Tax Type
Retail Sales and Use Tax
Description
Services; Professional or personal; Photocopied medical records
Topic
Taxability of Persons and Transactions
Date Issued
10-17-1995
October 17, 1995
Re: Ruling Request: Retail Sales and Use Tax
Dear****************:
This will respond to your letter seeking a ruling on the tax status of copies of medical records made by your company, the "Taxpayer", for various parties.
FACTS
The Taxpayer contracts directly with a hospital to perform the copying of medical records for all requesting parties, which may include other hospitals, doctors, insurance companies, attorneys, governmental agencies, and other requesting parties. The Taxpayer places a copy machine at the hospital for its own use and on predetermined days, its personnel report to the hospital to copy the charts and invoice and mail the documents to the requesting party.
You seek a ruling on the tax status of the "service" described and as to whether charges for shipping and handling are taxable. Furthermore, you question whether the transaction would be taxable if the requesting party is located outside Virginia.
RULING
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. Any shipping and handling charges in connection with this service, likewise, are nontaxable.
Furthermore, 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. (See Code of Virginia§ 58.1-609.10(10), copy enclosed.)
If you have any other questions about this matter, please contact *********** in the Office of Tax Policy at ***************.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/10290H
Rulings of the Tax Commissioner