Missouri – Taxability of Patient Video Surveillance Systems

SALT Report 1385 – The Missouri Department of Revenue ruled that sales made by an out-of-state company who provides video monitoring equipment and networking services to health care facilities are not taxable.

The company leases equipment to health care facilities and provides them with two service options. The first option is a basic service package that simplifies patient monitoring. The company installs cameras in a patient’s room that transmits video to the nurses’ station where the nurses can view several patients on one monitor. The video is recorded, saved and owned by the health care facility.

The second option offers additional services provided through the company’s network. This service allows patients to search the internet, watch medical education videos, order meal service, video chat, and watch pay-per-view movies on the television.  This option is available for an additional fee.

The company paid sales tax on the purchase price of the equipment leased to its customers. Therefore, the monthly fee charged by the company for its basic networking service is not subject to tax. Also, the monthly price charged by the company for the optional patient networking service and equipment lease are not subject to sales tax under §144.020.1 (8) RSMo which states that:

“If the lessor or renter of any tangible personal property had previously purchased the property under the conditions of “sale at retail” or leased or rented the property and the tax was paid at the time of purchase, lease or rental, the lessor, sublessor, renter or subrenter shall not apply or collect the tax on the subsequent lease, sublease, rental or subrental receipts from that property” and, MCSR 12 CSR 10-108.700(3)(A)(1), further explains, “If the lessor pays tax on the purchase price, the subsequent lease of the tangible personal property is not subject to tax.”

Additionally, since the company’s installation and training fee is separately stated from the network service and equipment rental the Department determined that they are not subject to tax.

For Further Information:

Missouri Department of Revenue – Letter Ruling – LR 7005