Texas Comptroller of Public Accounts STAR System
October 10, 2008
RE: 08260574 – Taxability of Case Management Fees
This letter addresses questions presented by ************** (COMPANY) in two
e-mails described below.
1. COMPANY email of November 2, 2007
Inquiry: Are health and wellness screening services taxable?
From subsequent conversations with you, I understand that the health and
wellness screening services performed by COMPANY are the collection and
analysis of blood, and the performance and analysis of electrocardiograms.
Your inquiry was answered by Al Van Allen in a response dated November 14,
2007. He wrote, “Health and wellness screening services are not in and of
themselves subject to sales tax. However, charges for these services become
taxable when they are performed on behalf of an insurance carrier, its insured,
its policy holders, or others pertaining to a policy or policies of insurance.”
After further review, we have determined that health and wellness screening
services are nontaxable medical services as set out in Comptroller Rule
3.355(c)(2). If these services are performed on behalf of an insurance
carrier, its insured, its policy holders, or others pertaining to a policy or
policies of insurance, they remain nontaxable. Mr. Van Allen’s email of
November 14, 2007 is superseded by this response.
2. COMPANY email of September 15, 2008
Inquiry: Results of services performed in Texas by COMPANY are reviewed,
organized and quality-control checked in COMPANY’S CITY A, Pennsylvania
facility. Are these reviewing, organizing and quality-control checking
From our conversations, I understand that the results you refer to are the
paperwork from the services performed in Texas by COMPANY.
The subject line of your inquiry is “Taxability of Case Management Fees”. In
the body of your inquiry you refer to the services performed in Texas by
COMPANY as “inspection services.” However, from phone conversations with you,
I understand that the services you refer to are the collection and analysis of
blood and urine, and the performance and analysis of electrocardiograms. I
also understand that your client, in this inquiry, is an insurance company, for
whom COMPANY performs the services on applicants to determine if they qualify
for a policy. These services are more appropriately labeled “health and
wellness screening services.”
As stated in the response to the first inquiry, health and wellness screening
services are nontaxable medical services. The reviewing, organizing and
quality control checking performed by your CITY A, Pennsylvania facility on the
resulting paperwork are nontaxable as well.
I hope this information answers your question. A complete set of rules, the
entire text of the Tax Code and other valuable information is available on our
Web site at www.window.state.tx.us.
This opinion is based on the information presented. If there are additional or
different facts, the opinion could change.
If you need more information, please call toll-free at (800) 531-5441, or you
may e-mail us at email@example.com.
Our goal is to provide you with prompt, professional service. Please take a
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Tax Policy Division
Texas Comptroller of Public Accounts
Sent: Monday, September 15, 2008 11:44 AM
To: Jody Frierson
Subject: Taxability of Case Management Fees
For a single client, COMPANY performs the inspection services in Texas
(taxable) and the results are forwarded to our CITY A, PA facility where the
entire inspection and results are reviewed, check by quality control, and
organized prior to billing the client. If an error is discovered the inspection
report is returned to the appropriate branch in Texas for correction. Once
done, the inspection data is resubmitted to CITY A, PA for a second review.
When the inspection work is determined by the CITY A staff to be 100% correct,
it is then set up to be billed to the client together with an added fee for the
review services performed in CITY A, the particular client in question being
situated in CITY B, Arizona.
The question is…..Are the services performed in CITY A, Pennsylvania subject to
Texas Sales Tax.
An expedited response would be very much appreciated since the client has
raised the question of taxability of the fee for the services rendered in PA.
Thank you very much for your assistance.
Sent: Friday, November 02, 2007 3:27 PM
To: Al Van Allen
Subject: Health and Wellness
COMPANY has begun a program of providing health and wellness screening services
to provider of health and wellness programs to corporations. COMPANY provides
the examiners and specimen collection kits for screening a corporation’s
employees so that proper health programs can be instituted for the benefit of
the individual employees.
Are such screening services taxable in the State of Texas?
DATE: NOVEMBER 9, 2007
SUBJECT: HEALTH AND WELLNESS PROGRAM TAXABILITY
HEALTH AND WELLNESS
A health and wellness (“H&W”) program is administered by a health and wellness
provider (“Provider”) for large (Mostly Fortune 500’s) self health insured
corporations (“Corporation”). The purpose of the program is to first provide a
health screening of employees, identify health risks of individual employees,
and then create regimens for the individuals to mitigate those risks over time,
reducing the more costly treatment of unmitigated risks that become diseases.
A Provider uses the services of ************** (“COMPANY”) to provide the
health screening to the employees for a fee. COMPANY provides all the necessary
health specimen collection kits (“Kits”), EKG’s and centrifuges, examiners,
health history forms, examiners, administrative services, etc. needed to
conduct the screening.
The screening is done at a time and place selected by the Corporation. The
EKG’s and centrifuges and other equipment needed are shipped to the site of the
screening from an COMPANY central H&W site, and returned at the conclusion of
the screening. Kits are shipped to the site by LAB, and all, both used and
unused, will be returned to LAB at the conclusion of the screening. COMPANY
will be billed by LAB for the kits shipped, and credited for those returned
COMPANY will bill the Provider for the screening, and the Provider will bill
Screenings will most likely take place at the offices or the Corporations or
nearby to facilitate minimal loss of time by employees being screened. These
locations may be in a single state or in multiple states for any given
Corporation. The invoice issued by COMPANY for conducting the screening may or
may not be subject to sales tax on services based on the individual sales tax
laws of each state.
Health and Wellness screenings and programs are a relatively new concept, and
the taxability is, likewise, new and uncertain. Therefore I would recommend the
following steps be taken to avoid any substantial exposures in the future.
1. Individual states where services are taxed, researched to determine if tax
applies to H&W screenings.
2. In states where the screening might be taxable, requests for letter rulings
3. H&W services treated as taxable in states issuing letter ruling indicating
them as such.
4. The cost of determining the taxability of the services charged to H&W
ACCESSION NUMBER: 200810293L
DOCUMENT TYPE: L
TAX TYPE: SALES