Missouri Revenue Dep’t: Information Electronically Sent to Requestors by Out-of-State Company Is Not Subject to Sales Tax

The Missouri Department of Revenue has issued a letter ruling, stating that fees charged by an out-of-state healthcare information provider for medical records that it sends to requestors by fax or email are not liable to sales tax payment since no transfer of tangible of personal property is involved in the transaction.

By way of background, Applicant is an out-of-state corporation that is licensed to do business in Missouri. Applicant collects and provides healthcare information to requestors who wish to obtain copies of medical records.

Applicant enters into contracts with physicians, hospitals, and other healthcare facilities (collectively, Healthcare Providers). The contracts obligate Applicant to respond on behalf of the Healthcare Providers 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, federal and state organizations, and others (collectively, Requesting Parties).

When the Healthcare Providers receive requests for Medical Records, they are obligated to refer the Requesting Parties to Applicant. Applicant does not at any time become the owner of the Healthcare Providers’ records.

The issue here is whether sales tax is imposed on sales of copies of Medical Records Applicant makes on behalf of Healthcare Providers when the copies are transferred via facsimile or email.

Responding in the negative, the Department stated that Section 144.020.1(4), RSMo, imposes a tax upon “every retail sale in this state of tangible personal property.” There is no transfer of tangible personal property when Applicant provides Medical Records via facsimile. Sending records by facsimile is also not one of the enumerated taxable services under Section 144.020.

Section 144.020.1, RSMo, imposes a sales tax “upon every retail sale in this state of tangible personal property” and certain services. Applicant’s sales of Medical Records are not made in a tangible form and the e-mail of the records is not one of the enumerated taxable services.

Therefore, there is no retail sale of tangible personal property nor is there a taxable service, the Department concluded.

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