Tax Type
Retail Sales and Use Tax
Description
Medical record copy charges
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
05-26-1995
May 26, 1995
Re: §58.1-1821 Application: Retail Sales and Use Tax
Dear********************
This will respond to your letter seeking correction of a sales and use tax assessment to your company (the "Taxpayer") for the period August 1988 through January 1994.
FACTS
The Taxpayer, who specializes in injury law, contests the assessment on charges for copies of patient medical records it purchases from hospitals, doctors, and third parties engaged in the retrieval and copying of medical records in preparation for court cases. You suggest that such charges represent charges for services and thus are nontaxable.
DETERMINATION
The department previously has ruled that the true object of transactions involving the provision of medical records is the tangible personal property (photocopy of the records) received. However, recently, upon reevaluation of the issue, we have determined that, due to the substantial service element involved in this type of transaction, the transaction does, in fact, represent a nontaxable service.
Accordingly, the Taxpayer's assessment will be revised to remove the tax and interest assessed with respect to charges for copies of medical records.
Notwithstanding the department's change in policy, you should note that legislation was passed by the 1995 General Assembly, effective July 1, 1995, providing an exemption from the sales and use tax for purchases of copies of medical records by law firms for use in case preparation.
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- Sincerely,
Danny M. Payne
Tax Commissioner
- Sincerely,
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OTP/9507H
Rulings of the Tax Commissioner