State and Local Taxation of Healthcare Providers: Common Sales/Use and Income Tax Considerations, and other Current SALT Trends

Healthcare is a broad term that includes medical services, medication, supplies, and equipment. These categories can be further subdivided, for example, into medical and telehealth services and prosthetic and durable medical equipment, etc. Sales tax treatment of healthcare items varies significantly based on how each purchase is classified, as well as who or what type of entity is making the purchase. Additionally, there are subtle and stark differences in each state's sales tax treatment of these purchases.

Many states exempt purchases of medical devices from sales tax. In New York, for example, "Sales of medical equipment, component parts, and medical supplies are exempt from New York State and local sales and use taxes unless sold for use in providing medical or similar services for compensation." Consequently, sales to physicians, hospitals, and other medical service providers are subject to sales tax.

In addition, many states offer exemptions for certain equipment purchases. For example, many states offer exemptions for R&D equipment purchased for use to develop or improve a product. Tax advisers working with healthcare businesses and providers need to be aware of the state tax exemptions offered in most states.

Also, as demand for telehealth has increased the past few years, along with telecommuting continuing to evolve and expand, it is important as ever for businesses to revisit historical approaches to state taxes. Telehealth and telecommuting can impact nexus, apportioning and sourcing of income for business tax purposes, gross receipts taxes, payroll taxes, and other tax type considerations.

Listen as our panel of state tax professionals defines the numerous opportunities states offer medical businesses to reduce or eliminate state and local taxes.

1. State tax landscape
2. Sales Tax Considerations
   • Sales
     • Healthcare services
       • Medical
       • Telehealth
     • Medication and supplies
     • Medical devices
       • Prosthetic
       • Durable medical equipment
       • Mobility enhancing
     • Sales by nonprofit organizations
     • Exemptions
       • For profit
       • Nonprofit
       • Medical facilities
       • Research and development
       • Manufacturing
     • Audits
     • Medical marijuana
3. Income Tax Update
   • Pass through entity tax update
   • Telehealth
   • Telecommuting
4. Questions

The panel will cover these and other critical issues:

• Which tangible medical purchases are typically exempt from sales tax
• How medical providers qualify for the R&D equipment in certain states
• Current sales tax trends in the healthcare industry
• Income tax issues affecting the healthcare industry

Learning Objectives

After completing this course, you will be able to:

• Identify common qualification requirements for the state R&D credit
• Determine which medical devices are typically exempt from sales tax
• Decide best steps to prepare for a potential sales tax audit
• Ascertain what often overlooked sales tax incentives are available to medical providers

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex state income tax forms and schedules; supervisory authority over other preparers/accountants. Knowledge and understanding of state taxation of warranties, including mandatory, option and extended warranties; familiarity with sales tax nexus issues.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.