Sales Tax Implications for Health Care Industry

The health care industry is faring especially well, adding over 480,000 jobs since last year. The category is now on pace to become largest job sector in the U.S. in the next three years, according to POLITICO’s Dan Diamond [www.politico.com/staff/dan-diamond].  Last month, hospitals added 10,600 jobs, physicians’ offices added 7,500 jobs, and home healthcare added 7,100 jobs. Rising employment makes sense as Baby Boomers get older.

Although it is often assumed that healthcare transactions are exempt from sales and use tax, that is not always the case.  In fact, unless an exemption explicitly applies to a health-related transaction, it is prudent to assume that it may be subject to tax.  This makes it all the more important to be able accurately and efficiently sort out transactions exempt and subject to tax.

Health businesses are using software for many of these purposes, including the streamlining of tax functions such as determining filing status, analyzing the potential tax impacts of changes to accounts, preparing and reviewing tax returns, calculating tax rates, and identifying items that could be fraudulent or trigger an audit.

Some of the other key issues that the healthcare industry face include sales tax exemption analysis,  the tracking among the various states in which nexus is established, the use tax accrual processes, and Identifying taxable product sales and taxable services.