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Prior to July 1, 2017 dental labs had been considered providers of a non-taxable service on the sale of prosthetic devices they manufactured and were not required to charge sales tax on the sales of the prosthetic devices (Michigan Letter Ruling 1985-20). Furthermore, the labs did not qualify for the "industrial processing exemption" and paid sales tax on the purchase of the materials to create the prosthetic device. A prosthetic device is defined as a replacement, corrective or supportive device, dispensed pursuant to a prescription, including repair or replacement parts for that device, worn on or in the body. 

Effective July 1, 2017, dental lab sales of dental prostheses are now subject to sales tax based on the sales price of the device. Since the transaction is now treated as a taxable sale at retail, the labs qualify for the industrial processing exemption. 

This change will result in: 1) dental labs charging and remitting tax on sales of their prosthetics, 2) the buyer will now be charged sales tax unless they can provide an exemption certificate for sale-for-resale or other qualifying activity, and 3) the dental lab may claim an exemption from sales tax on the purchase of the material to create a prosthetic device.