Opinion Number

Dear Mr. Potter:

You have requested an opinion of the Attorney General in your capacity as legal counsel for the Natchitoches Parish School Board (Board). You state that the Board is self-insured for purposes of the Louisiana Worker's Compensation Act (Act). In the event there is a compensable injury under the Act, the Board willpurchase and pay for prescription medications for the injured employees.

As you are aware, it is a common practice in worker's compensation cases for pharmacy providers to bill employers directly for prescriptions filled for employee/claimants. Thus, for example, the pharmacy may submit a bill to the employer at the end of the month for all worker's compensation prescriptions. Under the scenario presented in your request, the provider pharmacy bills the Board (a public employer) for prescriptions filled for injured Board employees. While the employees receive and control the use of their prescriptions, the Board purchases and pays for same. You specifically ask whether such purchases are exempt from state and local sales taxes.

With regard to state sales tax exemptions, we refer you to R.S.47:305 (D)(1)(j) which provides the following:

"D.(1) The sale at retail, the use, the consumption, the distribution, and the storage to be used or consumed in this state of the following tangible personal property is hereby specifically exempted from the tax imposed by this Chapter:

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(j) Drugs prescribed by a physician or dentists;"

In addition, R.S. 47:305.29 provides with regard to sales tax exemptions for certain local political subdivisions as follows:

"The sales and use taxes imposed by the state of Louisiana under R.S. 47:302 and R.S. 47:321 shall not apply to purchases by the state or any of its agencies, boards, or commissions, school boards and municipal governing authorities, law enforcement districts, parish hospital service districts, and parish and municipal libraries." (Emphasis added.)

As can be seen from the above, the purchase of prescription drugs is, in general, exempt from the state sales tax. In addition, purchases made by the Board are also exempt from said tax.

With regard to the exemption from sales tax levies by political subdivisions of the state, we refer you to Act No. 1029 of the 1991 Regular Session of the Louisiana Legislature. It exempts the state, any parish, city and parish, municipality, district, or other political subdivision thereof, or any agency, board, commission, or instrumentality of this state or its political subdivisions from the payment of sales and use taxes levied by any political subdivision. Therefore, in accordance with Act 1029, purchases made by the Board are exempt from local sales and use taxes.

In summary, it is the opinion of this office that purchases of prescription drugs made by the Natchitoches Parish School Board are exempt from both state and local sales and use taxes.

Trusting this adequately responds to your inquiry, I am

Very truly yours,

RICHARD P. IEYOUB ATTORNEY GENERAL

By: ___________________________ ROBERT E. HARROUN, III Assistant Attorney General

RPI/Rob, III/dra

Date Received: Date Released:

Robert E. Harroun, III Assistant Attorney General