Tax Type
Retail Sales and Use Tax
Description
Health Service Plan
Topic
Taxability of Persons and Transactions
Date Issued
03-28-1991
March 28, 1991
Re: Ruling Request: Sales and Use Tax
Dear**********
This will reply to your letter of June 20, 1990 seeking a refund of sales and use tax paid on behalf of *************(the Taxpayer).
FACTS
The Taxpayer is a nonstock corporation licensed as a health care service plan under Title 38.2 of the Code of Virginia, which has been established by certain Virginia hospitals and physicians to act as their agents in conducting plans for furnishing medical and hospital services to persons subscribing to the plans. The Taxpayer seeks a refund for sales and use taxes paid for purchases of all tangible personal property during the period May 1, 1987 through December 31, 1987 plus tax actually paid as part of a sales and use audit assessed May 31, 1989. The Taxpayer contends that based on Va. Code §58.1-2508(B) and the fact that it is an insurance company taxable under Chapter 25 of Title 58.1, it is exempt from payment of the tax.
RULING
The Taxpayer bases its claim for refund on Va. Code § 58.1-2508 which limits the income, license fees and other taxes which may be imposed on insurance companies. However, the Taxpayer is not an insurance company but a Health Service Plan as defined in Chapter 42 of Title 38.2 of the Code of Virginia. See, Blue Cross v. Commonwealth, 230 Va. 521, 525, 338 S.E.2d 849, 852 (1986). See also, Virginia Academy of Clinical Psychologists v. Blue Shield, 624 F. 2d 476, 480 (4th Cir. 1980), cert. denied, 450 U.S. 916, 101 S. Ct 1360, 67 L Ed. 2d 342 (1981).
The statute specifically applicable to Health Service Plans (HSPs) is Va. Code §38.2-4226. This statute provides that the license tax imposed on a nonstock health service plan is in lieu of other stare and local license fees or license taxes and stare income taxes of the nonstock corporation. Neither this statute nor Va. Code §58.1-2508(B) exempt HSPs or insurance companies from paying sales and use taxes on their purchases of tangible personal property. Therefore, the Taxpayer is liable for the tax.
Based on the foregoing, I find no basis for the refund requested.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner