CHA News Article

Proposed Amendments Clarify Application of Sales Tax on Medical Items for Medicare Part A Patients

The California Department of Tax and Fee Administration (CDTFA) released the attached proposed amendments to Regulation 1503, Hospitals and other Medical Service Facilities, Institutions and Homes for the Care of Persons. Under the current regulation, sales tax does not apply to items sold to a person insured under Medicare Part A; instead, they are considered exempt sales to the United States. The proposed amendments would clarify that medical services facilities — including hospitals — are primarily service providers that generally do not sell the tangible personal property they use or furnish in the provision of medical services to their patients. The proposed regulatory change would further clarify that the sales tax does not apply when property is furnished to a patient insured under Medicare Part A. An interested party meeting will be held on Sept. 27 at 10 a.m. in Sacramento; details are included in the proposed amendments. CHA will lead efforts to submit comments, which are due Oct. 12, on hospitals’ behalf and will meet with the CDTFA director. CHA will keep members informed of the process via CHA News.