Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 295.1535


295.1535 Management Fees. The company enters into an agreement with various providers to furnish medical equipment and supplies to the provider's customers. Under the agreement, it purports to purchase and sell the property to the provider for resale and it receives a "management fee" for its services.

According to the agreement, the company:

(1) takes the orders directly from the customers

(2) delivers the items to the provider's customers

(3) sets up the equipment

(4) trains the customers, as necessary, to use the equipment

(5) handles providers customers' complaints

(6) bills the provider's customers or insurance company, showing the providers as the sellers or lessors

(7) receives checks from customers and deposits them in the provider's bank account

(8) takes necessary collection action, and

(9) maintains an inventory "as is necessary" to fill orders.

Under the agreement, the company appears to be the sole contact point with the customer. It acts as if it is purchasing for its own account rather than on behalf of others. Under these circumstances, it is the retailer of the equipment and supplies. The "management fees" are part of the company's gross receipts. 3/22/93.