Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2017
Sales and Use Tax Annotations
505.0000 SALES TO THE UNITED STATES AND ITS INSTRUMEN-TALITIES—Regulation 1614
(e) MEDICARE PROGRAM
505.0865 Medicare Reimbursement Payments. Under Medicare rules, a medical supplier may not separately bill Medicare B for tax but should add the tax into the item billing. There are two different billing scenarios that can arise. In the first, Medicare B fully reimburses the medical supplier for its sales of medical supplies. In the second, Medicare B reimburses the medical supplier for only a portion of the sale and the remainder is received from a private insurer, Medi-Cal, or the patient. Regardless of whether or not Medicare B reimburses the medical supplier for the full retail sales price of the medical supplies, the billing to Medicare B is presumed to include sales tax and therefore, the payment from Medicare B to the taxpayer is inclusive of sales tax.
In order to obtain a refund of sales tax paid on sales of medical supplies that are subsequently determined to be exempt, the medical supplier must return the overpayment of tax reimbursement to the customer from whom it was received, i.e. Medicare B, Medi-Cal, private insurer or the patient. 07/16/02. (2003–2).