Miller Welding Supply, Inc. v. Utah State Tax Commission, Auditing Division

JACKSON, Judge:

Miller Welding Supply, Inc. (Miller Welding) appeals a decision by the Utah State Tax Commission (Tax Commission) upholding the assessment of a sales tax on Miller Welding’s sales of oxygen concentrators. We reverse.

FACTS

Miller Welding provides oxygen concentrators to medically dependent individuals. The oxygen concentrator is an engineered device that draws oxygen from the surrounding air, concentrates it, and delivers it to the patient at a prescribed rate. The device cannot be obtained without a medical prescription and is an alternative to the concentrated oxygen in the familiar green bottles.

The Tax Commission audited Miller Welding for the period of April 1, 1987, to December 31, 1989. During this time period, Miller Welding sold oxygen concentrators to patients pursuant to physician’s prescriptions without collecting sales tax, based on its interpretation of the sales tax exemption for medical “oxygen.” The auditor disagreed with Miller Welding’s interpretation and assessed Miller Welding with sales tax and interest along with a ten percent penalty in connection with the oxygen concentrators sold during the time period in question. Miller Welding filed a petition for redetermination with the Tax Commission and the Tax Commission determined the oxygen concentrators were not exempt from sales tax.

ANALYSIS

Miller Welding asserts the Tax Commission improperly found the oxygen concentrators do not have sales tax exempt status. Specifically, Miller Welding asserts that the Tax Commission improperly interpreted a statute exempting the sale of medicine from sales tax, which defines medicine as, among other things, “any oxygen ... prescribed by a physician.” See Utah Code Ann. § 59-12-102(4)(a)(iii) (1987). We apply a correction of error standard, giving no deference to the Tax Commission’s interpretation of the statute in question. Utah Code Ann. § 59-l-610(l)(b) (Supp. 1993).

Utah Code Ann. § 59-12-104(10) (1987) provides that the “sale of medicine” is exempt from sales tax. Section 59-12-102(4)(a)(iii) defines “medicine” as “any oxygen or stoma supplies prescribed by a physician or administered under the direction of a physician or paramedic.” When statutory language is plain and unambiguous, we will not look beyond the language to determine legislative intent. Sneddon v. Graham, 821 P.2d 1185, 1187 (Utah App.1991). However, when the statutory language is ambiguous, we will attempt to discern the intention of the legislature. Id. “A statute is ambiguous if it can be understood by reasonably well-informed persons to have different meanings.” Id. (quoting Tanner v. Phoenix Ins. Co., 799 P.2d 231, 233 (Utah App. . 1990)). The statutory language “any oxygen ... prescribed by a physician” is ambiguous because it has more than one potential meaning. For a definition of "oxygen,” we refer to a dictionary that had been published and was in use in 1981 when the legislature added the word “oxygen” to the statute as an exemption. There, the word “oxygen” is defined as “an element that is found free as a colorless tasteless odorless gas in the atmosphere.” Webster’s New Collegiate Dictionary (8th ed. 1973). The statutory meaning of “oxygen” in this statute is likely not the same as the dictionary meaning. A physician does not prescribe oxygen that is pervasive *363and free to every human being. Rather, a physician prescribes oxygen in a concentrated form that brings relief to patients medically dependent on concentrated oxygen.

Further, prescribed concentrated oxygen can mean the concentrated oxygen purchased in a bottle or the concentrated oxygen used by a patient through a delivery device, which is prescribed by a physician. The concentrated oxygen purchased in the familiar green bottles and the oxygen provided by the oxygen concentrator are both oxygen prescribed by a physician. When a patient receives a prescription for oxygen, the patient can choose to fill that prescription by purchasing the bottled oxygen or purchasing an oxygen concentrator. Both fill the same purpose and are medicine from the physician’s point of view. When oxygen is needed the patient can turn on a valve from either source and receive the same prescribed concentrated oxygen.

Because the statutory phrase “any oxygen ... prescribed by a physician” is ambiguous, we turn to legislative intent to determine its meaning. The clear purpose of Utah Code Ann. § 59-12-104(10) is to relieve those required to take prescribed medicine from the burden of having to pay sales tax on that medicine. The transcript of the senate discussion regarding sales tax exemptions for oxygen shows that the legislature intended to extend the definition of medicine to the “use of oxygen,” not just “oxygen” and not just the use of concentrated oxygen from a green bottle. Senator Swan, the sponsor of the bill exempting oxygen from sales tax stated that this bill “extends the definition of medicine practically to the use of oxygen.” Senate Floor Discussion of SB 53 (from recording of January 20, 1981 session).

In light of this legislative purpose, it is inconsistent to argue that the legislature would exempt the use of prescribed concentrated oxygen purchased in a bottle, but would not exempt the use of prescribed concentrated oxygen produced by an oxygen concentrator. We believe the legislature intended that patients should be relieved from paying sales tax when purchasing prescribed medicine, whether patients use oxygen provided by oxygen concentrators or oxygen provided in green bottles.

CONCLUSION

The Tax Commission’s ruling assessing sales tax on Miller Welding’s sales of oxygen concentrators is erroneous because oxygen concentrators fall under “any oxygen ... prescribed by a physician” Accordingly, we reverse.

BILLINGS, J., concurs.