W. Va. Code R. § 110-13P-5

Current through Register Vol. XLI, No. 50, December 13, 2024

Section 110-13P-5 - Determination of Tax Base for Application of the Credit

5.1. The Credit shall only be applied against the Health Care Provider Tax payable under W. Va. Code § 11-27-16 and may not be applied against any other gross receipts that may be received by the physician. For purposes of the Credit, the Health Care Provider Tax is imposed on the gross receipts derived by the physician from the provision of physicians' services at the tax rate indicated.

5.2. As indicated in the definition of "gross receipts," the amount subject to the Health Care Provider Tax is the amount received or receivable, whether in cash or in kind. The term "in kind" as used in the definition of "gross proceeds" means the fair market value in money, or of services or property, or the right to receive services, given in lieu of money.

5.2.1. Initially, fair market value is considered to be the amount the Health Care Provider charges for the service rendered. However, the physician may use a lower amount when that lower amount is an agreed upon amount under a plan negotiated at arm's length with an unrelated party that is acting in its own best interests.

5.2.1.a. A physician may not use the fees paid by Medicare or Medicaid as the lowest price paid by a patient for purposes of measuring the fair market value of services provided free or at a reduced charge because the physician has not negotiated for the fees at arm's length.

5.2.2. When the service is provided at a discount because the patient makes a cash payment, the amount subject to the Health Care Provider Tax is the amount actually received.

5.2.3. Unless the physician is providing a pre-employment physical examination for a person seeking employment with the physician, pre-employment physicals are subject to the Health Care Provider Tax; however, if the physician is providing the examination for a person seeking employment with the physician and there is no charge, the service is not subject to the Health Care Provider Tax.

5.2.4. When a physician furnishes services at a reduced price or free of charge to low-income patients, the tax is imposed on the amount actually received. If the services are provided free of charge, there is no tax due since the physician does not receive any payment or service in return.

5.3. A physician may furnish patient services at no charge or at a reduced charge to patients who pay for the service (or part of it) by performing a service. While these situations typically involve the provision of services to employees as part of the employees' compensation package or services to other patients at a discount based on the patient's obligation to provide goods or services in return, they are not limited to only those types of employees or patients.

5.3.1. When a physician furnishes patient services to its employees at a reduced price or free of charge under a policy of self-insurance, the taxable amount is the lowest price at which the physician furnishes similar patient services to other paying patients. This means that the physician may use the lowest price it charges under a plan negotiated at arm's length with an unrelated party that is acting in its own best interests. The plan used for determining the lowest price must still be open for enrollment.

5.3.1.a. When a physician furnishes patient services to his or her employees and is reimbursed through medical insurance the physician purchased for the employees, the physician is required to pay the Health Care Provider Tax on the total of:

5.3.1.a.1. The amount it receives from the health plan company;

5.3.1.a.2. Any co-payments or deductibles it receives from the employee; and

5.3.1.a.3. Any co-payment or deductible waived by the physician as part of the employees' compensation package.

5.3.2. Free chest X-rays provided annually to employees are subject to the Health Care Provider Tax and the amount subject to the tax is the lowest price at which the physician furnishes similar services to other similarly situated paying patients under a contract negotiated at arm's length.

5.3.3. Patient services provided at a reduced price to employees and their family members are subject to tax at the lowest price at which the physician furnishes similar services to other paying patients under a contract negotiated at arm's length.

5.3.4. Mandated vaccinations, tests, and free vaccinations provided to employees free of charge are subject to the Health Care Provider Tax. The taxable amount is the lowest price at which the physician furnishes similar service to other paying patients under a contract negotiated at arm's length.

5.3.5. Services given by a physician to family members or friends are not subject to the Health Care Provider Tax, but similar services provided to friends are subject to the tax if there is a charge or any form of barter involved in the transaction.

5.3.6. When a physician furnishes patient services to other individuals or groups, such as other Health Care Providers, at a reduced price or free of charge, the gross receipts upon which the Health Care Provider Tax is measured is the fair market value of the goods or services provided. The fair market value of the goods or services provided in return by those individuals or groups shall not be considered.

5.3.6.a. A physician may not use the fees paid to it by other Health Care Providers under professional discount agreements for purposes of measuring the fair market value of the services provided, because those fees do not represent the total amount paid for the services provided.

5.4. The Health Care Provider Tax rate applicable to the provision of physicians' services is as follows:

5.4.1. Effective July 1, 2001, this rate is 1.8%;

5.4.2. Effective July 1, 2002, this rate is 1.6%;

5.4.3. Effective July 1, 2003, this rate is 1.4%;

5.4.4. Effective July 1, 2004, this rate is 1.2%;

5.4.5. Effective July 1, 2005, this rate is 1%;

5.4.6. Effective July 1, 2006, this rate is .8%;

5.4.7. Effective July 1, 2007, this rate is .6%;

5.4.8. Effective July 1, 2008, this rate is .4%;

5.4.9. Effective July 1, 2009, this rate is .2%; and

5.4.10. Effective July 1, 2010, the Health Care Provider Tax imposed on providers of physicians' services is eliminated.

W. Va. Code R. § 110-13P-5