A mobile surgery service brings a portable laser machine, disposable surgical supplies, and a technician to a physician's office so the physician can perform minor, minimally invasive surgery there. Is the total charge to the physician taxable?

Plain-English summary

A mobile surgery service provider asked the Comptroller how sales tax applies to the service it provides to physicians. The provider brings a portable laser machine, all the disposable items and tools used in the surgery, and a technician who monitors and adjusts the laser to a physician's office, so the physician can perform minor, minimally invasive surgery there. As the taxpayer described it, this is essentially the same medical service a hospital operating room or surgery center provides — the only difference is the location.

The Comptroller ruled that the total charge to the health care provider is taxable as a rental of tangible personal property, citing Rule 3.294(c). That means the whole package charge — laser equipment, disposables/tools, and the technician's services — is taxed together as a single rental charge, not broken out into taxable and non-taxable pieces.

The letter closes with the Comptroller's standard caveat: the answer is based on the facts presented, and different facts, even if similar, could produce a different answer.

What this means for you

Mobile surgery service providers

If your business supplies portable surgical equipment (like a laser machine) along with disposable supplies and a technician to physicians' offices, the Comptroller treats your total charge to the physician as a taxable rental of tangible personal property — not as an exempt professional or medical service. Bundling equipment, supplies, and a technician into one charge did not change that outcome here.

Physicians and physician practices contracting for mobile surgical services

Expect sales tax to apply to the full amount billed by a mobile surgery equipment/technician provider, similar to what you'd pay if renting the equipment directly, even though the arrangement lets you perform a procedure that would otherwise require sending the patient to a hospital or surgery center.

Accountants and tax professionals

The key citation is Rule 3.294(c), which the Comptroller applied to characterize this bundled equipment-plus-technician charge as a rental of tangible personal property. Note that this ruling addresses only the facts presented — it does not itemize whether disposables or the technician's time could be separately stated or taxed differently, and the Comptroller was clear that similar-but-different facts could yield a different answer.

Common questions

Q: Is the whole charge for the mobile surgery service taxable, or just the equipment rental portion?
A: The Comptroller ruled the total charge to the health care provider is taxable as a rental of tangible personal property — the ruling does not carve out a non-taxable portion for the technician's services or the disposable items.

Q: Does it matter that a technician monitors and adjusts the laser during the procedure?
A: Based on this letter, no — the Comptroller taxed the total charge as a rental of tangible personal property even though the service included a technician alongside the equipment and disposables.

Q: Does it matter that this service is performed at the physician's office rather than a hospital or surgery center?
A: The taxpayer argued the only difference from a hospital operating room or surgery center is the location, but the Comptroller still taxed the charge as a rental of tangible personal property.

Q: What rule did the Comptroller rely on?
A: Rule 3.294(c).

Q: Can this business rely on this letter if its facts change slightly?
A: No. The Comptroller explicitly stated the opinion is based on the facts presented, and different facts, although similar, may result in different answers.

Citations and references

• Rule 3.294(c) (rental of tangible personal property)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9606L1425A04

Original ruling text

June 27, 1996

Dear **:

Thank you for your letter dated June 21, 1996, concerning sales tax.

Facts: Your client is a mobile surgery service provider. The client provides
a medical service that enables the physicians to perform minor, minimally
invasive surgery in the physician's office. There service includes all
disposable items and tools used in the surgery, the surgical equipment, and
a technician that monitors and adjusts the operation of the laser. In
essence, the client does the same medical service as a hospital operating
room or surgery center at the doctor's location. The only difference between
the medical service provided by a hospital operating room or surgery center
and your client is the location that the medical service takes place.

Comptroller Response: The total charge to the health care provider is
taxable as a rental of tangible personal property. Please refer to
Rule 3.294(c).

This opinion is based on the facts you presented and current law. Different
facts although similar, may result in different answers.

Please call me if you have any questions or need more information. Our toll
free number is 1-800-531-5441, and my extension is 5-0330. The direct line
is 512/475-0330. You may also write to Tax Policy Division, Comptroller
of Public Accounts.

Sincerely,

Bettie Peterson
Tax Policy Division