Louisiana ~ Sales and Use Tax: Dialysis Clinic’s Purchases of Drugs Administered to Medicare Patients Not Exempt

The operator of a dialysis facility did not qualify for a Louisiana local sales tax exemption or exclusion for its purchases of prescription drugs from a pharmaceutical vendor which were administered to Medicare patients at its facility.

The drug purchases did not qualify for the local tax exclusion under Sec. 47:301(10)(u) for sales of tangible personal property made “under the provisions of Medicare” because Medicare was not a party to or pay for the drug transactions. The drug purchases, price, vendor, and payment of sales tax were not controlled or governed under the provisions of Medicare.

The drug purchases also did not qualify for the local sales tax exemption under Sec. 47:337.9(F) for prescription drugs “purchased through or pursuant to a Medicare Part B and D plan” because no Plan participant was a party to the sales and the transactions were not paid for by Medicare. The exemption did not apply to bulk drug sales between a dialysis clinic and a vendor for drugs administered to all dialysis patients, including both Medicare and non-Medicare patients. Medicare provisions played no part in determining which drugs were purchased, which vendor was used, what price was paid, or whether sales tax was charged.

Finally, the taxpayer was not entitled to a tax refund under Sec. 47:315.3 because transactions did not involve Medicare patients or direct payment by Medicare.

Crowe v. Bio-Medical Application of Louisiana, LLC, Court of Appeal of Louisiana, First Circuit, Nos. 2014 CA 0917 and 0918, June 3, 2016, ¶202-726; Crowe v. Bio-Medical Application of Louisiana, LLC, Court of Appeal of Louisiana, First Circuit, Nos. 2014 CA 0919 and 0920, June 3, 2016, ¶202-727

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