Sales Tax Articles
Sales Tax State Activity Update - April 2006
New York Delves into Record Retrieval Services
Background
The Petitioner is a law firm located in New York City with offices throughout the United States. The law firm is a mass torts, product liability, and personal injury firm involved in state and national litigation involving asbestos, breast and hip implants, drug recalls, personal injury, and medical malpractice.
The Petitioner hires a record-retrieval service (RRS) to obtain medical records, psychological records and other confidential personal information of the Petitioner's clients for use in conducting its legal activities on behalf of its clients.
The information provided consists of protected medical records and other confidential information that is not available from any publicly accessible source.
RRS performs no investigatory services for Petitioner. The RRS merely requests copies of records from medical institutions or other organizations selected by the Petitioner and provides such institutions and organizations with the appropriate release authorizations from Petitioner's clients. RRS then provides Petitioner with copies of retrieved records. The only services purchased are the record retrieval services. In no event is the Petitioner charged by RRS for compiling, studying, reviewing, or analyzing the requested records.
Opinion
To the extent that RRS is retrieving specifically identified confidential records on behalf of the Petitioner's client, which contain confidential information pertaining to the client, the RRS's services are not services subject to sales tax under section 1105(c) (1) of the Tax Law.
If a medical practitioner or other source provides the RRS with copies of specific confidential records at no charge or for an administrative fee, the service provided by RRS to Petitioner of retrieving such records is not subject to sales tax under section 1105(c) of the Tax Law. Also, an administrative fee charged by the custodian of the client records for the retrieval of such documents and whether or not a certification thereof is included, also does not constitutes neither the sale of tangible personal property taxable under section 1105(a) of the Tax Law. In addition it is not a sale of a service taxable under section 1105(c) of the Tax Law.
However, a separately stated charge by RRS for making additional copies of records constitutes a receipt from the sale of tangible personal property subject to sales tax under section 1105(a) of the Tax Law.
The full text can be viewed on the New York State Department of Taxation and Finance website.
(New York, Department of Taxation and Finance, Advisory Opinion, TSB-A-06(7) S,
03/03/06)
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