Sales and Use Tax TAA 12A-031 - Copies of Medical Records
QUESTION: Which of the above invoice component fees charged for services and/or
products that Taxpayer provides using delivery method one are subject
to Florida sales and use tax?
ANSWER: Taxpayer provides the copies electronically. The delivery of the copies
electronically is not subject to tax, as there is no provision of any
tangible personal property. Consequently, none of the charges associated
with the electronic delivery would be subject to tax.
December 5, 2012
Re: Technical Assistance Advisement – TAA 12A-031
Florida Sales and Use Tax Medical – Copies of Medical Records
Sections: 212.02, 212.05, and 212.21, Florida Statutes (F.S.)
Rule: 12A-1.041, Florida Administrative Code (F.A.C.)
Petitioner: XXX (“Taxpayer”)
Dear XXX:
This letter is a response to your petition dated XXX, for the Department's
issuance of a Technical Assistance Advisement ("TAA") concerning
the above referenced petitioner and matter. Your petition has been carefully
examined and the Department finds it to be in compliance with the requisite
criteria set forth in Chapter 12-11, F.A.C. This response to your request
constitutes a TAA and is issued to you under the authority of Section
213.22, F.S.
Facts
Taxpayer processes and fulfills medical record requests (known in the healthcare
industry as the release of information process). Taxpayer has nexus in
Florida. Taxpayer partners with hospitals, health systems, physician practices,
and clinics to process and fulfill medical record requests and maintain
compliance related to releasing medical information to all types of requestors.
Taxpayer, by agreement with the health facility, makes photocopies of
the medical records, delivers them to the requesting party, and bills
the requesting party directly for the copies. The requesting parties typically
are patients, attorneys, insurance companies, governmental entities, or
hospitals, hereinafter (“Customers”).
A trained specialist digitally captures the protected health information
from the facility’s electronic or paper medical records through
Taxpayer’s technology platform. The digital medical records are
then electronically transmitted to its release of information processing
center in XXX. Taxpayer uses two methods to deliver the medical records
to its customers. With delivery method one, paper copies of the medical
records are printed, packaged, mailed, and delivered by the United States
Postal Service or shipped and delivered by FedEx. With delivery method
two, Taxpayer provides the customer access to the medical records electronically
via its web portal or Taxpayer “pushes” the records to its
high volumes customer via File Transfer Protocol (“FTP”).
Due to the strict procedural and regulated steps involved in the release
of this information process, there are associated costs. Taxpayer’s
fees are normally based on rates regulated by state statutes, rules, or
policies. If there is no governing state authority, Taxpayer sets a reasonable
fee for its services and/or products in accordance with Health Insurance
Portability and Accountability Act of 1996 (HIPAA) guidelines.
Taxpayer has asserted that it is not currently under audit or review by
the Florida Department of Revenue (“DOR”), nor is it in litigation
with the DOR.
Delivery Method One:
When Taxpayer is ready to mail or ship paper copies of the medical records
to the customer, Taxpayer invoices the customer and then releases the
records. Below are the various possible line items that could make up
a typical invoice, along with a short explanation of each line item for
delivery method one:
1. Affidavit Fee: A separately stated flat fee charged for a written statement
confirmed by oath or affirmation, for use as evidence in court.
2. Basic Fee: A separately stated flat unregulated fee for searching, retrieving, reviewing, and preparing copies of medical records for delivery to the requestor.
3. Certification Fee: A separately stated flat fee to certify the medical records.
4. Deposition Fee: A separately stated fee to affirm that the information is suitable to be utilized in a legal deposition.
5. Handling Fee: A separately stated flat fee distinct from the charge for postage, associated with mailing paper copies of the individual’s medical record.
6. Labor Fee: A processing service fee (e.g., an additional fee charged for retrieving records stored off-site).
7. No Records Found Fee: A flat fee for conducting a search and no medical records were found to provide to the requestor. Taxpayer has charged this fee to its customers when no records were found and no records were provided to the customer.
8. Notary Fee: A separately stated flat fee to notarize the medical records.
9. Photo Fee: A separately stated fee for each page of the medical record that is photocopied.
10. Per Page Fee: A separately stated fee for each page of the medical record that is captured by scanning or captured from microfilm.
11. Postage Fee: A separately stated fee for the actual postage cost associated
with mailing paper copies of the medical record when it is mailed via
the United States Postal Service or delivery fee for records shipped via
FedEx. This fee does not contain a markup for profit. 12. Retrieval Fee:
A separately stated flat regulated fee for searching, retrieving, reviewing,
and preparing copies of medical records for delivery to the requestor.
13. Shipping and Handling Fee: A separately charged fee for postage or
FedEx shipping and handling. This fee does not contain a markup for profit.
Taxpayer’s customers do not have the option to pick up the records
and “avoid” this fee. 14. Shipping (only) Fee: A separately
charged fee for actual postage cost or FedEx shipping cost. This fee does
not contain a markup for profit. Taxpayer’s customers do not have
the option to pick up the records and “avoid” this fee.
Delivery Method Two:
When Taxpayer is ready to electronically provide or deliver digital copies
of the medical records to the customer, Taxpayer invoices the customer
and then releases the records. Below are the various possible line items
that could make up a typical invoice and a short explanation of each line
item for delivery method two:
1. Affidavit Fee: A separately stated flat fee charged for a written statement
confirmed by oath or affirmation, for use as evidence in court.
2. Basic Fee: A separately stated flat unregulated fee for searching, retrieving, reviewing, and preparing copies of medical records for delivery to the requestor.
3. Certification Fee: A separately stated flat fee to certify the medical records.
4. Deposition Fee: A separately stated fee to affirm that the information is suitable to be utilized in a legal deposition.
5. Handling Fee: A separately stated flat fee distinct from the charge for postage, associated with mailing paper copies of the individual’s medical record.
6. Labor Fee: A processing service fee (e.g., an additional fee charged for retrieving records stored off-site).
7. No Records Found Fee: A flat fee for conducting a search and no medical records were found to provide to the requestor. Taxpayer has charged this fee to its customers when no records were found and no records were provided to the customer.
8. Notary Fee: A separately stated flat fee to notarize the medical records.
9. Photo Fee: A separately stated fee for each page of the medical record that is photocopied.
10. Per Page Fee: A separately stated fee for each page of the medical record that is captured by scanning or captured from microfilm.
11. Quickview Delivery Fee: A separately stated flat fee to electronically access and view the contents of the delivered information via Taxpayer’s web portal.
12. Electronic FTP Fee: A separately stated fee to electronically receive medical records pushed to the customer via FTP.
13. Retrieval Fee: A separately stated flat regulated fee for searching,
retrieving, reviewing, and preparing copies of medical records for delivery
to the requestor.
Requested Advisements
Question One: Which of the above invoice component fees charged for services
and/or products that Taxpayer provides using delivery method one are subject
to Florida sales and use tax?
Question Two: Which of the above invoice component fees charged for services
and/or products that Taxpayer provides using delivery method one are subject
to Florida sales and use tax?
Taxpayer’s Position
Taxpayer believes that when it delivers a hard copy of a medical record
to the requesting party (Delivery Method One), all separately stated fees/line
items (except Notary Fees) on the invoice are subject to sales tax. Taxpayer
also believes that when it delivers a digital copy of a medical record
electronically (Delivery Method Two) to the requesting party, all separately
stated fees/line items on the invoice are not subject to sales tax.
Applicable Law and Discussion
Chapter 212, F.S., imposes sales tax on all sales of tangible personal
property, unless specifically exempt. Section 212.21(2), F.S., specifically
provides in pertinent part:
It is hereby declared to be the specific legislative intent to tax each
and every sale, admission, use, storage, consumption, or rental levied
and set forth in this chapter, except as to such sale, admission, use,
storage, consumption, or rental as shall be specifically exempted therefrom
by this chapter subject to the conditions appertaining to such exemption. . . .
Section 212.08(13), F.S., provides in pertinent part:
No transactions shall be exempt from the tax imposed by this chapter except
those expressly exempted herein. All laws granting tax exemptions, to
the extent they may be inconsistent or in conflict with this chapter,
. . . shall yield to and be superseded by the provisions of this subsection . . . .
Section 212.05, F.S., provides, in pertinent part:
It is hereby declared to be the legislative intent that every person is
exercising a taxable privilege who engages in the business of selling
tangible personal property at retail in this state, including the business
of making mail order sales, or who rents or furnishes any of the things
or services taxable under this chapter, or who stores for use or consumption
in this state any item or article of tangible personal property as defined
herein and who leases or rents such property within the state.
(1) For the exercise of such privilege, a tax is levied on each taxable
transaction or incident, which tax is due and payable as follows:
(a)1.a. At the rate of 6 percent of the sales price of each item or article
of tangible personal property when sold at retail in this state, computed
on each taxable sale for the purpose of remitting the amount of tax due
the state, and including each and every retail sale.
***
Section 212.02(16), F.S., defines the term “sales price,” in part, as:
"Sales price" means the total amount paid for tangible personal
property, including any services that are a part of the sale, valued in
money, whether paid in money or otherwise, and includes any amount for
which credit is given to the purchaser by the seller, without any deduction
therefrom on account of the cost of the property sold, the cost of materials
used, labor or service cost, interest charged, losses, or any other expense
whatsoever….
Section 212.06(1)(a), F.S., provides, in pertinent part:
The aforesaid tax at the rate of 6 percent of the retail sales price as
of the moment of sale, 6 percent of the cost price as of the moment of
purchase, or 6 percent of the cost price as of the moment of commingling
with the general mass of property in this state, as the case may be, shall
be collectible from all dealers as herein defined on the sale at retail,
the use, the consumption, the distribution, and the storage for use or
consumption in this state of tangible personal property or services taxable
under this chapter. The full amount of the tax on a credit sale, installment
sale, or sale made on any kind of deferred payment plan shall be due at
the moment of the transaction in the same manner as on a cash sale.
***
Rule 12A-1.041(5)(c), F.A.C., provides as follows:
The charge for copying documents and other papers which are not public
records and which can be copied by a dealer engaged in such business represents
the sale of tangible personal property and is taxable.
Rule 12A-1.045, F.A.C., provides as follows:
(1) "Transportation charges" include carrying, delivery, freight,
handling, pickup, shipping, and other similar charges or fees.
(2) Transportation charges which are not separately stated on an invoice
or bill of sale, but are included in the sales price of taxable tangible
personal property, are subject to tax.
(3)(a) Where the seller agrees to deliver tangible personal property to
some designated place and the purchaser cannot elect to avoid the charge
for transportation services, the charge for the transportation service
is subject to tax, even if separately stated on an invoice or bill of sale.
***
(4)(a) The charge for transportation services is not subject to tax when
both of the following conditions have been met:
1. The charge is separately stated on an invoice or bill of sale; and
2. The charge can be avoided by a decision or action solely on the part
of the purchaser. (See subsection (5) for shipping of tangible personal
property F.O.B. origin.)
***
(5) If the seller contracts to sell tangible personal property F.O.B. origin,
the title to the property passes at the point of origin. Since the title
to the property passes at the point of origin, transportation services
arranged by the seller and rendered to the buyer are not a part of the
taxable selling price, provided the transportation charges are separately
stated. Where the transportation charges are billed by the seller to the
buyer, but documentation is inadequate to establish the point at which
title passes to the buyer, it is presumed that the tangible personal property
was sold F.O.B. origin and the title to the property passes at the point
of origin. In such instances, the transportation charges are not considered
a part of the selling price of the property, if separately stated.
***
Rule 12A-1.027(2)(b), F.A.C., provides as follows:
(b) Charges for postage paid to the United States Postal Service that are
separately stated on a customer's invoice, bill, or other tangible evidence
of sale are not subject to tax.
In 2001, the Attorney General’s Office issued AGO 01-018 in response
to questions concerning whether sales tax should be added to the charges
mandated by law for copies of records provided pursuant to s. 395.3025(1),
F.S. This section of Florida law addresses patient and personnel records
and copies under Public Health, Hospital Licensing and Regulation. This
AGO discussed whether sales tax is in addition to the statutorily set
maximum per page charge for copies of medical records and concluded that
the sales tax and postage were in addition to, and not included in, the
mandated charges for copies of medical records. However, the AGO did not
address whether sales tax applies to copies provided through a copying business.
As no specific exemption from sales tax is provided for copies of medical
records, the copies would be exempt only if some other exemption applies.
Providing copies of medical records is not a medical service, so the exemption
from sales tax provided to medical services is not applicable. Unlike
public agencies or licensed facilities, copying companies are in the business
of providing copies. In fact, Rule 12A-1.041(5)(c), F.A.C., specifically
states that copies of records provided by copying companies are taxable.
In this case, Taxpayer is engaged in the business of providing copies
of medical records and is not a public agency or a licensed medical facility.
CONCLUSION
I will restate the charges and follow with our position highlighted in
bold on the taxability of such charges for delivery method one:
1. Affidavit Fee: A separately stated flat fee charged for a written statement
confirmed by oath or affirmation, for use as evidence in court. –
Taxable as part of the sales price of the sale of tangible personal property.
2. Basic Fee: A separately stated flat unregulated fee for searching, retrieving,
reviewing, and preparing copies of medical records for delivery to the
requestor. – Taxable as part of the sales price of the sale of tangible
personal property.
3. Certification Fee: A separately stated flat fee to certify the medical
records. – Taxable as part of the sales price of the sale of tangible
personal property.
4. Deposition Fee: A separately stated fee to affirm that the information
is suitable to be utilized in a legal deposition. – Taxable as part
of the sales price of the sale of tangible personal property.
5. Handling Fee: A separately stated flat fee distinct from the charge
for postage, associated with mailing paper copies of the individual’s
medical record. – Taxable as part of the sales price of the sale
of tangible personal property.
6. Labor Fee: A processing service fee (e.g., an additional fee charged
for retrieving records stored off-site). – Taxable as part of the
sales price of the sale of tangible personal property.
7. No Records Found Fee: A flat fee for conducting a search and no medical
records were found to provide to the requestor. – This fee would
not be taxable as there is no sale of tangible personal property (i.e., records).
8. Notary Fee: A separately stated flat fee to notarize the medical records.
– Specifically exempt.
9. Photo Fee: A separately stated fee for each page of the medical record
that is photocopied. – Taxable as part of the sales price of the
sale of tangible personal property.
10. Per Page Fee: A separately stated fee for each page of the medical
record that is captured by scanning or captured from microfilm. –
Taxable as part of the sales price of the sale of tangible personal property.
11. Postage Fee: A separately stated fee for the actual postage cost associated
with mailing paper copies of the medical record when it is mailed via
the United States
Technical Assistance Advisement Page 8
Postal Service or delivery fee for records shipped via FedEx. This fee
does not contain a markup for profit. – Exempt as provided in Rule
12A-1.027(2)(b), F.A.C.
12. Retrieval Fee: A separately stated flat regulated fee for searching,
retrieving, reviewing, and preparing copies of medical records for delivery
to the requestor. – Taxable as part of the sales price of the sale
of tangible personal property.
13. Shipping and Handling Fee: A fee charged for postage of FedEx shipping
and handling. This fee does not contain a markup for profit. – Please
refer to Rule 12A-1.045, F.A.C. The fee is separately stated. However,
since the purchaser cannot elect to avoid the charge for transportation
services (i.e., shipping and handling fee), the charge for the transportation
service is subject to tax, even if separately stated on an invoice.
14. Shipping (only) Fee – A fee charged for actual postage cost or
FedEx shipping cost. This fee does not contain a markup for profit. -
Please refer to Rule 12A-1.045, F.A.C. The fee is separately stated. However,
since the purchaser cannot elect to avoid the charge for transportation
services (i.e., shipping and handling fee), the charge for the transportation
service is subject to tax, even if separately stated on an invoice.
As for delivery method two, Taxpayer provides the copies electronically.
The delivery of the copies electronically is not subject to tax, as there
is no provision of any tangible personal property. Consequently, none
of the charges associated with the electronic delivery would be subject to tax.
This response constitutes a Technical Assistance Advisement under S. 213.22,
F.S., which is binding on the Department only under the facts and circumstances
described in the request for this advice, as specified in S. 213.22, F.S.
Our response is predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or administrative rule
changes or judicial interpretations of the statutes or rules upon which
this advice is based may subject similar future transactions to a different
treatment than expressed in this response.
You are further advised that this response, your request, and related backup
documents are public records under Chapter 119, F.S., and are subject
to disclosure to the public under the conditions of S. 213.22, F.S. Confidential
information must be deleted before public disclosure. In an effort to
protect confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement, the backup
material, and this response, deleting names, addresses, and any other
details which might lead to identification of the taxpayer. Your response
should be received by the Department within 10 days of the date of this letter.
If you have any further questions with regard to this matter and wish to
discuss them, you may contact me directly at 850-717-6363.
Sincerely,
Leigh L. Ceci
Tax Law Specialist
Technical Assistance & Dispute Resolution
Record ID: 124601