Does Georgia tax medical-record copies, electronic delivery, online database access, and related postage charges?

Plain-English summary

Georgia taxed charges for medical records delivered as tangible property, such as paper copies or computer discs. Requesting parties primarily wanted the records themselves, so the professional-service exception did not turn tangible copies into nontaxable services. Postage and handling charges followed the tangible records and were taxable as part of their sales price.

Records delivered only electronically—by facsimile or emailed PDF—were not taxable because no tangible personal property or right to it was transferred. Charges for access to records stored in an online database were also nontaxable.

The delivery destination controlled state and local sourcing. Georgia taxed records delivered to a Georgia location, even if shipped from outside the state, but not records sent to an out-of-state location. Billing address did not control.

Common questions

Q: Is a PDF of a medical record taxable?

A: Not when delivered solely electronically and the customer receives no tangible property or right to it.

Q: Is separately stated postage taxable?

A: Yes when connected with taxable records delivered in a tangible medium.

Citations and references

• O.C.G.A. § 48-8-3(22) -- service transactions with inconsequential property
• O.C.G.A. § 48-8-2(10), (34)(A)(iv) -- delivery charges
• O.C.G.A. § 48-8-77 -- sourcing
• Ga. Comp. R. & Regs. r. 560-12-2-.75(1)(a)-(b) -- custom printing

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2015-11

Original ruling text

Date Issued: September 9, 2015
Georgia Letter Ruling: LR SUT-2015-11
Topic: Service Provider – Medical Records
This letter is in response to your letter ruling request, regarding the application of Georgia sales and use tax to certain
transactions entered into by Taxpayer.
Facts as Presented by Taxpayer
Taxpayer performs the following services for Healthcare Providers:


Receive and review incoming requests for Medical Records. Validate authorizations to release Medical
Records from Requesting Parties for legal compliance, and/or request additional information, if necessary.



Pull files and/or review electronic records and/or microfilm to locate Medical Records meeting the requests.
Copy Medical Records to paper and/or scan and upload records to Taxpayer’s Central Business Center
located at its headquarters for the Requesting Party to download.



Record pertinent information regarding the requests in Taxpayer’s web-based information request
management application software system to track the status of the requests.



Mail and/or electronically deliver Medical Records to the Requesting Party.



Invoice and collect payment from the Requesting Party.

Taxpayer may perform these functions onsite at the Healthcare Provider’s facility or at Taxpayer’s headquarters,
depending on the scope of services selected by the particular Healthcare Provider. Typically Taxpayer identifies, pulls,
copies, and scans the pertinent Medical Records onsite at the Healthcare Provider’s facility. Taxpayer then either mails
the Medical Records or uploads and makes the records available to the Requesting Party through Taxpayer’s online
e-delivery system. Taxpayer performs billing and payment collection activities at its headquarters. Taxpayer’s primary
compensation for performing services for the Healthcare Provider is the fees collected from Requesting Parties. In
some instances, the Healthcare Provider may also pay Taxpayer directly for services.
The amount that Taxpayer charges varies depending upon the particular Requesting Party and the quantity and type
of Medical Records requested. Certain federal and state laws may limit the amount that may be charged to certain
Requesting Parties. In addition, when a request is submitted by certain Requesting Parties, the Healthcare Provider is
required by law to provide the requested Medical Records within a certain per Taxpayer of time. Invoices for Medical
Records delivered in a physical format include an itemized charge for “postage” or “postage and handling,” depending
on the transaction.
Taxpayer also offers a service that allows the Healthcare Provider to store records and other sensitive documents in a
secure online database. The Healthcare Provider can access the stored information at any time using a username and
a password. This service does not require the Healthcare Provider to install software, and no data is stored on the
Healthcare Provider’s own server.
Issues
1) Are Taxpayer’s charges for furnishing Medical Records subject to sales or use tax when such records are
distributed as printed copies? Facsimile copies? Emailed PDFs?
2) Are Taxpayer’s charges for access to records stored in an online database subject to sales or use tax?
3) Are separately stated charges for “postage” or “postage and handling” subject to sales or use tax?
4) What is the proper application of state and local sales and use tax when the Requesting Party has locations both
in-state and out-of-state?

Date Issued: September 9, 2015
Georgia Letter Ruling: LR SUT-2015-11
Topic: Service Provider – Medical Records
Page 2 of 3

Analysis
Georgia levies and imposes a tax (subject to certain exemptions) on the retail purchase, retail sale, rental, storage, use,
or consumption of tangible personal property and on certain enumerated services.1 “Sale” means any transfer of title
or possession, exchange, barter, lease, or rental, conditional or otherwise, in any manner, or by any means of any kind
of tangible personal property for a consideration. 2 The dealer making the taxable sale must collect the tax from the
purchaser and remit the tax to the Department.3 A sale is sourced to the location where the purchaser takes possession
of the tangible personal property or makes first use of the services. 4
Unlike sales of tangible personal property, which are generally presumed taxable, sales of services are not subject to
the tax unless specifically designated as taxable. When a transaction involves both a transfer of tangible personal
property and the provision of nontaxable services, the Department looks to the main purpose of the specific transaction
to help determine taxability. In addition, O.C.G.A. § 48-8-3(22) provides that sales and use tax does not apply to
“[p]rofessional, insurance, or personal service transactions which involve sales as inconsequential elements for which
no separate charges are made.”
In determining whether a particular transfer of tangible personal property falls under the exception in O.C.G.A. § 488-3(22), the main consideration is the purpose of the customer.5 Taxability turns on whether the customer is primarily
interested in buying the services provided or the tangible personal property transferred in conjunction with the services.
If a customer primarily wishes to purchase the skilled services of the service provider because the customer cannot
perform such services for himself due to the lack of equipment, time, or skill, the sale or transfer of tangible personal
property by the service provider is incidental to and but a means of providing the services that the customer wants,
and the exception in O.C.G.A. § 48-8-3(22) would apply. On the other hand, if a customer is primarily interested in
acquiring the tangible personal property, the sale is subject to sales and use tax.
Here, the Requesting Parties primarily wish to obtain Medical Records, either in a tangible medium or electronically,
and, as a result, O.C.G.A. § 48-8-3(22) does not apply. The sale of printed or copied material delivered in a tangible
medium is a sale of tangible personal property and thus subject to sales and use tax. 6 The Department does not consider
information or material delivered electronically to be a sale of tangible personal property when the customer does not
receive tangible personal property or the rights to tangible personal property as part of the sale. As such, the sale of
Medical Records delivered solely in an electronic format is not subject to the tax.
The sales price of personal property and services includes delivery charges. 7 “Delivery charges” means “charges by
the seller of personal property or services for preparation and delivery to a location designated by the purchaser of
personal property or services including, but not limited to, transportation, shipping, postage, handling, crating, and
packing.”8 Delivery charges made by the seller must be included in the sales price and are subject to sales and use tax
in the same manner as the sale of the associated tangible personal property.

1

O.C.G.A. §§ 48-8-1, -30.
O.C.G.A. § 48-8-2(33)(A).
3
O.C.G.A. § 48-8-30(b)(1).
4
O.C.G.A. § 48-8-77.
5
See Craig-Tourial Leather Co. Inc. v. Reynolds, 87 Ga. App. 360 at 365 (1952).
6
See generally Ga. Comp. R. & Regs. 560-12-2-.75(1)(a)-(b). The sale of custom printing is the sale of tangible
personal property and is subject to sales tax on the total invoice charge made on the transaction. Custom printing is
the production or fabrication of printed matter, in accordance with a customer's order or copy, for the customer's use
or consumption.
7
O.C.G.A. § 48-8-2(34)(A)(iv).
8
O.C.G.A. § 48-8-2(10).
2

Date Issued: September 9, 2015
Georgia Letter Ruling: LR SUT-2015-11
Topic: Service Provider – Medical Records
Page 3 of 3

Rulings
1) Taxpayer’s charges for Medical Records are subject to sales tax when such records are delivered in a tangible
medium, such as paper copies or a computer disc. Charges for Medical Records delivered solely in an electronic
medium, such as facsimile or an emailed PDF, are not subject to sales tax because there is no transfer of tangible
personal property.
2) Charges made for accessing records stored in an online database are not subject to the tax because there is no
transfer of tangible personal property.
3) Charges made for “postage” or “postage and handling” must be included in the sales price of Medical Records
delivered in a tangible medium and are taxable in the same manner as the associated sale.
4) Only Medical Records delivered to a customer at a location in Georgia are subject to sales tax. Records sent
outside of Georgia are not subject to Georgia sales tax, even if the records are shipped from a Georgia location.
Records shipped from outside of Georgia to a location in Georgia are subject to the tax. If the Requesting Party
has locations both in-state and out-of-state, the shipping destination, not the billing address, determines the
imposition of the tax (both state and local).
The opinions expressed in this ruling are based upon the information contained in your request and limited to the
specific transactions, facts, circumstances, and Taxpayer in question. Should the circumstances regarding the
transactions change or differ materially from those represented, this ruling may become invalid. Subsequent statutory
or administrative rule changes or judicial interpretations of the statutes or rules upon which this ruling is based may
subject similar future transactions to a different tax treatment than that expressed in this ruling.