Medical billing taxability changes

Starting in 2020, the Comptroller is changing its policy relating to the taxability of medical billing services.  While insurance services have always been subject to Texas sales tax, the Comptroller previously took the position that medical billing services happen before any insurance claims are submitted, and therefore are not taxable insurance services.  Effective January 1, 2020, the Comptroller will be taking the opposite position – preparation of a claim is an inherent part of the insurance claim process and medical billing services to prepare a medical insurance claim are taxable insurance services.

If you outsource your medical billing services, you should be prepared for your service provider to begin charging you sales tax on such services.  If your service provider fails to charge tax, you should consider accruing and remitting use tax on your purchases of medical billing services, as you will ultimately be liable for such taxes in the event of an audit.


Have questions about if your services are going to be charged? Contact Jon today to get the answers you need.


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