Sales tax update: Mississippi succeeds, S.C. Suffers another setback

Thursday, October 22, 2009

JACKSON, Miss. – Mississippi hasn’t taxed HME for years, but it has been taxing co-pays.

That’s until the Mississippi Association of Medical Equipment Suppliers (MAMES) succeeded this summer in getting a bill passed that requires the state to stop taxing HME providers 7% on the 20% co-pays they collect from Medicare beneficiaries.

“We’ve tried, over the years, to get clarification from the state tax commission, but it fell on deaf ears,” said Danyelle Carroll, vice president of MAMES. “This clarifies that Medicare is 100% exempt from the sales tax, including co-pays.”

The law went into effect July 1. It applies to co-pays where Medicare is the primary payer.

Over the years, HME providers have had to pay anywhere from $6,000 to $40,000 in taxes on co-pays per year, Carroll said.

Lawmakers were shocked when MAMES leadership approached them to clarify the sales tax rules for HME, Carroll said.

“They were like, ‘You’re kidding me; you’re being audited on co-pays?’” she said. “They didn’t think that was possible.”

Even with support in the legislature, the bill wasn’t a sure thing, Carroll said.

“Mississippi is in a budget crunch,” she said. “But no one could deny the original intent of the exemption.”

South Carolina

The South Carolina Medical Equipment Services Association (SCMESA) suffered a setback recently when a state Supreme Court overruled a lower court’s decision to exempt CPAPs, BiPAPs, vents, nebulizers and enteral nutrition from the state’s 6% sales tax.

But SCMESA’s not ready to throw in the towel, says Bobby Horton, executive director.

“A new legislative session starts in January, and we plan to have two lobbyists in Jackson to push the exemption,” he said.