Texas: Medical Billing Services Are Taxable Effective October 1, 2021

April 2020

Summary

On March 19, 2020, the Texas Comptroller issued guidance superseding previously issued guidance.  The new guidance extends the effective date on taxing medical billing services from April 1, 2020, to October 1, 2021.

Effective October 1, 2021, Texas will begin prospectively treating medical billing services as taxable insurance services.  The original effective date of the change in agency policy was January 1, 2020.  However, the state’s Comptroller extended the effective date to October 1, 2021.
 

Details

On March 19, 2020, the Texas Comptroller of Public Accounts issued a memo, STAR Accession No. 202003007L, on the sales taxability of “medical billing services.”  The memo is a notification of a change in agency policy regarding the taxability of medical billing services.  Effective October 1, 2021, medical billing services, including those performed prior to submitting a claim to an insurance company, to provide additional information, or to adjust a submitted billing, are now considered taxable insurance services for sales and use tax purposes in Texas.
 
Texas Tax Code Section 151.0101 includes “insurance services” on the list of taxable enumerated services.  According to the Comptroller’s memo, neither the statute nor Texas rules specifically address medical billing services.  As such, the Comptroller’s office is providing notice that it does consider medical billing services to fall under the umbrella of taxable insurance services.
 
The Comptroller acknowledges that this is a change to prior, long-standing agency policy, dating back to around 2002.



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