Sales by Surgery Centers and Taxable sales include (continued): Copies of medical records Physical medical record and provides it as a photocopy, repr

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1 WISCA Sales and Use Tax Webinar Presented by WISCONSIN DEPARTMENT OF REVENUE December Medical References Statutes: Sec (3pj), (3pm), (7m), and (11m) Sec (14), (14m), (14r), (22b), and (28) Administrative Code: Durable Medical Equipment, mobility-enhancing equipment, and prosthetic devices Drugs Hospitals, clinics and medical professions Dentists and their suppliers Sales by pharmacies and drug stores Streamline Sales and Use Tax website health care item listing Rules Appendix L Rules Appendix M board-rulesrules 2 Medical Industry Basics Sales and Use Tax Medical Industry Basics Medical services are not subject to tax Medical clinics, surgery centers, and physicians are consumers of the items they use in providing their medical services and must pay tax on their purchase of medical supplies and equipment unless a specific exemption applies 3 Purchases are exempt if the hospital, surgery center, or medical facility is a Wisconsin or federal governmental unit or nonprofit organization that has a Certificate of Exempt Status (CES CES) number 4 Sales by Surgery Centers and Required to charge sales tax on taxable sales and services, unless an exemption applies Taxable sales include: Sales of items or services not directly related to medical services Medical alarm monitoring services Fixed assets Parking fees Soft drinks 5 Sales by Surgery Centers and Taxable sales include (continued): Gift shop sales (e.g.,., flowers, cards, balloons) Taxable sales made by auxiliaries that are part of the same entity as the medical facility Coffee shop Fundraising sales Gift shop sales Vending machine sales Soft drinks Toiletries 6 1

2 Sales by Surgery Centers and Taxable sales include (continued): Copies of medical records Physical medical record and provides it as a photocopy, reprint, or tangible medium (e.g., CD) sale is taxable Digital it version of the medical record and provides it as a physical copy (e.g., paper) or a digital version (e.g., CD) sale is taxable Physical medical record and scans the document so it can be ed to the customer sale is taxable NOTE: Medical record in electronic format and transfers it electronically by or some other type of electronic file transfer method sale is not taxable Sales by Surgery Centers and Nontaxable sales include: Medical services Charges to patients t for items used in conjunction with providing medical services (e.g., supplies) Food and food ingredients sold by hospitals and sanatoriums (e.g., prepared food, candy) Exception sales of soft drinks are taxable 7 8 Certificate of Exempt Status (CES) In order to be exempt from Wisconsin sales and use tax on purchases, Wisconsin nonprofit organizations must obtain exempt status Many people assume that if an organization has obtained federal nonprofit status that they automatically qualify for a sales tax exemption. This is not the case it is not an automatic exemption Certificate of Exempt Status (CES CES) Wisconsin and federal governmental units and federally recognized Native American tribes or bands in Wisconsin are not required to obtain a CES number Some do obtain a CES number for purchasing simplification 9 10 Certificate of Exempt Status (CES) Purpose of CES is so retailers can identify nonprofit organizations that qualify for the exemption Not all organizations qualify, including: Business organizations Chambers of commerce Professional societies Certificate of Exempt Status (CES) Application must be completed pdf Required documentation (except tribes and governmental units): Articles of incorporation or bylaws Statement of receipts (income) and disbursements (expenses) for their last accounting period Federal Internal Revenue Service (IRS) determination letter

3 Purchases by Surgery Centers and Purchases are exempt if the hospital, surgery center, or medical facility is a Wisconsin or federal governmental unit, federally recognized Native American tribe or band in Wisconsin, or nonprofit organization that has a Certificate of Exempt Status (CES) number Purchases by hospitals, surgery centers, and medical facilities that do not hold a CES number are subject to tax unless the item or service is specifically exempted by law Exception: Wisconsin and federal governmental units and federally recognized Native American tribes or bands in Wisconsin are not required to obtain a CES number to make purchases without tax Purchases by Surgery Centers and Taxable purchases include: Medical equipment and supplies Medical instruments Needles and syringes Office equipment and supplies Oxygen delivery equipment Soap Trade fixtures Uniforms and gowns Purchases by Surgery Centers and Nontaxable purchases include: Items resold (not used in providing medical services) Gift shop items Soda Services not specifically listed in the statutes Real property improvements Medical Related Exemptions Drugs Durable Medical Equipment (DME) Mobility Enhancing Equipment (MEE) Prosthetic Devices (PD) Definition of Drug A compound, substance or preparation other than food and food ingredients, dietary supplements, or alcoholic beverages to which any of the following apply: Listed in U.S. Pharmacopoeia, Homeopathic Pharmacopoeia or National Formulary Intended for use in diagnosing, curing, mitigating, treating or preventing disease Intended to affect a function or structure of the body Drugs include: Definition of Drugs Alcohol (rubbing) Prescription medicines Antibiotic creams and ointments Antiseptics Eye drops Hand sanitizers Sterile water (for injections)

4 Drugs do not include: Definition of Drugs Alcoholic beverages, soft drinks, and distilled water Dietary supplements Durable medical equipment Prosthetic devices Mobility-enhancing equipment Exemption for Drugs Sales price from the sales of and storage, use or other consumption in this state of drugs: (a) (b) Prescribed for the treatment of a human being by a person authorized to prescribe the drugs, and dispensed on prescription filled by a registered pharmacist in accordance with law Furnished by a licensed physician, surgeon, podiatrist, or dentist to a human patient for treatment of the patient Continued on next slide Continued from previous slide Exemption for Drugs (c) Furnished by a hospital for treatment of any person pursuant to the order of a licensed physician, surgeon, podiatrist ist or dentist (d) Sold to a licensed physician, surgeon, podiatrist, dentist or hospital for the treatment of a human being Continued on next slide Continued from previous slide Exemptions for Drugs (e) Sold to this state or any political subdivision or municipal corporation thereof, for use in treatment of a human being (em) Furnished for the treatment of a human being by a medical facility or clinic maintained by this state or any political subdivision or municipal corporation thereof (f) Furnished without charge to any of the following if the drug may not be dispensed without a prescription: Physician, surgeon, nurse anesthetist, advanced practice nurse, osteopath, dentist, podiatrist, optometrist Exemptions for Durable Medical Equipment, Mobility-enhancing Equipment, Prosthetic Devices, and Accessories The sales price from the sale of and the storage, use, or other consumption of durable medical equipment that is for use in person s s home, mobility-enhancing equipment, and prosthetic devices, and accessories for such equipment or devices, if the equipment or devices are used for a human being Definition of Durable Medical Equipment Equipment, including the repair parts and replacement parts for equipment that: Is primarily and customarily used for a medical purpose related to a person; can withstand repeated use; is not generally useful to a person who is not ill or injured; and is not placed in or worn on the body Does not include mobility-enhancing equipment

5 Exemption for Durable Medical Equipment Use in a person s home means that the equipment is sold to an individual for use where they are living, regardless of whether they are living in a single family home, apartment building, nursing home, assisted living center, convalescent home, or school dormitory Exemption for Durable Medical Equipment DME is not for use in a person s home if it is purchased by a hospital, clinic, surgery center, nursing home, assisted living center, convalescent home, dental office, chiropractor, or optician s office Taxable to these entities, unless another exemption applies (e.g., exempt entity) Exemption for Durable Medical Equipment Examples of DME that qualify for exemption if they are purchased for use in a person's home: Blood pressure machines and cuffs Heating pads CPAP machines that are not worn on the body Stethoscopes More examples can be found at: ://docs.legis.wisconsin.gov/code/admin_code/tax/11/iii/08 27 Exemptions for Mobility-Enhancing Equipment Equipment including the repair parts and replacement parts for the equipment, that is: primarily and customarily used to provide or increase the ability of a person to move from one place to another; that may be used in a home or motor vehicle; and that is generally not used by a person who has normal mobility Does not include a motor vehicle or any equipment on a motor vehicle that is generally provided by a motor vehicle manufacturer Does not include durable medical equipment 28 Exemptions for Mobility-Enhancing Equipment The exemption for mobility-enhancing equipment is not limited to mobility-enhancing equipment for use in a person's home 29 Exemptions from Sales and/or Use Tax Law 77.51(7m) Mobility-Enhancing Equipment MEE includes: Canes Crutches Grab bars and hand rails Lift chairs Tub and shower stools Wheelchairs and ramps 30 5

6 Exemptions for Prosthetic Device A replacement, corrective, or supportive device, including the repair parts and replacement parts for the device, that is: placed in or worn on the body to artificially replace a missing portion of the body; Exemptions for Prosthetic Device The exemption for prosthetic devices is not limited to prosthetic devices for use in a person's home to prevent or correct a physical deformity or malfunction; or to support a weak or deformed portion of the body Exemptions for Prosthetic Device PD includes: Ace bandages Arm slings Artificial body parts Bone pins, plates, nails, screws, etc. Contact lenses Dentures Elastic bandages and supports Eye glasses Pacemakers Stents General Rule Sales of tangible personal property and taxable services are taxable unless: unless: A specific exemption exists within the statutes and The purchaser provides the seller with a fully completed exemption certificate (there are exceptions) There are three ways for a sale to be exempt from sales and use taxes: 1. Product-based exemption (e.g.,., prescription drugs for humans) Do not need exemption certificate 2. Entity-based exemption (e.g.,., nonprofit organizations) Generally need an exemption certificate 3. Use-based exemption (e.g.,., resale) Always need an exemption certificate Product-based exemptions include (i.e., do not need exemption certificate): Drugs Durable medical equipment Prosthetic devices

7 Entity-based exemption: Exempt Organizations Must be supported by a fully completed exemption certificate (Form S-211) or a copy of their Wisconsin CES number Exception for Wisconsin and federal governmental units and federally recognized Native American tribes or bands in Wisconsin The sales tax exemption applies to all purchases made by a qualifying exempt organization The elements for a valid exemption certificate are: Purchaser's name and address Purchaser's state tax ID number and state of issue (if no state tax ID number, the purchaser s FEIN or their Driver s license number with state of issue) Purchaser s type of business Reason for exemption Purchaser's signature and date (required if paper certificate; no signature is required if submitted electronically) Documentation required by retailer for exempt sales to Wisconsin or federal governmental units and Native American tribes or bands in Wisconsin: Fully completed exemption certificate If no exemption certificate obtained Bill or invoice must be issued in the name of the governmental unit or tribe along with either: A purchase order or similar written document from the governmental unit or tribe, identifying itself as the purchaser Recording on the invoice it retains, the governmental unit's or tribe's or band's, certificate of exempt status, or CES number The purchaser is required to complete an exemption certificate and give it to the seller at the time of purchase Purchaser's s responsibilities: Knowing if they qualify for an exemption Being held liable for any use tax, interest and penalties that might be due if the items purchased are not eligible for an exemption

8 DOR Resources Electronic Mailing Lists Lists are available for different tax types/issues Sales & Use Tax Tax Professionals Wisconsin Economic Outlook Withholding Tax Subscribe at: Sales and Use Tax Resources Go to DOR website at Sales and Use Tax Reports (quarterly) Wisconsin Tax Bulletins Publications Publication 201 for general sales and use tax info Speaker Information David Steines Tax Specialist