Is a retinal angiographer's x-ray service for ophthalmologists taxable under Texas sales and use tax?

Subject

Retinal Angiographer X-Ray Services For Ophthalmologists Are Nontaxable Medical Diagnostic Services

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9309L1273B13

Plain-English Summary

A taxpayer asked the Comptroller whether the services of a retinal angiographer are subject to Texas sales tax. As described in the request letter, a retinal angiographer travels to an ophthalmologist's office, takes an x-ray of a patient's eye at the doctor's request, brings the undeveloped film back to his own office to develop it, and returns the developed x-ray to the ophthalmologist. For some ophthalmologists, the angiographer also provides a written "reading" — a report based on the x-ray findings. The fee is broken down only between the taking of the x-ray and the reading, when a reading is requested.

The Comptroller's response was direct: "The retinal angiographer is providing non-taxable health or medical diagnostic services." The letter did not distinguish between the taking of the x-ray, the reading of the x-ray, or the value of the developed film — the entire service was characterized as non-taxable.

The letter adds an important flip side to that conclusion: because the angiographer is providing a non-taxable service rather than selling a taxable item or taxable service, he is treated as the end consumer of what he uses to perform that service. As stated in the ruling, "the angiographer is required to pay sales tax on all equipment, film, materials and services i[t] uses to provide the service." In other words, the exemption applies to what he charges the ophthalmologist, not to what he buys to run his own business.

The Comptroller closed with the standard caveat that the opinion is based on the facts presented and that different facts, though similar, may result in different answers.

What This Means For You

If you provide diagnostic imaging or similar medical services to health care providers: This letter indicates the Comptroller treats health or medical diagnostic services — here, an eye x-ray taken and read at a physician's request — as non-taxable, without needing to carve out and separately tax the tangible x-ray film or a written report component.

If you are structuring your billing: The letter states there is no need to separately state a charge for the developed film specifically to avoid tax, because the Comptroller found the whole service non-taxable. That said, the ruling is fact-specific to the scenario described (an angiographer working at an ophthalmologist's direction), so businesses in a different arrangement should not assume identical billing treatment applies without their own ruling.

If you provide a non-taxable service like this one: Remember the other half of the holding — you are the end consumer of the equipment, film, materials, and services you purchase to perform your non-taxable service, and you owe sales tax on those purchases. This is a common trade-off in Texas sales tax law: providers of non-taxable services generally cannot buy their supplies tax-free, since they are not reselling a taxable item or service to their customer.

Q&A

Q: Is a retinal angiographer's x-ray service to an ophthalmologist subject to Texas sales tax?
A: No. The letter states, "The retinal angiographer is providing non-taxable health or medical diagnostic services."

Q: Does it matter whether the fee is split between "taking" the x-ray and "reading" the x-ray?
A: The letter does not tax either piece separately — it characterizes the overall service as a non-taxable health or medical diagnostic service, without carving out a taxable portion for the reading or the taking of the x-ray.

Q: Does the retinal angiographer need to separately state a charge for the developed x-ray film to avoid sales tax?
A: The letter does not require this. It resolves the question by finding the entire service non-taxable, so there is no taxable "developed film" charge that needs separate billing treatment under this ruling.

Q: If the angiographer's service is non-taxable, does that mean he never pays sales tax on anything related to the business?
A: No. The letter specifies that as the provider of a non-taxable service, "the angiographer is required to pay sales tax on all equipment, film, materials and services i[t] uses to provide the service."

Q: Can other medical service providers rely on this letter for their own tax treatment?
A: The letter itself cautions that "this opinion is based on the facts presented" and that "different facts, though similar, may result in different answers," meaning the conclusion is tied to the specific retinal angiographer arrangement described in the request.

Original ruling text

September 15, 1993

Dear **:

This is in response to your letter dated August 26,1993, regarding
sales tax as it applies to the services of a retinal angiographer.

FACTS PRESENTED: As defined in your letter, a retinal angiographer provides
an x-ray service to ophthalmologists. He goes to the ophthalmologist's
office, takes an x-ray of the patient's eye as requested by the doctor,
takes the undeveloped film of the eye back to his office, and develops the
x-ray. Some ophthalmologists request that a written report based on the
x-ray findings be included with the developed x-ray. The only breakdown in
the fees for this are between the taking of the x-ray and the "reading" of
the x-ray, if requested.

QUESTIONS: Is any part of the above described transaction taxable under
the sales and use tax laws of Texas? If so, which portion is taxable, i.e.,
are the services of taking and reading the x-ray taxable, or only the
value of the developed tangible x-ray taxable? If the tangible x-ray is
determined to betaxable, must the fee for the actual piece of developed
film be charged separately on any billing?

RESPONSE: The retinal angiographer is providing non-taxable health or
medical diagnostic services. As the provider of a non-taxable service, the
angiographer is required to pay sales tax on all equipment, film,
materials and services ituses to provide the service.

This opinion is based on the facts presented. Different facts, though
similar, may result in different answers. If you have any questions or
need more information, please write or call me at 1-800-531-5441,
extension 50330, or 512- 475-0330.

Sincerely,

Bettie Peterson
Tax Administration Division

August 26, 1993

State Comptroller of Public Accounts
ATTENTION: SALES TAX POLICY DIVISION
Capital Station
Austin, TX 78774

Dear Sirs/Madams:

I am writing you to request a policy letter regarding the following:

The service/product provider is a retinal angiographer. He provides an
X-ray service to ophthalmologists in which he goes to the
ophthalmologist's office and takes an X-ray of the patient's eye as
requested by the ophthalmologist. The service/product provider then
takes the undeveloped film of the eye back to his office and develops
the X-ray. Some ophthalmologists request that the service/product
provider, in addition to returning to the ophthalmologist the
developed X-ray, give a "reading", i.e., a written report based on the
X-ray as to what the X-ray shows about the patient's eye. Other
ophthalmologists just want the X-ray taken and the developed X-ray to
be returned to them without a written report. The only breakdown in
the fees for this are between the taking of the X-ray and the
"reading" of the X-ray, if requested.

Questions: Is any part of the above described transaction taxable
under the Sales and Use Tax laws of Texas? If so, which portion is
taxable, i.e., are the services of taking and reading the X-ray
taxable, or only the value of the developed tangible X-ray taxable? If
the tangible X-ray is determined to be taxable, must the fee for the
actual piece of developed film be charged separately on any billing?