Tax Type
Retail Sales and Use Tax
Description
Services; Professional or personal; Medical records and legal depositions
Topic
Taxability of Persons and Transactions
Date Issued
07-31-1995
July 31, 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 November 1987 through December 1993.
FACTS
The Taxpayer, a law firm, contests the assessment on charges for copies of patient medical records used in the preparation for court cases. In addition, the Taxpayer contests the assessment on charges for additional copies of written transcripts of depositions taken from persons involved in legal proceedings. The Taxpayer has paid the assessment, therefore, requests a refund of tax, penalty and interest.
DETERMINATION
Medical records: 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, the department recently reevaluated this issue. In the enclosed P.D. 95-136 (05/26/95) it was determined that, due to the substantial service element involved in the photocopying of medical records, the transaction does represent a nontaxable service.
Notwithstanding the department's change in policy, you should note that the General Assembly passed legislation effective July 1, 1995 that provides an exemption from the sales and use tax for purchases of copies of medical records by law firms for use in case preparation.
Copies of transcripts: The department recently ruled in the enclosed P.D. 95116 (05/12/95) that charges for copies of transcripts are exempt when provided to Parties in the legal proceedings. However, transcript copies provided to third parties who are not part of legal proceedings would be considered taxable sales.
Based on the above, the audit will be adjusted to remove the tax and interest with respect to charges for copies of medical records and transcripts for use in legal proceedings. Accordingly, a refund, with updated interest, will be issued. If you have
any questions regarding this letter, you may contact********in my Office of Tax Policy at**************
Sincerely,
Danny M. Payne
Tax Commissioner
Rulings of the Tax Commissioner