Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2016
Sales and Use Tax Annotations
300.0000 HOSPITALS, INSTITUTIONS AND HOMES FOR THE CARE OF PERSONS—Regulation 1503
300.0054 Hospital Charges to Patients. Charges to patients for items of tangible personal property which either are not "administered" or for which a separate administration charge is made constitute retail sales. This is the case whether the payments made are based on the specific amount of service or quantity of property provided or a "flat rate" based on a pre-approved schedule of services (e.g., a per capita rate, a per diem rate, etc.).
In instances where the hospital provides administration of property and no separate charge is made, the hospital is the consumer.
If the hospital maintains a tax paid inventory, a tax-paid purchases resold deduction is allowable in cases where the hospital makes a separate charge for nonadministered items or makes a separate charge for administration of administered items.
In those instances where billings to insurance companies are subject to a "contract allowance" whereby it is understood that the amount paid will be less than the amount billed, the unpaid amount is a discount to be taken at the time of the transaction, not a bad debt to be taken later. 5/23/88. (Am. 2003–3).
(Note: Changes to Regulation 1503, effective June 1, 2001, replaced the "administered vs. nonadministered" concept with the new procedures specified in subdivision (b)(2).)