Minnesota: Tax on DME? In some cases, yes.

Monday, May 24, 2010

SAINT PAUL, Minn. - Bills have been introduced in the House of Representatives and Senate that would stop the state from collecting sales tax on certain HME.

If passed, H.F. 3805 and S.F. 3352 would exempt prescribed, single-use DME, along with certain other medical devices and drugs, from the state's 6% to 7.5% sales tax.

"In Minnesota, you could buy a $500 outfit and you wouldn't get taxed, but you could buy a $500 piece of medical equipment and you would," said Rose Schafhauser, executive director of the Midwest Association for Medical Equipment Services (MAMES). "When we've explained that, it has resonated with lawmakers."

Both bills were introduced in April by state Rep. Tina Leibling and Sen. Thomas Bakk.

The state only recently began collecting sales tax on DME like CPAP masks and enteral nutrition, providers say.

"Some providers are getting audited and taxed retroactively to 2008," said Todd Knorr, a branch manager for Rice Home Medical in Willmar, Minn., and a past Minnesota chairman for MAMES. "Some are getting audited and not taxed at all. It's inconsistent."

To make up for the lost revenue from exempting prescribed, single-use DME from the sales tax, the industry has suggested that the state tax certain non-prescription, single-use DME like shoe inserts.

"In all of our meetings, it's apparent to lawmakers that what's happened is unintended," Schafhauser said. "So we're hopeful."

Even if providers fail to push through the legislation this session, not all is lost, they say.

"The exposure that we've gotten has been awesome," said Al Neumann, owner of Corner Medical in Bloomington, Minn., and Minnesota chairman for MAMES. "The relationships we've developed are invaluable. It lets lawmakers know, 'Hey, we're out there.'"