California – New Sales Tax on Medi-Cal Managed Care Plans

SALT Report 2871 – The California State Board of Equalization issued guidance regarding the new sales tax on Medi-Cal managed care plans that took effect on July 1, 2013. The tax is imposed at a rate of 3.9375% and applies to the total gross amount received by sellers of Medi-Cal managed care plans. However, the amount subject to tax does not apply to amounts received pursuant to a subcontract with a Medi-Cal managed care plan to provide health care services to Medi-Cal beneficiaries.

The BOE requires anyone who sells these plans to register for a seller’s permit, report gross receipts, and remit sales tax.  Once registered, you will be required to file returns on a quarterly basis by October 31, January 31, April 30, and July 31.  However, if your taxable gross receipts average $17,000 or more per month, you will be required to make two prepayments within each quarter.  Once you have registered with the BOE, they will inform you of your filing requirements and frequency.

The BOE has mailed permit applications to those who actively engage in selling Medi-Cal managed care plans.  The applications must be returned to the Department by September 10, 2013.

For Further Information

California State Board of Equalization – Special Notice