Hospitals and Medical Clinics: Do You Owe Wisconsin Sales Tax on Your Sales?

NOTE: This article has been replaced by a revised article dated November 4, 2015. See the new article...

Although most of the medical services you provide are nontaxable, you may also make sales that are subject to Wisconsin sales tax. This article provides information about taxable sales commonly made by hospitals and medical clinics.

Which sales are taxable?

Your sales price from selling, licensing, leasing, or renting tangible personal property, taxable services, and certain digital goods is subject to Wisconsin sales tax, unless you receive a fully completed exemption certificate from your customer, or your customer is an exempt organization and provides you with their Certificate of Exempt Status (CES) number. A business or organization cannot use the CES number of a separate exempt organization to claim an exemption on its purchases.

A hospital or medical clinic is liable for sales tax on its sales of taxable products or services to other business entities. 1 Also, a hospital or medical clinic is liable for sales tax on taxable sales made by auxiliaries that are part of the same entity as the hospital or medical clinic (e.g., gift shop sales and fundraising sales such as ice cream socials and cookbooks).

Examples of taxable sales and rentals made by hospitals and medical clinics include, but are not limited to:

  1. Medical alarm monitoring services. 2
  2. Medical equipment, supplies, and fixed assets. 3
  3. Soft drinks.
  4. Parking or providing parking spaces for motor vehicles.
  5. Copies of medical records under the following circumstances:

    1. The hospital or clinic begins with a physical medical record and provides a photocopy, reprint, or tangible medium (such as a CD) of the record to the customer, and the sale occurs at a location in Wisconsin. In this case, the hospital or clinic has made a sale of tangible personal property in Wisconsin. The hospital or clinic's receipts from this sale are subject to Wisconsin sales taxes.

      Example (1): Attorney requests copies of various medical records from Hospital on behalf of his client, Individual. The original records are paper records in a patient's file. An employee of Hospital retrieves Individual's file and makes photocopies of the records. Individual authorizes Hospital to send the copies to Attorney. Hospital uses a shipping company to send the copies and the bill to Attorney at his office in Madison, Wisconsin. Hospital charges Attorney $45.00 for the copies of Individual's medical records. For purposes of Wisconsin sales taxes, Hospital has made a sale of tangible personal property which is subject to Wisconsin sales tax.

      Example (2): Same facts as Example (1), except Hospital furnishes the record to Attorney in a digital format on a CD. Same answer as in Example (1).

    2. The hospital or clinic begins with a digital version of the medical record (e.g., a .pdf document) and produces a physical copy of the medical record, such as on paper or a digital version on a CD, and the sale of the copies to the purchaser occurs in Wisconsin. The hospital or clinic's receipts from this sale are subject to Wisconsin sales tax.

    3. The hospital or clinic starts with a physical medical record, scans the document, and emails a digital copy to the customer. The service furnished by the hospital or clinic is a photographic service and is subject to Wisconsin sales tax if the customer receives the email in Wisconsin. If the hospital or clinic does not know where the customer receives the email, the hospital or clinic should use the customer's billing address to determine the location where the service is furnished.

Note: If the hospital or clinic maintains medical records in an electronic format and, upon request, transfers them electronically by email or some other type of electronic file transfer method, the hospital or clinic's charges for the medical records are not subject to sales tax.

1 Sales of taxable products or services to other business entities are taxable, unless an exemption applies. For example, a hospital's sales of equipment sterilization services to a separate entity (medical clinic) operating within the hospital are taxable, unless the separate entity claims a valid exemption.

2 Medical alarm monitoring services are taxable telecommunications message services. More information is provided in Part X.B.13. on page 38 of Publication 201, Wisconsin Sales and Use Tax Information.

3 An exemption may apply to the sale of medical equipment and supplies, such as those described in Part XI.B.7. on page 46 and Parts XV. and XVI. on page 73 of Publication 201, Wisconsin Sales and Use Tax Information.

Obtaining a seller's permit?

If you make taxable sales in Wisconsin, you must have a Wisconsin seller's permit. You may apply for a seller's permit using one of the following methods:

Questions?

If you have questions, email us at dorbusinesstax@wisconsin.gov or call us at (608) 266-2776.

September 26, 2014