Taxman comes calling

Friday, July 31, 2009

JEFFERSON CITY, Mo.--Providers here are crying foul as the state conducts audits to recoup taxes on certain items of durable medical equipment that providers say are exempt.

“In a nutshell, if it’s prescribed by a physician, it should be exempt,” said provider Greg Speiser, owner of Salisbury-based Community Medical Equipment, which is undergoing an audit going back more than three years.

Since 1995, the state has had a law on the books exempting DME like hospital beds, wheelchairs and respiratory equipment from sales tax. However, components like CPAP masks, diabetic test strips and wheelchair batteries are not named specifically.

Unfortunately, that leaves room for interpretation, says provider Patrick Naeger, vice president of Perrysville-based Healthcare Equipment & Supply, who was one of the authors of the original legislation.

“The department is trying to make the case that, because we didn’t specifically mention that certain parts are exempted, they are taxable,” he said. “We would argue that they are not taxable. (For example), the CPAP cannot be used without the mask.”

Repairs are also tax-exempt, but if a part is replaced, or the patient needs to add on to the original equipment as their condition changes, that is taxable, says the state.

“If a person with MS orders a chair that doesn’t have tilt-recline and then later needs to add it, are they calling that a repair?” said Shawn Bright, one of the owners of DW Auto and Home Ability in Columbia, who has been ordered to repay $22,000 in taxes. “That’s not a repair; that’s a new product.”

Naeger and others are working on legislation that would close any remaining holes in the original law, but they will have to wait until the next legislative session in January 2010.