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Department of Revenue reminds health care entities about sales tax

The Wisconsin Department of Revenue (DOR) is reminding hospitals and medical clinics that although most typical medical services are not subject to sales tax, many transactions or fees for related or ancillary products or services are still subject to sales tax in Wisconsin.

According to the DOR’s September 2014 Sales and Use Tax Report (pages 7-9), a hospital or clinic is liable for sales tax if they charge a price or fee for a taxable product or service. For health care entities, taxable products and services include most products or services for which a price or fee is charged other than the medical service itself. Products and services that are subject to sales tax include, but are not limited to, medical equipment, gift shop items, parking, home services, copying fees and other ancillary products or services. The fact that a product or service may be prescribed, or whether or not it is covered by insurance, does not affect its taxable status.

Copies of medical records for which a fee is charged to the recipient also are subject to Wisconsin sales tax. Information about the amount that can be charged for retrieval, copying and transmission of medical records can be found in the Aug. 14, 2014 Medigram. In general, the reproduction of records for an authorized requestor are subject to sales tax unless the records are stored and transmitted electronically. The DOR report provides specific examples of what types of services and fees related to medical records copies are subject to sales tax.

A hospital or clinic is liable to the state of Wisconsin for sales tax regardless of whether the amount of the tax is passed on to the consumer. See Wisconsin Tax Bulletin #61 — page 21. In some circumstances, a hospital or clinic may be liable for sales tax even when it cannot charge the customer for that tax. For example, the maximum amount that can be charged for medical records requested as part of a Worker’s Compensation claim is limited by statute, but charges for copies of those records are still subject to Wisconsin sales tax. See Wisconsin Tax Bulletin #76 — page 14.

Back to October 23, 2014 Medigram