Which charges for paper and electronic medical-record copies were subject to Florida sales tax?

Plain-English summary

The Florida Department of Revenue reached different results for paper and electronic delivery of medical records by a copying business.

Electronic delivery through a web portal or file transfer provided no tangible personal property, so none of the associated charges were taxable.

For paper copies, affidavit, basic, certification, deposition, handling, labor, photo, per-page, and retrieval fees were taxable components of the sale. A no-records-found fee was nontaxable because no copy was sold, and a separately stated notary fee was exempt. The conclusion treated its separately stated actual postage fee as exempt, while mandatory shipping-and-handling and shipping-only charges that the purchaser could not avoid were taxable.

What this means for you

Medical-record fulfillment companies

Delivery format changes the tax result. Map each paper-copy invoice component to the ruling and keep electronic delivery distinct.

Healthcare requestors

Regulated copy-price limits did not themselves exempt a copying company's paper records or related service components from sales tax.

Common questions

Q: Were electronically delivered records taxable?
A: No.

Q: Were all paper-copy fees taxable?
A: No. The ruling exempted no-records-found and notary fees and gave separate treatment to postage and shipping charges.

Citations and references

• Fla. Stat. §§ 212.02(16), 212.05, 212.06(1)(a), 212.08(13), 212.21(2), and 213.22
• Fla. Admin. Code rr. 12A-1.041(5)(c), 12A-1.045, and 12A-1.027(2)(b)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 12A-031

Original ruling text

Interim
Executive Director
Marshall Stranburg

QUESTION: Which of the above invoice component fees charged for services and/or products
that Taxpayer provides using delivery method one are subject to Florida sales and use tax?

ANSWER: Taxpayer provides the copies electronically. The delivery of the copies
electronically is not subject to tax, as there is no provision of any tangible personal property.
Consequently, none of the charges associated with the electronic delivery would be subject to
tax.
December 5, 2012

Re:

Technical Assistance Advisement – TAA 12A-031
Florida Sales and Use Tax
Medical – Copies of Medical Records
Sections: 212.02, 212.05, and 212.21, Florida Statutes (F.S.)
Rule: 12A-1.041, Florida Administrative Code (F.A.C.)
Petitioner: XXX (“Taxpayer”)

Dear XXX:
This letter is a response to your petition dated XXX, for the Department's issuance of a Technical
Assistance Advisement ("TAA") concerning the above referenced petitioner and matter. Your
petition has been carefully examined and the Department finds it to be in compliance with the
requisite criteria set forth in Chapter 12-11, F.A.C. This response to your request constitutes a
TAA and is issued to you under the authority of Section 213.22, F.S.
Facts
Taxpayer processes and fulfills medical record requests (known in the healthcare industry as the
release of information process). Taxpayer has nexus in Florida. Taxpayer partners with
hospitals, health systems, physician practices, and clinics to process and fulfill medical record
requests and maintain compliance related to releasing medical information to all types of
requestors. Taxpayer, by agreement with the health facility, makes photocopies of the medical
records, delivers them to the requesting party, and bills the requesting party directly for the
copies.
The requesting parties typically are patients, attorneys, insurance companies,
governmental entities, or hospitals, hereinafter (“Customers”).

Child Support Enforcement – Ann Coffin, Director  General Tax Administration – Maria Johnson, Director
Property Tax Oversight – James McAdams, Director  Information Services – Tony Powell, Director

www.myflorida.com/dor
Tallahassee, Florida 32399-0100

Technical Assistance Advisement
Page 2

A trained specialist digitally captures the protected health information from the facility’s
electronic or paper medical records through Taxpayer’s technology platform. The digital
medical records are then electronically transmitted to its release of information processing center
in XXX. Taxpayer uses two methods to deliver the medical records to its customers. With
delivery method one, paper copies of the medical records are printed, packaged, mailed, and
delivered by the United States Postal Service or shipped and delivered by FedEx. With delivery
method two, Taxpayer provides the customer access to the medical records electronically via its
web portal or Taxpayer “pushes” the records to its high volumes customer via File Transfer
Protocol (“FTP”).
Due to the strict procedural and regulated steps involved in the release of this information
process, there are associated costs. Taxpayer’s fees are normally based on rates regulated by
state statutes, rules, or policies. If there is no governing state authority, Taxpayer sets a
reasonable fee for its services and/or products in accordance with Health Insurance Portability
and Accountability Act of 1996 (HIPAA) guidelines.
Taxpayer has asserted that it is not currently under audit or review by the Florida Department of
Revenue (“DOR”), nor is it in litigation with the DOR.
Delivery Method One:
When Taxpayer is ready to mail or ship paper copies of the medical records to the customer,
Taxpayer invoices the customer and then releases the records. Below are the various possible
line items that could make up a typical invoice, along with a short explanation of each line item
for delivery method one:

1. Affidavit Fee: A separately stated flat fee charged for a written statement confirmed by
   oath or affirmation, for use as evidence in court.
2. Basic Fee: A separately stated flat unregulated fee for searching, retrieving, reviewing,
   and preparing copies of medical records for delivery to the requestor.
3. Certification Fee: A separately stated flat fee to certify the medical records.
4. Deposition Fee: A separately stated fee to affirm that the information is suitable to be
   utilized in a legal deposition.
5. Handling Fee: A separately stated flat fee distinct from the charge for postage,
   associated with mailing paper copies of the individual’s medical record.
6. Labor Fee: A processing service fee (e.g., an additional fee charged for retrieving
   records stored off-site).
7. No Records Found Fee: A flat fee for conducting a search and no medical records were
   found to provide to the requestor. Taxpayer has charged this fee to its customers when
   no records were found and no records were provided to the customer.
8. Notary Fee: A separately stated flat fee to notarize the medical records.
9. Photo Fee: A separately stated fee for each page of the medical record that is
   photocopied.
10. Per Page Fee: A separately stated fee for each page of the medical record that is
    captured by scanning or captured from microfilm.

Technical Assistance Advisement
Page 3

11. Postage Fee: A separately stated fee for the actual postage cost associated with mailing
    paper copies of the medical record when it is mailed via the United States Postal
    Service or delivery fee for records shipped via FedEx. This fee does not contain a
    markup for profit.
12. Retrieval Fee: A separately stated flat regulated fee for searching, retrieving,
    reviewing, and preparing copies of medical records for delivery to the requestor.
13. Shipping and Handling Fee: A separately charged fee for postage or FedEx shipping
    and handling. This fee does not contain a markup for profit. Taxpayer’s customers do
    not have the option to pick up the records and “avoid” this fee.
14. Shipping (only) Fee: A separately charged fee for actual postage cost or FedEx
    shipping cost. This fee does not contain a markup for profit. Taxpayer’s customers do
    not have the option to pick up the records and “avoid” this fee.
    Delivery Method Two:
    When Taxpayer is ready to electronically provide or deliver digital copies of the medical records
    to the customer, Taxpayer invoices the customer and then releases the records. Below are the
    various possible line items that could make up a typical invoice and a short explanation of each
    line item for delivery method two:
15. Affidavit Fee: A separately stated flat fee charged for a written statement confirmed by
    oath or affirmation, for use as evidence in court.
16. Basic Fee: A separately stated flat unregulated fee for searching, retrieving, reviewing,
    and preparing copies of medical records for delivery to the requestor.
17. Certification Fee: A separately stated flat fee to certify the medical records.
18. Deposition Fee: A separately stated fee to affirm that the information is suitable to be
    utilized in a legal deposition.
19. Handling Fee: A separately stated flat fee distinct from the charge for postage, associated
    with mailing paper copies of the individual’s medical record.
20. Labor Fee: A processing service fee (e.g., an additional fee charged for retrieving records
    stored off-site).
21. No Records Found Fee: A flat fee for conducting a search and no medical records were
    found to provide to the requestor. Taxpayer has charged this fee to its customers when
    no records were found and no records were provided to the customer.
22. Notary Fee: A separately stated flat fee to notarize the medical records.
23. Photo Fee: A separately stated fee for each page of the medical record that is
    photocopied.
24. Per Page Fee: A separately stated fee for each page of the medical record that is captured
    by scanning or captured from microfilm.
25. Quickview Delivery Fee: A separately stated flat fee to electronically access and view the
    contents of the delivered information via Taxpayer’s web portal.
26. Electronic FTP Fee: A separately stated fee to electronically receive medical records
    pushed to the customer via FTP.
27. Retrieval Fee: A separately stated flat regulated fee for searching, retrieving, reviewing,
    and preparing copies of medical records for delivery to the requestor.

Technical Assistance Advisement
Page 4

Requested Advisements
Question One: Which of the above invoice component fees charged for services and/or products
that Taxpayer provides using delivery method one are subject to Florida sales and use tax?
Question Two: Which of the above invoice component fees charged for services and/or products
that Taxpayer provides using delivery method one are subject to Florida sales and use tax?
Taxpayer’s Position
Taxpayer believes that when it delivers a hard copy of a medical record to the requesting party
(Delivery Method One), all separately stated fees/line items (except Notary Fees) on the invoice
are subject to sales tax. Taxpayer also believes that when it delivers a digital copy of a medical
record electronically (Delivery Method Two) to the requesting party, all separately stated
fees/line items on the invoice are not subject to sales tax.
Applicable Law and Discussion
Chapter 212, F.S., imposes sales tax on all sales of tangible personal property, unless specifically
exempt. Section 212.21(2), F.S., specifically provides in pertinent part:
It is hereby declared to be the specific legislative intent to tax each and every sale,
admission, use, storage, consumption, or rental levied and set forth in this chapter, except
as to such sale, admission, use, storage, consumption, or rental as shall be specifically
exempted therefrom by this chapter subject to the conditions appertaining to such
exemption. . . .
Section 212.08(13), F.S., provides in pertinent part:
No transactions shall be exempt from the tax imposed by this chapter except those
expressly exempted herein. All laws granting tax exemptions, to the extent they may be
inconsistent or in conflict with this chapter, . . . shall yield to and be superseded by the
provisions of this subsection . . . .
Section 212.05, F.S., provides, in pertinent part:
It is hereby declared to be the legislative intent that every person is exercising a taxable
privilege who engages in the business of selling tangible personal property at retail in this
state, including the business of making mail order sales, or who rents or furnishes any of
the things or services taxable under this chapter, or who stores for use or consumption in
this state any item or article of tangible personal property as defined herein and who
leases or rents such property within the state.
(1) For the exercise of such privilege, a tax is levied on each taxable transaction or
incident, which tax is due and payable as follows:

Technical Assistance Advisement
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(a)1.a. At the rate of 6 percent of the sales price of each item or article of tangible
personal property when sold at retail in this state, computed on each taxable sale for the
purpose of remitting the amount of tax due the state, and including each and every retail
sale.

Section 212.02(16), F.S., defines the term “sales price,” in part, as:
"Sales price" means the total amount paid for tangible personal property, including any
services that are a part of the sale, valued in money, whether paid in money or otherwise,
and includes any amount for which credit is given to the purchaser by the seller, without
any deduction therefrom on account of the cost of the property sold, the cost of materials
used, labor or service cost, interest charged, losses, or any other expense whatsoever….
Section 212.06(1)(a), F.S., provides, in pertinent part:
The aforesaid tax at the rate of 6 percent of the retail sales price as of the moment of sale,
6 percent of the cost price as of the moment of purchase, or 6 percent of the cost price as
of the moment of commingling with the general mass of property in this state, as the case
may be, shall be collectible from all dealers as herein defined on the sale at retail, the use,
the consumption, the distribution, and the storage for use or consumption in this state of
tangible personal property or services taxable under this chapter. The full amount of the
tax on a credit sale, installment sale, or sale made on any kind of deferred payment plan
shall be due at the moment of the transaction in the same manner as on a cash sale.

Rule 12A-1.041(5)(c), F.A.C., provides as follows:
The charge for copying documents and other papers which are not public records and
which can be copied by a dealer engaged in such business represents the sale of tangible
personal property and is taxable.
Rule 12A-1.045, F.A.C., provides as follows:
(1) "Transportation charges" include carrying, delivery, freight, handling, pickup,
shipping, and other similar charges or fees.
(2) Transportation charges which are not separately stated on an invoice or bill of sale,
but are included in the sales price of taxable tangible personal property, are subject to tax.
(3)(a) Where the seller agrees to deliver tangible personal property to some designated
place and the purchaser cannot elect to avoid the charge for transportation services, the
charge for the transportation service is subject to tax, even if separately stated on an
invoice or bill of sale.

Technical Assistance Advisement
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(4)(a) The charge for transportation services is not subject to tax when both of the
following conditions have been met:

1. The charge is separately stated on an invoice or bill of sale; and
2. The charge can be avoided by a decision or action solely on the part of the purchaser.
   (See subsection (5) for shipping of tangible personal property F.O.B. origin.)

(5) If the seller contracts to sell tangible personal property F.O.B. origin, the title to the
property passes at the point of origin. Since the title to the property passes at the point of
origin, transportation services arranged by the seller and rendered to the buyer are not a
part of the taxable selling price, provided the transportation charges are separately stated.
Where the transportation charges are billed by the seller to the buyer, but documentation
is inadequate to establish the point at which title passes to the buyer, it is presumed that
the tangible personal property was sold F.O.B. origin and the title to the property passes
at the point of origin. In such instances, the transportation charges are not considered a
part of the selling price of the property, if separately stated.

Rule 12A-1.027(2)(b), F.A.C., provides as follows:
(b) Charges for postage paid to the United States Postal Service that are separately stated
on a customer's invoice, bill, or other tangible evidence of sale are not subject to tax.
In 2001, the Attorney General’s Office issued AGO 01-018 in response to questions concerning
whether sales tax should be added to the charges mandated by law for copies of records provided
pursuant to s. 395.3025(1), F.S. This section of Florida law addresses patient and personnel
records and copies under Public Health, Hospital Licensing and Regulation. This AGO
discussed whether sales tax is in addition to the statutorily set maximum per page charge for
copies of medical records and concluded that the sales tax and postage were in addition to, and
not included in, the mandated charges for copies of medical records. However, the AGO did not
address whether sales tax applies to copies provided through a copying business.
As no specific exemption from sales tax is provided for copies of medical records, the copies
would be exempt only if some other exemption applies. Providing copies of medical records is
not a medical service, so the exemption from sales tax provided to medical services is not
applicable. Unlike public agencies or licensed facilities, copying companies are in the business
of providing copies. In fact, Rule 12A-1.041(5)(c), F.A.C., specifically states that copies of
records provided by copying companies are taxable. In this case, Taxpayer is engaged in the
business of providing copies of medical records and is not a public agency or a licensed medical
facility.

Technical Assistance Advisement
Page 7

CONCLUSION
I will restate the charges and follow with our position highlighted in bold on the taxability of
such charges for delivery method one:

1. Affidavit Fee: A separately stated flat fee charged for a written statement confirmed
   by oath or affirmation, for use as evidence in court. – Taxable as part of the sales
   price of the sale of tangible personal property.
2. Basic Fee: A separately stated flat unregulated fee for searching, retrieving,
   reviewing, and preparing copies of medical records for delivery to the requestor. –
   Taxable as part of the sales price of the sale of tangible personal property.
3. Certification Fee: A separately stated flat fee to certify the medical records. –
   Taxable as part of the sales price of the sale of tangible personal property.
4. Deposition Fee: A separately stated fee to affirm that the information is suitable to
   be utilized in a legal deposition. – Taxable as part of the sales price of the sale of
   tangible personal property.
5. Handling Fee: A separately stated flat fee distinct from the charge for postage,
   associated with mailing paper copies of the individual’s medical record. – Taxable
   as part of the sales price of the sale of tangible personal property.
6. Labor Fee: A processing service fee (e.g., an additional fee charged for retrieving
   records stored off-site). – Taxable as part of the sales price of the sale of
   tangible personal property.
7. No Records Found Fee: A flat fee for conducting a search and no medical records
   were found to provide to the requestor. – This fee would not be taxable as there is
   no sale of tangible personal property (i.e., records).
8. Notary Fee: A separately stated flat fee to notarize the medical records. –
   Specifically exempt.
9. Photo Fee: A separately stated fee for each page of the medical record that is
   photocopied. – Taxable as part of the sales price of the sale of tangible
   personal property.
10. Per Page Fee: A separately stated fee for each page of the medical record that is
    captured by scanning or captured from microfilm. – Taxable as part of the sales
    price of the sale of tangible personal property.
11. Postage Fee: A separately stated fee for the actual postage cost associated with
    mailing paper copies of the medical record when it is mailed via the United States

Technical Assistance Advisement
Page 8

Postal Service or delivery fee for records shipped via FedEx. This fee does not
contain a markup for profit. – Exempt as provided in Rule 12A-1.027(2)(b),
F.A.C.

12. Retrieval Fee: A separately stated flat regulated fee for searching, retrieving,
    reviewing, and preparing copies of medical records for delivery to the requestor. –
    Taxable as part of the sales price of the sale of tangible personal property.
13. Shipping and Handling Fee: A fee charged for postage of FedEx shipping and
    handling. This fee does not contain a markup for profit. – Please refer to Rule
    12A-1.045, F.A.C. The fee is separately stated. However, since the purchaser
    cannot elect to avoid the charge for transportation services (i.e., shipping and
    handling fee), the charge for the transportation service is subject to tax, even if
    separately stated on an invoice.
14. Shipping (only) Fee – A fee charged for actual postage cost or FedEx shipping cost.
    This fee does not contain a markup for profit. - Please refer to Rule 12A-1.045,
    F.A.C. The fee is separately stated. However, since the purchaser cannot elect
    to avoid the charge for transportation services (i.e., shipping and handling
    fee), the charge for the transportation service is subject to tax, even if
    separately stated on an invoice.
    As for delivery method two, Taxpayer provides the copies electronically. The delivery of the
    copies electronically is not subject to tax, as there is no provision of any tangible personal
    property. Consequently, none of the charges associated with the electronic delivery would be
    subject to tax.
    This response constitutes a Technical Assistance Advisement under S. 213.22, F.S., which is
    binding on the Department only under the facts and circumstances described in the request for
    this advice, as specified in S. 213.22, F.S. Our response is predicated on those facts and the
    specific situation summarized above.
    You are advised that subsequent statutory or
    administrative rule changes or judicial interpretations of the statutes or rules upon which this
    advice is based may subject similar future transactions to a different treatment than expressed in
    this response.
    You are further advised that this response, your request, and related backup documents are public
    records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions
    of S. 213.22, F.S. Confidential information must be deleted before public disclosure. In an
    effort to protect confidentiality, we request you provide the undersigned with an edited copy of
    your request for Technical Assistance Advisement, the backup material, and this response,
    deleting names, addresses, and any other details which might lead to identification of the
    taxpayer. Your response should be received by the Department within 10 days of the date of this
    letter.

Technical Assistance Advisement
Page 9

If you have any further questions with regard to this matter and wish to discuss them, you may
contact me directly at 850-717-6363.
Sincerely,

Leigh L. Ceci
Tax Law Specialist
Technical Assistance & Dispute Resolution
Record ID: 124601