When were charges for paper or electronic copies of medical records subject to Louisiana sales tax?

Plain-English summary

A licensed medical provider's own copies of patient records were excluded professional work product and not subject to sales tax, but an outside copying vendor did not inherit that exclusion. A third party's flat-fee work for the provider was a taxable reproduction service; a per-copy or per-image transaction was a taxable sale of the copies themselves.

The ruling treated paper, disk, film, and electronically delivered copies as tangible personal property and then classified the separate fees commonly shown on a medical-record invoice.

Copies furnished by the medical provider

La. R.S. 47:301(16)(e) excluded work products created in the ordinary business of a person licensed or regulated under Title 37, unless duplicated without modification for sale to multiple purchasers.

When a physician or another covered medical professional copied the provider's own records for a patient or authorized agent, the records remained incidental to the nontaxable professional service. No sales tax was due on the provider's charge for those copies.

Outside vendor: flat-fee copying service

The professional work-product exclusion did not apply when the medical provider hired a third party to reproduce the records.

If the vendor copied records for a flat fee—whether the copies stayed in-house or the provider had to deliver them without billing the recipient—the vendor performed the taxable service of reproducing written matter under La. R.S. 47:301(14)(d). The service was sourced where performed, usually where the images were reproduced.

If taxable copying services were billed in one lump sum, the entire customer charge was taxable under LAC 61:I.4103.C.15.b.

Outside vendor: per-copy or per-image sale

When the third party charged per reproduced page or image and delivered the copies to the requester, the transaction was a taxable sale of tangible personal property.

Hardcopy sales were sourced to the delivery destination. Electronically delivered copies were sourced to the billing address under the ruling.

A HIPAA business-associate agreement did not turn the copying company into a Title 37 medical provider and did not create the professional work-product exclusion.

Taxable invoice components

For taxable copy sales, the ruling included these charges in sales price:

• Basic or retrieval fee: necessary to locate the records before copying.
• Quickview online delivery fee: mandatory to deliver electronically selected copies.
• Per-page fee: the direct charge for each scanned or photocopied page.
• Handling fee: a seller service cost distinct from postage.

Separately stating these charges did not remove them from the taxable base.

Charges excluded under the stated conditions

• Postage: excluded when it was the actual, separately stated post-sale delivery charge, with the place of sale and buyer-account transportation clearly determinable from the invoices.
• E-disclose tracking fee: an optional electronic-delivery tracking service, not part of sales price.
• Certification, notarization, and deposition fees: optional professional services, separately stated.
• Docustore fee: optional separately stated online storage, unnecessary to produce the copies and not a listed taxable service.

What this means for you

Medical providers

The provider's own Title 37 work product received different treatment from an outside vendor's reproduction service. Identify who actually makes and sells the copies.

Record-copying vendors

Contract and billing structure matter. A flat-fee service and a per-image sale were both taxable here, but under different statutory categories and sourcing rules.

Requesters and payers

Review each invoice component. Mandatory production and delivery-platform charges entered the tax base, while only the specifically described optional or qualifying transportation charges were excluded.

Common questions

Q: Were a physician's own patient-record copies taxable?

A: No, under the professional work-product exclusion described.

Q: Did a HIPAA business-associate agreement exempt a copying vendor?

A: No.

Q: Were electronic copies treated differently from paper copies?

A: Both were treated as tangible personal property; electronic sales were sourced to the billing address under the ruling.

Q: Was a retrieval fee taxable?

A: Yes.

Q: Was postage taxable?

A: Not when it satisfied the ruling's separate-statement, post-sale delivery, and invoice-documentation conditions.

Q: Were optional certification and online-storage fees taxable?

A: No, when separately stated as described.

Citations and references

• La. R.S. 47:302(A), 47:321(A), and 47:331(A) — tax on retail sale or use of tangible personal property
• La. R.S. 47:301(10)(a)(i) and (12) — retail sale and sale definitions
• La. R.S. 47:301(16)(e) — licensed professional work-product exclusion
• La. R.S. 47:301(14)(d) — taxable reproduction services
• La. R.S. 47:301(13) — sales price definition
• LAC 61:I.4301(C) — retail sale regulation
• LAC 61:I.4103.C.14.a and C.15.b — sales-price components and lump-sum taxable services
• South Central Bell Telephone Co. v. Barthelemy, 643 So. 2d 1240 (La. 1994) — cited tangible-property authority
• LAC 61:III.101.C — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 07-006

Original ruling text

Revenue Ruling
No. 07- 006
October 15, 2007
Sales and Use Tax
Taxability of Transactions Involving the Copying of Medical Records
The purpose of this revenue ruling is to discuss the sales and use taxability of services which
include the copying of medical records.
Facts
Typical fact patterns concerning copying services include the following scenarios:

1. A Louisiana medical provider who renders medical services in Louisiana has a member
   of his or her staff make copies of medical records to fulfill the requests of the patient or
   someone whom the patient has granted the right to obtain such copies.
2. A provider of health care information management services contracts with a hospital or
   other medical provider to make all copies of medical records for a certain fee over a
   period of time. Some of the copies made are solely for the internal use of the hospital and
   never leave the premises. Other copies are produced to fulfill the requests of patients or
   others with the authority to request such medical records and are sent offsite to the
   requestor and billed in accordance with current statutory rates provided in La. Rev. Stat.
   Ann. 40:1299.96.
   Applicable Law
   Louisiana imposes a tax upon the sale at retail or use in this state of each item or article of
   tangible personal property pursuant to La. Rev. Stat. Ann. § 47:302(A), § 47:321(A), and
   § 47:331(A). La. Rev. Stat. Ann. § 47:301(12) defines sale as “any transfer of title or possession,
   or both, exchange, barter, conditional or otherwise, in any manner or by any means whatsoever,
   of tangible personal property, for a consideration…”
   Retail sale is defined by La. Rev. Stat. Ann. § 47:301(10)(a)(i) as “a sale to a consumer or to any
   other person for any purpose other than for resale as tangible personal property….” The
   Department clarified the term “retail sale” in its regulation LAC 61:I.4301(C) that provides that
   “the intent of the law is to classify every sale made to the final user or consumer for any
   imaginable purpose, other than for resale, as a retail sale or a sale at retail.” The regulation also
   provides, “For purposes of La. Rev. Stat. Ann. § 47:301(10), whether a transaction is exempt
   from taxation by statute, jurisprudence, or by constitution has no bearing on classification of the
   transaction.”
   Under La. Rev. Stat. Ann. § 47:301(16)(e), an exclusion is allowed from the definition of
   tangible personal property for “work products which are written on paper, stored on magnetic or
   optical media, or transmitted by electronic device, when such work products are created in the
   normal course of business by any person licensed or regulated by the provisions of Title 37 of
   the Louisiana Revised Statutes of 1950, unless such work products are duplicated without
   modification for sale to multiple purchasers.”
   Title 37 includes these medically-related occupations whose work products may be excluded
   from “tangible personal property”: podiatrists, dentists, nurses, optometrists, mental health

Revenue Ruling No, 07-006
Page 2 of 5

counselors, pharmacists, physicians, surgeons, midwives, psychologists, physical therapists,
hearing aid dealers, nursing facility administrators, speech-language pathologists, audiologists,
chiropractors, occupational therapists, dieticians, nutritionists, licensed radiologic technologists,
and respiratory therapists.
La. Rev. Stats. Ann. § 47:302(C), §47:321(C), and §47:331(C) provide that sales of services are
taxable. La. Rev. Stat. Ann. § 47:301(14) defines what the term “sales of services” means and
includes. La. Rev. Stat. Ann. § 47:301(14) (d) includes in “sales of services” the “furnishing of
printing or overprinting, lithographic, multilith, blue printing, photostating or other similar
services of reproducing written or graphic matter.”
Ruling
Where a patient requests the making of copies of certain identifiable medical records and fills out
necessary forms agreeing to pay the associated costs, there is a contract of sale between the
parties. The requestor is not interested in the process of making the copies so much as he is
receiving the actual copies for which he must pay. Paper copies, copies saved on disk, copies
saved on film, and copies scanned and sent electronically are tangible personal property under
the Civil Code definition of the term and the jurisprudence. 1 Upon the delivery of the copies,
sales tax should be remitted according to the rates of the destination unless an exemption or
exclusion applies.
In Scenario 1, where the medical provider actually provides the requested copy to the patient or
his agent, no sales tax is due because the work product exclusion in La. Rev. Stat. Ann.
§ 47:301(16)(e) applies. In that case, the patient is the customer and is not required to pay sales
tax because the records requested are from one who is in the business of rendering professional
medical services licensed or regulated by the provisions of Title 37 of the Louisiana Revised
Statutes of 1950 and are not duplicated without modification to be sold to multiple purchasers.
The records are merely incidental to the nontaxable services provided.
In Scenario 2, the medical provider is not making copies for requestors so the work product
exclusion is not applicable. Here, the medical provider has hired an outside party to provide the
taxable service of “reproducing written matter” under La. R.S. Ann. § 47:301(14)(d) so that it
does not have to do so.
Should the medical provider utilize the services of an outside party to make copies on its behalf
for a flat fee (where the copies stay in-house or where the healthcare provider is obligated to
provide those copies to another party without billing), then a sale of personal property does not
take place. In this situation, the outside party is providing a taxable service to the provider. This
service should be sourced to where the service is rendered, usually the location where the images
are reproduced.
By contrast, if in Scenario 2 the copies are invoiced with fees charged per copy/reproduced
image, the transaction will be treated as the sale of tangible personal property whether made at
the request of the medical provider or another requestor (the patient or another party who can
legally obtain the copies).
1

See South Central Bell Telephone Co. v. Barthelemy, 643 So.2d 1240, (La., 1994).

Revenue Ruling no. 07-006
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When a third party contracts to sell copies of medical records, the transaction between that
company and its customer is a taxable transaction since the third party is not a medical provider
under Title 37 and makes the copies with a profit motive. Despite the fact that in most cases,
third parties who copy medical records have a “business associate” agreement with the custodian
of the records for purposes of not violating the privacy provisions of Health Insurance Portability
and Accountability Act of 1996, (“HIPAA”), the fact that the third party has entered into this
agreement whereby it must comply with the privacy standards of HIPAA is not enough to grant
the third party status as a medical provider under Title 37 so that its work product would be
excluded from the definition of tangible personal property.
When copies are sold as tangible personal property, the transactions should be sourced to where
the copies are delivered, since the requesters are not picking up the copies at a brick-and-mortar
location. In the event that the copies are delivered electronically, it would be proper for the sale
to be sourced to the billing address.
Taxability of Invoice Components
Sales price is the total amount for which tangible personal property is sold, including any
services that are part of the sale valued in money and the cost of materials used, labor, or service
cost. 2 LAC 61:I.4103.C.14.a. states that “[a]ny part of the sales price that is related to costs
incurred by the vendor to bring the product to market or make the product available to customers
becomes part of the tax base and is subject to sales tax even if a separate charge is made on the
invoice.” That regulation further states that in certain instances freight, shipping, and delivery
charges from the vendor to customer are not considered part of the sales price because they are
not related to costs incurred by the vendor to bring the product to market. 3
In the transactions identified as sales of copies above, typically numerous items have been
included on invoices for these transactions including the following components: basic/retrieval
fee, quickview (online) delivery fee, per page fee, postage fee, handling fee, e-disclose fee,
certification/notarization/deposition fee, and docustore (online storage) fees.
Basic /Retrieval Fee A basic/retrieval fee is a separately stated mandatory flat fee charged for
locating the records. Because the requested records cannot be copied until after they are found,
the retrieval is necessarily related to the production of the copies; therefore, the retrieval fee is
included in the sales price.
Quickview Delivery Fee The quickview delivery fee is a separately stated fee to electronically
access and view the contents of the delivered information via the Internet. This fee is mandatory
when the customer opts to receive the copies requested electronically. Here, since the existence
of the copy is only manifested in physical form upon its being delivered online to the requestor,
the sale is not complete without this element, and no other company could deliver the copied
images in the same media, this fee is part of the sales price.
Per Page Fee The per-page fee is a separately-stated, mandatory fee for each page of the medical
record that is either scanned or photocopied. This fee is clearly included in the tax basis.
2
3

La. Rev. Stat. 47:301(13)
Subject to certain requirements stated LAC 61:I.4103.C.14.a.ii.(a).(i). and (ii).

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Postage Fee The postage fee is a separately stated fee for the postage associated with mailing a
hardcopy of the individual’s medical report. This fee does not contain a markup for profit. The
postage fee is mandatory if the copies are printed and mailed to the requester. Generally, freight,
shipping and delivery charges are not considered part of the sales price of tangible personal
property when the delivery occurs after the sale has taken place and two conditions are met: 1)
the seller separately states the charges for actual delivery or transportation of the sold property
from the place of the sale to the destination designated by the purchaser, and 2) the place of the
sale of the property and the fact that the transportation is rendered subsequent to the sale and
purchase and for the buyer’s account must be clearly determinable from the invoices for the sale
and transportation of tangible personal property.
Handling Fee The handling fee is a separately stated charge, distinct from the charge for postage,
associated with the mailing of a hardcopy of the individual’s medical record. The Department’s
regulation provides that handling charges are considered service costs and are included in the
sales price. Since this is a fee charged by the seller not actually for transportation cost, this
amount is properly taxable as amounts paid or charged for the service.
E-Disclose Fee The e-disclose fee is a separately stated fee to track and confirm the status of the
information being delivered. This service is optional and is only applicable where the copies are
delivered electronically. In order for the requesting party to be able to use this tracking service,
the requesting party has to hold software that enables them to access this information. This fee is
not part of the sales price.
Certification Fee, Notarization Fee, and Deposition Fee The certification fee is a separately
stated fee to certify the information. The notarization fee is a separately stated fee to notarize the
information. The deposition fee is a separately stated fee to affirm that the information is suitable
to be utilized in a legal deposition. These services are optional professional services and are not
part of the sales price.
Docustore Fee The docustore fee is a separately stated fee to electronically store the information.
This fee relates to the provision of an optional service where the third party holds electronic
copies of previously scanned documents. The benefit of selecting this option is that if the
requester needs additional copies of records previously scanned, the third party will not have to
physically go back and scan in the documents a second time, thereby, reducing total fees charged
for the making of copies. Because this fee is optional, is not necessary to produce the copies, and
is separately stated, it is not part of the sales price. In addition, the on-line storage of documents
is not a taxable service under the provisions of La. Rev. Stat. §°47:301 (14)(a)-(g).
Where the actions of the third party are found to be taxable copying/reproducing services, the
entire amount charged to the customer is taxable if billed in a lump sum under LAC
61:I.4103.C.15.b.
Conclusion
When a medical provider makes copies of medical records for patients or others authorized to
receive the copies requested, the copies are excluded from the definition of tangible personal
property so no sales tax is due when the copies are sold. When a third-party entity makes copies
for a hospital on a flat fee, this arrangement indicates that the third party is providing the taxable

Revenue Ruling No, 07-006
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service of reproducing written or graphic matter. The fact that the third party is a business
associate of the medical provider for purposes of federal privacy provisions is of no
consideration. When a third party fills requests for copies for a fee based on the number of
images reproduced and delivered to the requestor either via electronic means or in hardcopy, the
transaction is a taxable sale of tangible personal property.
Please direct any questions or comments concerning this Revenue Ruling to the department’s
Policy Services Division at 225.219.2780.
Cynthia Bridges
Secretary

A Revenue Ruling is written to provide guidance to the public and to Department of Revenue employees. It is issued
under Section 61:III.101.C of the Louisiana Administrative Code to apply principles of law to a specific set of facts. A
Revenue Ruling does not have the force and effect of law and is not binding on the public. It is a statement of the
department's position and is binding on the department until superseded or modified by a subsequent change in
statute, regulation, declaratory ruling, or court decision.