Connecticut – Taxability of Medical Records

SALT Report 1436 – The Connecticut Department of Revenue ruled that medical records and data provided to patients, insurance companies, health care providers, attorneys, and federal or state agencies in a hard copy format are sales of tangible personal property and subject to Connecticut sales and use tax.
Computer and Data Processing Services
Regulation §12-426-27(b)(1) states that computer and data processing services that include storing information and retrieving or providing access to information are taxable.  Therefore, any medical records provided through access to an online database are subject to a 1% sales and use tax because the transactions involve access to the medical office’s database.
Photocopies of Medical Records
Sales of photocopies by retailers that are in the business of selling photocopies, or by persons that make coin-operated photocopying machines available to the public are subject to sales and use tax as this is a sale of tangible personal property.
However, sales of photocopies by professional service providers, such as law firms, medical offices, laboratories, accounting firms, banks, and insurance companies, are not subject to sales and use taxes because in most cases, these sales are incidental to the primary services provided by those entities.
Medical Records Provided by Fax or Email
When Medical Records are provide by fax or email, the true object is the provision of the medical records.  Ruling No. 96-1 states that the use of computers to transmit data must be found to be an essential aspect of the service, without which the service would not exist, or the service recipient would not have contracted with the company.  Therefore, when medical records are provided by fax or by e-mail, neither tangible personal property nor hard copies are transferred making this type of sale non-taxable.
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