Vague laws vex providers

Thursday, January 31, 2008

PORTLAND, Maine - Maine has begun auditing providers to collect what it claims are unpaid taxes owed on certain types of HME. Providers are finding the process taxing, to say the least.
"We just finished the audit," said Amy Kelly, vice president and owner of Prime Care in Wells. "They want to collect sales tax on prescription items and, industry-wide, that is not the typical practice."
In Maine, mobility aids like walkers and wheelchairs, diabetic supplies and oxygen aren't taxed as they are considered prescription items.
Hospital beds are considered taxable but, especially when billed to Medicare, providers typically don't collect sales tax on them.
"None of us are charging sales tax on hospital beds," said Jim Greatorex, president of Portland-based Black Bear Medical. "They've been at this for months and still haven't given us a clear ruling on hospital beds."
The state's position is that Medicare is paying a benefit--often the rental fee--but isn't tax exempt, leaving providers to try and collect the tax from customers.
Tyrell Hunter, president of Topsham-based Majors Mobility, was audited four years ago and had to pay back $3,000.
"We had a disagreement with the auditor over whether Medicare is tax exempt," she said. "They are not, and that's why we hadn't been collecting it."
Muddying the waters is confusion over use tax and sales tax, said Hunter.
"They are trying to double tax us," she said. "They want us to pay a use tax on (the item) and then charge us a sales tax after 13 months."
The New England Medical Equipment Dealers (NEMED) Association has been monitoring the issue and Greatorex said Maine providers will probably band together to seek resolution on the issue.
"At the end of the day, no matter where this ends, we are hoping to get a clear sales tax law out of this," he said.