Insertable cardiac monitors did not qualify as a “medicine” for purposes of the California sales and use tax exemption for medicine. The statute specifies that the term “medicines” does not include instruments, apparatus, contrivances, appliances, devices, or other mechanical, electronic, optical, or physical equipment or article, but does include articles permanently implanted in the human body to assist the functioning of any natural organ and which remain or dissolve in the body. The word “device” refers to a piece of equipment or a mechanism designed to serve a special purpose or perform a special function. Applying that definition, the court ruled that the monitors are devices because they are designed to monitor heart rhythms. As such, the monitors are not medicines. The taxpayer argued that the permanently implanted cardiac monitors assisted the functioning of the heart and in that way, met the statutory requirement for exemption. The appellate court, however, was not persuaded and noted that the monitors serve a purely informational function that requires subsequent human intervention to assist the functioning of the heart. Medtronic USA, Inc. v. California Department of Tax and Fee Administration, Court of Appeal of California, First District, No. A169290, April 16, 2025
