Does a company that retrieves and delivers a patient's confidential medical records to insurers, attorneys, or the patient have to charge New York sales tax on its fee?

Plain-English summary

Release of Information Solutions, Inc. contracts with hospitals and doctors' offices to handle every request for a specific patient's medical records — whether the request comes from the patient, an insurance company, another provider, or an attorney. Its New York-based "Site Coordinators" visit healthcare facilities weekly to scan and transmit requests to the company's Massachusetts office, where staff approve or reject each one under HIPAA and other privacy rules, then retrieve, digitize, and deliver the specific patient's records — electronically or by mail — directly from Massachusetts. The company never compiles, alters, or retains any records; it deletes everything shortly after each request is fulfilled and must redo the entire retrieval (and recharge) even for a repeat request on the same patient.

The Department ruled this service is NOT subject to New York sales tax. It's not a sale of tangible personal property, and it's not a taxable "information service" either, because the personal/individual-information exclusion in the information-services tax specifically carves out confidential, patient-specific records that aren't compiled into reports for other customers — this company retrieves one identified patient's exact records for an authorized requester, nothing more. Because the underlying service isn't taxable, the company isn't even required to register as a sales tax vendor for these transactions, and questions about in-state vs. out-of-state delivery become moot.

The Department drew a clear line, though: selling GENERAL or STATISTICAL health information — de-identified data pulled from medical files and compiled into reports, or anything sourced from a publicly available database — would be a taxable information service, unlike retrieving one patient's own confidential file. And a separately stated charge for producing extra paper copies of records is a taxable sale of tangible personal property when delivered in New York.

What this means for you

Medical-records retrieval and release-of-information companies

Fees for retrieving and delivering an identified patient's own confidential records — to the patient, an insurer, an attorney, or another authorized requester — are not subject to New York sales tax, as long as you're not compiling the information into reports sold to other customers. But if you separately charge for extra paper copies, that specific charge is taxable, and you may need to register as a vendor just for that piece.

Health-data and analytics companies

If your business instead compiles de-identified or statistical health information into reports for sale, or resells information from a public database, that's a taxable "information service" under a different line of Department precedent — don't assume this ruling's exemption extends to compiled or aggregated data products.

Accountants and tax professionals

The controlling distinction is personal/individual information (excluded from tax) versus information "substantially incorporated in reports furnished to other persons" (taxable). Confirm which side of that line your client's product falls on before applying this ruling.

Common questions

Q: Do I owe sales tax on fees for retrieving a patient's own medical records?
A: No, as long as the service is limited to obtaining and delivering that specific patient's confidential records to an authorized requester, without compiling the data into reports sold to others.

Q: What if I charge separately for extra paper copies?
A: That charge is a taxable sale of tangible personal property when the copies are delivered in New York.

Q: Would selling statistical or de-identified health data be taxable?
A: Yes — the Department distinguished that from confidential, patient-specific retrieval; selling compiled or public-database-derived health information is a taxable information service.

Q: Can other companies rely on this Advisory Opinion?
A: No. It binds the Department only for the petitioner and the exact facts described; other businesses should confirm their own facts match before relying on it.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(8)(i) (vendor)
• Tax Law § 1105(c)(1) (information services; personal/individual exclusion)
• Tax Law § 1105(c)(9) (telephony-delivered services)
• 20 NYCRR 525.2(a)(2)-(3) (transactions tax; destination tax)

Prior rulings/cases referenced:

• Weitz & Luxenberg, P.C., TSB-A-06(7)S
• Immediate Medical Records, Inc., TSB-A-92(7)S
• Matter of Hooper Holmes v Wetzler, 152 AD2d 871
• State Farm Mutual Automobile Insurance Co., TSB-A-04(29)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2007.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a07_10s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-07(10)S
Sales Tax
April 5, 2007

Office of Tax Policy Analysis
Technical Services Division
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S040330A

On March 30, 2004, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Release of Information Solutions, Inc., 27 Mica Lane, Suite 208,
Wellesley, MA 02481.
The issues raised by Petitioner, Release of Information Solutions, Inc., under the facts
presented, are:

1. Whether Petitioner’s charges for services and provision of medical records are subject
   to sales tax.
2. Whether Petitioner is a vendor required to collect sales tax.
3. Whether taxable charges, if any, are limited to services and medical records
   distributed to customers within New York State.
4. What is the proper application of sales tax when the requesting party (such as an
   insurance company) has locations both in-state and out-of-state.
   Petitioner submitted the following facts as the basis for this Advisory Opinion.
   Petitioner, a Delaware corporation, is engaged in the business of collecting and furnishing
   healthcare information.
   Petitioner enters into agreements with various physicians, hospitals, and other healthcare
   facilities (collectively, “Healthcare Facilities”). These agreements require Petitioner to respond
   to all requests for medical records, data, and information relating to particular patients
   (collectively, “Medical Records”) that are made by or for patients, insurance companies,
   physicians, other health care providers, payers, attorneys, and others (collectively, “Requesting
   Parties”). In turn, when Healthcare Facilities receive requests for Medical Records, they are
   obligated to refer the Requesting Parties to Petitioner. The Requesting Parties are Petitioner’s
   customers.
   Petitioner employs Site Coordinators to respond to requests for Medical Records. Each
   Site Coordinator has a regular group of Healthcare Facilities sites, located in New York, that he
   or she visits on a weekly basis. While at a Healthcare Facility, the Site Coordinator digitally
   scans a copy of any requests for Medical Records that a Requesting Party has submitted. Then
   Petitioner’s Site Coordinators electronically transmit the requests to Petitioner’s Massachusetts

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office, where the request is read online and is either approved or rejected. A request may be
rejected if, for example, fulfillment would violate federal or state laws.
If the request is approved, it is converted into a work order that is made available online
to the Site Coordinator in New York. The Site Coordinator then follows up on the work order to
fulfill the request. The work order may require the Site Coordinator to digitally scan the Medical
Records that are responsive to the request. Alternatively, the work order may instruct the Site
Coordinator to use the Healthcare Facility’s own electronic medical records system. In either
event, digitized Medical Records are electronically received by Petitioner’s Massachusetts office.
In some cases, Petitioner has its own record-access privileges and can directly download Medical
Records from the Healthcare Facility without any onsite intervention of the Site Coordinator.
After obtaining a digital copy of a requested Medical Record, Petitioner produces
whatever form – electronic file or paper copy – that the Requesting Party prefers. All of these
activities occur in the Massachusetts office, which is Petitioner’s only office location. Petitioner
furnishes the Medical Records by electronically transmitting the digital records or mailing the
printed copy. In both cases, Petitioner sends the Medical Records from its Massachusetts office
directly to its customers. Petitioner’s customers are located in all 50 states.
Billing is also done from Petitioner’s Massachusetts office. This office is where
Petitioner prepares invoices and sends them to customers. Customers may telephone their
requests to Petitioner’s Massachusetts office, which is where all work orders are either accepted
or rejected. Petitioner has no New York office. Petitioner’s New York activities are limited to
the Site Coordinator’s visits to Healthcare Facilities and their scans and transmissions of both
digital requests and digitized Medical Records.
The amount charged varies depending upon the Requesting Party, the quantity of medical
records requested, and the type of information requested. For example, state law generally limits
the amount that may be charged for patient Medical Records supplied to the patient, while the
amount that can be charged to insurance companies typically is not capped. State law may
establish maximum charges for copying or duplicating certain items, but not others.
All of the Medical Records that Petitioner gathers, collects, scans, digitizes, transmits,
and prints are confidential and protected under numerous privacy laws, including the Health
Insurance Portability and Accountability Act (HIPAA). Each response to a request for Medical
Records relates to only one patient. The patient is the legal owner of the Medical Records. The
confidentiality and privacy laws and the patient’s retention of all property rights to Medical
Records preclude Petitioner from compiling any of the Medical Records. Petitioner, therefore,
does not (and cannot) make any such compilations. Applicable law likewise prohibits Petitioner
from altering the Medical Records in any way. Each request for Medical Records and each
response by Petitioner is unique and must be held in strict confidence.

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Petitioner does not retain any Medical Records that it has gathered, collected, scanned,
digitized, transmitted, or printed. Petitioner regularly and systematically deletes all electronic
files and destroys all paper copies immediately after furnishing the medical records to the
Requesting Parties. In the unusual case, when a New York facility’s Medical Records are not
furnished to a Requesting Party (e.g., because of non-payment), Petitioner automatically deletes
all electronic files and all documents relating to the request after 30 days. Petitioner cannot later
use any previously obtained and furnished Medical Records. Petitioner is prohibited from
disclosing any Medical Records except pursuant to a specific, authorized request.
Petitioner makes no further use of and receives no further benefit from the Medical
Records beyond the Requesting Party’s payment for the single request made. If the Medical
Records subsequently were requested by another Requesting Party, Petitioner would need to
again go through the entire process of obtaining and furnishing such Medical Records and fully
charging for such services. Even if the request for Medical Records were from the same
Requesting Party that had made the initial request for such records, the same process and charge
would apply to the subsequent request. In no case would Petitioner be able to merely open an
old electronic file and send it again. Petitioner’s document deletion policy virtually eliminates
the risk of unauthorized disclosures or other violations of applicable laws. This protects
Petitioner from the huge exposure to liability that otherwise could result from storing and
retaining the Medical Records.
Applicable law and regulations
Section 1101(b) of the Tax Law provides, in part:
When used in this article for the purposes of the taxes imposed by subdivisions
(a), (b), (c) and (d) of section eleven hundred five and by section eleven hundred ten, the
following terms shall mean:
*

*

*

(8) Vendor. (i) The term “vendor” includes:
(A) A person making sales of tangible personal property or services, the receipts
from which are taxed by this article; (Emphasis added)
Section 1105 of the Tax Law provides, in part:
On and after June first, nineteen hundred seventy-one, there is hereby imposed
and there shall be paid a tax of four percent upon:
(a) The receipts from every retail sale of tangible personal property, except as
otherwise provided in this article.

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*

*

*

(c) The receipts from every sale, except for resale, of the following services:
(1) The furnishing of information by printed, mimeographed or multigraphed
matter or by duplicating written or printed matter in any other manner, including the
services of collecting, compiling or analyzing information of any kind or nature and
furnishing reports thereof to other persons, but excluding the furnishing of information
which is personal or individual in nature and which is not or may not be substantially
incorporated in reports furnished to other persons, . . . .
*

*

*

(9)(i) The furnishing or provision of an entertainment service or of an information
service (but not an information service subject to tax under paragraph one of this
subdivision), which is furnished, provided, or delivered by means of telephony or
telegraphy or telephone or telegraph service (whether intrastate or interstate) of whatever
nature, such as entertainment or information services provided through 800 or 900
numbers or mass announcement services or interactive information network services.
Provided, however, that in no event (i) shall the furnishing or provision of an information
service be taxed under this paragraph unless it would otherwise be subject to taxation
under paragraph one of this subdivision if it were furnished by printed, mimeographed or
multigraphed matter or by duplicating written or printed matter in any other manner nor
(ii) shall the provision of cable television service to customers be taxed under this
paragraph.
Section 525.2 (a) of the Sales and Use Tax Regulations provides, in part:
(2) Except as specifically provided otherwise, the sales tax is a “transactions tax”,
with the liability for the tax occurring at the time of the transaction. Generally, a taxed
transaction is an act resulting in the receipt of consideration for the transfer of title to or
possession of tangible personal property or for the rendition of an enumerated service.
The time or method of payment is generally immaterial, since the tax becomes due at the
time of transfer of title to or possession of (or both) the property or the rendition of such
service . . . .
(3) Except as specifically provided otherwise, the sales tax is a “destination tax”.
The point of delivery or point at which possession is transferred by the vendor to the
purchaser, or the purchaser's designee, controls both the tax incidence and the tax rate.
(Emphasis added)

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Opinion
Petitioner is engaged in the business of collecting and furnishing healthcare information
in response to requests by patients, insurance companies, physicians, other health care providers
and payers, attorneys, and others (Requesting Parties) for medical records, data, and information
(Medical Records) relating to particular patients. Petitioner enters into agreements with various
physicians, hospitals, and other healthcare facilities (Healthcare Facilities) to respond to all
requests for Medical Records.
The records provided consist of confidential medical records and other confidential
information that is not available from any publicly accessible source. Such records cannot be
obtained by Petitioner unless the appropriate release authorizations have been signed by the
person to whom the records pertain.
Petitioner employs Site Coordinators to respond to the requests for Medical Records.
The requests are reviewed in Petitioner’s Massachusetts office and are either approved or
rejected by staff there. If a request is approved, it is converted into a work order that is made
available online to the Site Coordinator. The Site Coordinator then follows up on the work order
to fulfill the request. The Site Coordinator electronically transmits digitized Medical Records to
Petitioner’s Massachusetts office, where Petitioner furnishes the Medical Records to the
Requesting Party by electronically transmitting digital records or mailing printed copies. Billing
is also done from Petitioner’s Massachusetts office, where Petitioner prepares invoices and sends
them to Requesting Parties.
Petitioner does not alter or retain for further use any Medical Records that it has gathered,
collected, scanned, digitized, transmitted, or printed. Petitioner regularly and systematically
deletes all electronic files and destroys all paper copies immediately after furnishing them to the
Requesting Parties.
Section 1105(c) of the Tax Law imposes sales tax on receipts from the sale, except for
resale, of certain enumerated services. Sections 1105(c)(1) and 1105(c)(9) impose tax on
information services unless the information furnished is personal or individual in nature and the
information is not or may not be substantially incorporated in reports furnished to other persons.
Petitioner is retrieving specifically identified confidential records on behalf of a
Requesting Party who has been authorized to receive the records by the person to whom the
records pertain. Therefore, Petitioner’s services are not services subject to sales tax under
section 1105(c)(1) or 1105(c)(9) of the Tax Law. The retrieval and delivery of such confidential
records constitutes neither the sale of tangible personal property taxable under section 1105(a) of
the Tax Law nor the sale of a service taxable under section 1105(c) of the Tax Law. See Weitz &
Luxenberg, P.C., Adv Op Comm T & F, March 3, 2006, TSB-A-06(7)S; Immediate Medical
Records, Inc., Adv Op Comm T & F, January 31, 1992, TSB-A-92(7)S. Petitioner's sales of

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record retrieval services, therefore, as described in this Opinion, do not make Petitioner a vendor
for sales tax purposes. See section 1101(b)(8)(i) of the Tax Law.
The sale of general information which does not identify specific patients, transcribed
from files of medical practitioners, or the sale of analyses of statistical or generic (not patient­
specific) information gleaned from medical files might be considered the sale of a taxable
information service under section 1105(c)(1) of the Tax Law. However, obtaining such
information is clearly distinguishable from Petitioner’s service of providing to the patient (or
designee) exact copies of an identified patient’s confidential records. In addition, the sale of
information derived from records that are generally available to the public is distinguishable
from the present case. The sale of such public database information would be taxable under
section 1105(c)(1) of the Tax Law. See Matter of Hooper Holmes v Wetzler, 152 AD2d 871, lv
den, 75 NY2d 706; State Farm Mutual Automobile Insurance Co., Adv Op Comm T & F,
December 28, 2004, TSB-A-04(29)S. It should also be noted that a separately stated charge by
Petitioner for making additional paper copies of records would constitute a receipt from the sale
of tangible personal property subject to sales tax under section 1105(a) of the Tax Law when
delivered in New York State and might require Petitioner to register as a vendor.
Since Petitioner’s record retrieval services are not subject to sales tax, issues 3 and 4 are
moot.

DATED: April 5, 2007

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.