Did the physician in Louisiana PLR 10-023 qualify for the small town doctor income tax credit?

Plain-English summary

Louisiana Private Letter Ruling 10-023 concluded that the redacted physician qualified for the small town doctor credit under the facts provided.

The physician was licensed in Louisiana, maintained her primary practice office inside a qualifying hospital, lived and practiced far enough from the nearest incorporated city with more than 30,000 residents, had relocated from outside the hospital service area, intended to practice for at least three years, and accepted Medicaid and Medicare.

Physician and practice facts

Dr. A was a board-certified physician who had worked outside Louisiana before relocating to City B in 2008. She was licensed in Louisiana and intended to remain in the state.

Her home and primary office were in City B, whose estimated 2008 population was 9,155. Her office was located inside Hospital D, a privately owned hospital that was not predominantly physician-owned.

She saw patients and performed surgeries at both Hospital D and nonprofit Hospital E, also in City B.

Distance and population requirements

La. R.S. 47:297(H)(2)(b) required the physician's primary office to be within 20 miles of a qualifying community hospital. Both the office and hospital also had to be more than 20 miles from the nearest incorporated city with more than 30,000 residents.

Dr. A's office was inside Hospital D. Her home and office were within 20 miles of Hospitals D and E.

City C was the nearest incorporated city with more than 30,000 residents and was approximately 37 miles from City B. City H was closer, but its estimated population was 27,183, below the statutory threshold.

Other statutory requirements

The ruling found that Dr. A satisfied the remaining cited conditions:

• she was a certified physician with a Louisiana license;
• she had relocated from outside the service areas of the relevant hospitals;
• the ruling's discussion said she had practiced in City B since 2007 for purposes of the three-year requirement; and
• she accepted Medicaid and Medicare payments for services.

The published text contains a date inconsistency: its factual scenario says Dr. A relocated to City B in 2008, while the discussion says she had practiced there since 2007. The Department nevertheless concluded that she qualified.

Her employer's main office was in City C, but Dr. A's own office was not there and she did not see patients there. The ruling focused on her primary practice office and qualifying hospital locations.

Ruling

Based on the facts presented, the Department ruled that Dr. A qualified for the small town doctor credit.

The conclusion was specific to the redacted physician and depended on the accuracy and completeness of the submitted facts.

What this means for you

Physicians considering a rural practice

The ruling's test looked beyond the town's size. Licensing, office-to-hospital distance, distance from a city above the population threshold, prior service area, practice duration, and Medicaid/Medicare participation all mattered.

Hospitals and physician employers

The location of the physician's actual primary practice office mattered more than the employer's main-office address under the facts described.

Accountants and tax professionals

Document the relevant census population, incorporated-city boundaries, mileage, hospital ownership, physician relocation, practice dates, and payer participation.

Common questions

Q: Did the physician's office have to be near a community hospital?

A: Yes. The cited statute required the primary office to be within 20 miles, and Dr. A's office was inside Hospital D.

Q: Did a nearby city with 27,183 residents disqualify her?

A: No. The statutory threshold in the ruling was a population exceeding 30,000.

Q: Did the employer's office in the larger city control?

A: No. Dr. A did not maintain her office or see patients there; her primary office was in City B.

Q: Can another physician rely on this PLR?

A: No. It bound the Department only for Dr. A and the truthful, complete facts presented.

Citations and references

• La. R.S. 47:297(H)(2)(a) — Louisiana medical-license requirement
• La. R.S. 47:297(H)(2)(b) — qualifying office, hospital ownership, distance, and relocation rules
• La. R.S. 47:297(H)(2)(d) — agreement to practice for at least three years
• La. R.S. 47:297(H)(2)(e) — acceptance of Medicaid and Medicare
• LAC 61:III.101 — Private Letter Ruling authority and reliance limits

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA PLR 10-023

Original ruling text

OX
BOBBY JINDAL pp as C4 CYNTHIA BRIDGES
Governor “Rem Secretary

State of Loutstana
Department of Revenue

Private Letter Ruling
Redacted Version
No. 10-023

Individual Income Tax
Qualification for the Small Town Doctor Credit
October 20, 2010

This is in reply to your request for a private letter ruling on behalf of Dr. A seeking a determination as to
whether Dr. A qualifies for the small town doctor credit.

Factual Scenario
You provided these facts:

Dr. A is a board certified physician who completed her education and was working as a physician outside of
Louisiana in 2007. Dr. A was practicing medicine outside of the service areas of all the hospitals referred to
below in 2007.

Dr. A’s residence and office where she practices medicine are located in City B, Louisiana. According to
census estimates, the 2008 population of City B, Louisiana was 9,155.

The nearest incorporated city with a population over 30,000 is City C, which is approximately 37 miles from
City B.

Hospital D is a privately owned hospital that is not predominantly owned by physicians. Dr. A’s office is
located in Hospital D. Hospital D is located in City B, Louisiana. Dr. A sees patients and performs surgeries
at Hospital D.

Hospital E is a nonprofit hospital formed by the Parish F Police Jury. Hospital E is located in City B,
Louisiana. Dr. A sees patients and performs surgeries at Hospital E.

Dr. A is an employee of Company G. Company G’s main office is located in City C, Louisiana. Dr. A’s
office is not in Company G. Dr. A does not see patients at Company G.

In 2008, Dr. A relocated to City B, Louisiana from out of state and took a job as an employee of Company
G. Dr. A practices medicine in an office located in Hospital D in City B, Louisiana.

Dr. A intends to remain in Louisiana.
Dr. A is licensed to practice medicine in Louisiana.

Dr. A performs surgeries and other procedures at both Hospital D and Hospital E. Both hospitals are
located in City B.

Dr. A’s office and home in City B, Louisiana are less than twenty miles from Hospital D and Hospital E.Dr.
A’s home, office, Hospital D, and Hospital E are all more than twenty miles away from the closest
incorporated city of greater than 30,000, which is City C, Louisiana. City C, Louisiana is approximately 37
miles from City B, Louisiana.

Contributing to a better gualily of life.

617 North Third Street, Post Office Box 44098, Baton Rouge, Louisiana 70804-4098 @ (225) 219-2780 @ Fax (225) 219-2759 e TDD (225) 219-2114
www.revenue.louisiana.gov

Private Letter Ruling No. 10-023
Redacted Version

Page 2 of 3

City H, Louisiana is closer to City B, Louisiana than is City C. According to census estimates, the 2008
population of City H, Louisiana was 27,183. The border of incorporated City H, Louisiana is less than twenty
miles from the border of incorporated City B, Louisiana. Dr. A’s home and Hospital E are more than twenty
miles from the border of incorporated City H, Louisiana. Dr. A’s office and Hospital D are exactly twenty
miles from the border of incorporated City H, Louisiana.

Dr. A, Hospital D, Hospital E, and Company G all accept Medicaid and Medicare payments.
Ruling Request

You have requested a ruling as to whether Dr. A qualifies for the small town doctor credit.
Discussion

Louisiana Revised Statute 47:297(H)(2)(a) provides that in order to qualify for the small town doctor credit,
the taxpayer must “Be a certified medical doctor possessing an unrestricted license from this state to practice
medicine ...” According to the facts provided, Dr. A is a board certified physician practicing medicine in
City B, Louisiana.

Louisiana Revised Statute 47:297(H)(2)(b) provides that “If a certified medical doctor, 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, and both the office and the hospital shall 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 shall have relocated from outside of the service area of the community hospital.”
According to the facts provided, the primary office of Dr. A is located in Hospital D, a hospital not owned
predominantly by other physicians. Both Dr. A’s office and Hospital D are located more than twenty miles
from the nearest incorporated city with a population in excess of thirty thousand persons, which in this case
is City C, Louisiana. Dr. A relocated from outside of Louisiana in 2007.

Louisiana Revised Statute 47:297(H)(2)(d) provides that the certified medical doctor must “Agree to practice
... for a period of not less than three years.” Dr. A has been practicing medicine in City B, Louisiana since
2007.

Louisiana Revised Statute 47:297(H)(2)(e) provides that the certified medical doctor must “Accept Medicaid
and Medicare payments for services rendered.” According to the facts provided, Dr. A accepts Medicaid and
Medicare payments for services rendered.

Ruling
Based on the facts provided, Dr. A qualifies for the small town doctor credit.

If you have any questions or need additional information, please call Vanessa LaFleur, Director, or William E.
Little, Attorney, Policy Services Division, at 219-2780.

Sincerely,

Cynthia Bridges
Secretary
By:

William E. Little
Attorney
Policy Services Division

This correspondence constitutes a private letter ruling (PLR) by the Louisiana Department of Revenue, as provided for
by section 61:11.101 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.