Did an orthopedic surgeon recruited from an out-of-state residency qualify for Louisiana's former Small Town Doctor's Credit?

Plain-English summary

The orthopedic surgeon qualified because he relocated from outside the community hospital's service area and satisfied the practice, distance, licensing, and payer conditions.

The historical credit was the lesser of the taxpayer's tax due or $5,000 per tax year, for no more than five years.

Doctor and practice facts

The doctor completed an out-of-state residency, moved to the Louisiana city in 2002, established a permanent residence and orthopedic practice, held an unrestricted Louisiana medical license, intended to stay, and accepted Medicare and Medicaid.

Location tests

The primary office was within 20 miles of a community hospital not predominantly owned by physicians. Both the office and hospital were more than 20 miles from the nearest incorporated city with more than 30,000 people.

The doctor also moved from outside the hospital's service area. The ruling described that area as the place from which the hospital received most patients, considering geography, roads, transportation, and available services.

Common questions

Q: Did moving from outside Louisiana automatically satisfy the relocation test?

A: The key statutory test was relocation from outside the hospital's service area; the doctor's out-of-state move satisfied it on these facts.

Q: Did the hospital's ownership matter?

A: Yes. It could not be predominantly owned by other physicians.

Q: Did the doctor have to accept public-program payments?

A: Yes. The ruling identified both Medicare and Medicaid.

Citations and references

• La. R.S. 47:297(H) — former Small Town Doctor's Credit, amount, duration, and eligibility conditions
• 2000 U.S. Census data — population facts used in the ruling
• LAC 61:III.101 — Private Letter Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA PLR 03-012

Original ruling text

Page 2
Louisiana Department of Revenue

Private Letter Ruling
Redacted Version
No. 03-012
November 7, 2003
Individual Income Tax
Small Town Doctor’s Credit

This is in reply to your request for a private letter ruling concerning the application of the Small
Town Doctor’s Credit, La. Rev. Stat. Ann. § 47:297(H). Specific clarification of the requirement
that the medical doctor must have relocated from outside of the community Hospital A’s service
area was requested.
Facts
Doctor A completed his medical education from an out of state university in 2002. While
working as a doctor in residency at the out of state university, he was recruited by Hospital A in
City A, Louisiana, to establish and maintain a practice as an orthopedic surgeon. Upon
completion of his residency, Doctor A relocated from out of state to City A, Louisiana in 2002
and established his orthopedic practice. He is a certified medical doctor with an unrestricted
license to practice medicine in Louisiana. He has established his permanent residence and
medical practice in Louisiana and plans to stay. His practice accepts Medicaid and Medicare
payments.
Discussion:
La. Rev. Stat. Ann. § 47:297(H) provides a tax credit to be taken by taxpayers who are certified
medical doctors (M.D.), possess an unrestricted license to practice medicine in Louisiana, accept
Medicaid and Medicare payments, and meet specified conditions for practicing in a rural
community in Louisiana. Effective June 25, 2002, the credit is also available to dentists. The
credit is the lesser of the tax due or $5,000 per tax year, up to a maximum of five years, for each
qualified taxpayer.
Specifically, La. Rev. Stat. Ann. § 47:297(H)(2)(b) provides that the taxpayer shall establish and
maintain, after July 1, 1991, the primary office of his practice within twenty miles of a
community hospital not owned predominantly by other physicians. The statute requires that both
the office and the hospital be located more than twenty miles from the nearest incorporated city
with a population in excess of thirty thousand persons, provided that the medical doctor has
relocated from outside of the service area of the community hospital.
Service areas are determined by the particular hospital. It is the area from which the hospital
receives the majority of its patients. Factors such as geography, road conditions, transportation,
and services provided by the hospital determine the service area.

617 North Third Street
Baton Rouge, Louisiana 70802
225-219-2700 ‚ 225-219-2708 Fax
www.rev.state.la.us

Proposed PLR No. 03-XXX
Page 2 of 2
November 7, 2003
Hospital A is a 168-bed facility. Its primary service area includes the cities of A, B, C, and D.
Its secondary service area includes the cities of E, F, G, H, I, and J.
Hospital A is not owned predominantly by other physicians. Healthcare Company owns Hospital
A. Healthcare Company was founded by an equity investment firm to acquire and develop a
nationwide system of hospitals in non-urban markets.
According to 2000 US Census data, the population of City A is less than 30,000. The nearest
cities with populations in excess of 30,000 are more than 20 miles from City A.
Ruling:
Under the facts provided and necessary assumptions, Doctor A is eligible for the Small Town
Doctor’s Credit. He has relocated from outside the service area of Hospital A. The hospital is
not owned predominantly by other physicians. His office is located within 20 miles of Hospital
A. Both his office and the hospital are more than 20 miles from the nearest city with a
population in excess of 30,000 persons. His practice accepts Medicare and Medicaid payments.
If you have any questions or need additional information, please call Michael Pearson, Senior
Policy Consultant, or Bettye Winham, Revenue Tax Research Analyst, Policy Services Division,
at 225-219-2780.
Sincerely

Cynthia Bridges
Secretary
By:

Bettye Winham
Revenue Tax Research Analyst
Policy Services Division

This correspondence constitutes a private letter ruling (PLR) by the Louisiana Department of Revenue, as provided
for by section 61:III.101 of the Louisiana Administrative Code. A PLR provides guidance to a specific taxpayer at
the taxpayer's request. It is a written statement that applies principles of law to a specific set of facts or a particular
tax situation. A PLR does not have the force and effect of law, and is not binding on the person who requested it or
on any other taxpayer. This PLR is binding on the department only as to the taxpayer to whom it is addressed, and
only if the facts presented were truthful and complete and the transaction was carried out as proposed. It continues
as authority for the department's position unless a subsequent declaratory ruling, rule, court case, or statute
supersedes it.