the gift shop, snack bar, or other operation where retail sales are made. Contrary to a common belief, there is no general exemption from sales tax on sales made by nonprofit organizations. Generally, if a volunteer organization operates a retail selling operation either within or outside the hospital, it is required to obtain a seller's permit, collect sales tax on retail sales, and file sales tax returns.

Volunteer organizations may also be involved in fundraising activities such as charity dinners and auctions. Sales of tangible personal property are generally taxable even if the items sold are donated and the proceeds benefit a charitable cause. For more information, please see publication 18, Nonprofit Organizations.

Thrift stores benefiting individuals with HIV and AIDS

Tax does not apply to certain thrift stores' sales of used clothing, household items, or other retail merchandise benefiting individuals with HIV and AIDS. A nonprofit organization must operate the thrift store to raise funds that will be used to provide medical, hospice, or social services for individuals chronically ill with HIV or AIDS.

The organization operating the thrift store must:

Sales of Capital Assets

Since hospitals are predominantly service enterprises, sales of capital assets used in the performance of hospital services, such as hospital beds or medical equipment, are generally considered occasional sales and are not subject to tax. If, however, the hospital makes more than two of these asset sales for substantial amounts in any 12-month period, the gross receipts from the first two sales are exempt occasional sales, but the gross receipts from third and subsequent sales during any 12-month period are subject to tax, unless otherwise exempt.

Please note: Hospitals or other health facilities that operate a retail department, such as a pharmacy, gift shop, cafeteria, or snack bar as adjuncts to the hospital or other health facility must report tax on the sale of fixtures and equipment used in the operation of these businesses. For example, the sale of display counters and cash registers located in a gift shop would be taxable. For further information, see Regulation 1595, Occasional Sales—Sale of a Business—Business Reorganization.

Photocopies of Medical Records

Hospital or other medical facility sells photocopies to requesting party

You are generally required to pay tax on sales of photocopies of medical records unless you are required by law to furnish copies of such records. For example, you are not required to report and pay tax on your charges if the photocopies are furnished to the patient, or to someone acting on behalf of the patient, or to the patient's representative, as provided in California Health and Safety Code section 123110(b).

Likewise, you are not required to report and pay tax if you are required to provide photocopies in response to a written authorization or subpoena duces tecum presented by an attorney or the attorney's representative as provided in California Evidence Code sections 1158 and 1563.

These fees remain nontaxable if a photocopying service makes and sells the copies to you to furnish to the requesting party; however, in such cases you may be required to pay tax to the photocopying service as a consumer of the photocopies transferred to you.

Transcriptions of medical reports. Tax does not apply to a separately stated charge for providing a typewritten transcription of a medical report or an interpretation of the contents of a medical record; however, tax applies to the fair retail value of any photocopies produced for a customer in connection with these nontaxable services.

Photocopying service sells photocopies to requesting party

If a copying service, by agreement with the hospital or other health facility, makes photocopies of medical records, furnishes them directly to the requesting party, and bills the requesting party directly for the copies, the charges are taxable.

For additional information, see Regulation 1528, Photographers, Photocopiers, Photo Finishers and X-Ray Laboratories.

Sales or purchases of breast pumps and related supplies

Beginning April 1, 2024, through March 31, 2029, the sale or purchase of breast pumps and related supplies are exempt from tax. Revenue and Taxation Code section 6370.2 defines the qualifying products:

  • A breast pump is an electrically or manually controlled pump device designed and marketed to be used to express milk from a human breast during lactation and includes the electronically or manually controlled pump device and any battery, alternating current (AC) adapter, or other power supply unit packaged and sold with the pump device at the time of sale to power the pump device.
  • Breast pump collection and storage supplies are those items designed or marketed to be used in conjunction with a breast pump to collect milk expressed from a human breast and store collected milk until it is ready for consumption, and include, but are not limited to:
    1. Breast shields and breast shield connectors.
    2. Breast pump tubes and tubing adapters.
    3. Breast pump valves and membranes.
    4. Backflow protectors and backflow protector adaptors.
    5. Bottles and bottle caps specific to the operation of the breast pump.
    6. Breast milk storage bags.
    7. Other items that may be useful to initiate, support, or sustain breastfeeding using a breast pump during lactation that may be sold separately but are generally sold as part of a breast pump kit.
  • A breast pump kit includes a breast pump and one or more of the following items:
    1. Breast pump collection and storage supplies.
    2. Other items that may be useful to initiate, support, or sustain breastfeeding using a breast pump during lactation, so long as the other items sold with the breast pump kit at the time of the sale are less than 10 percent of the total sales price of the breast pump kit.
  • Breast pads.

Please note: "Breast pump collection and storage supplies" does not include the following items if not sold as part of a breast pump kit prepackaged by the breast pump manufacturer or distributor:

  1. Bottles and bottle caps not specific to the operation of the breast pump.
  2. Breast pump travel bags and other similar carrying accessories, including ice packs, labels, and other similar products.
  3. Breast pump cleaning supplies.
  4. Nursing bras, bra pads, breast shells, and other similar products.
  5. Creams, ointments, and other similar products that relieve breastfeeding-related symptoms or conditions of the breasts or nipples.

If you sell qualifying breast pumps and related supplies, you should continue to report your sales of these qualifying items in your reported total gross sales on your sales and use tax return. You may then claim the deduction for these qualifying sales on your return. Under Nontaxable sales (deductions), Other Nontaxable Sales, select Other and input "breast pumps" or "breast pump-related supplies" under Description.

Revision June 2026