CHA News

CHA Comments on Changes to Sales and Use Tax for Hospitals

Proposed regulations would change application of sales tax on items for Medicare Part A patients

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On Jan. 16, CHA submitted a comment letter to the California Department of Tax and Fee Administration (CDTFA) on its proposed amendments that would clarify how sales and use tax is applied to medical items furnished by hospitals.

In the letter, CHA urges CDTFA not to change its current policy that treats hospitals as retailers and to convene a small workgroup to fully understand the ramifications of the proposed changes. CHA also identifies complexities that would result from the proposal as currently written, including that it would require auditors to use confidential patient medical records to determine taxability.

CDTFA has acknowledged it will not apply the proposed rule to hospital claims for services rendered prior to Jan. 1, and will resume processing all claims that have been on hold. Should CDTFA finalize these changes, CHA also urges CDTFA to replace the proposal’s effective date of Jan. 1, 2019, with a prospective date so that hospitals have time to prepare.