Four Corners Healthcare Corp

20-06

On August 29, 2017, the Department denied the Taxpayer’s application for refund for gross receipts tax in the total amount of $1,325,343.10. On or about November 22, 2017, Taxpayer submitted a formal protest on the denial. At issue in the protest was whether gross receipts that were paid for by a federal program for medical services that was not Medicare could be deducted and whether the Taxpayer was entitled to another deduction for providing medical services provided by a healthcare practitioner. The Taxpayer is a home health agency that provided home health services for individuals who were receiving compensation and benefits under the Energy Employees Occupational Illness Compensation Program Act (EEOICPA), a program that was created for individuals who developed health problems related to radiation exposure while working for the Department of Energy. The services received by these individuals under the EEOICPA were paid for by the United States Department of Labor. The Taxpayer argued that the receipts that were paid by this program for home health services were deductible because the money was paid by a federal agency and the individuals were eligible Medicare beneficiaries, even though the services were not being paid by Medicare. However, the Hearing Officer determined this was not a complete reading of the statute which states also that the individual receive the services “pursuant to the provisions of Title 18 of the federal Social Security Act.” This means that the individual is more than simply a Medicare beneficiary but is receiving services that are paid by Medicare. The Taxpayer argued that they had received an email from the Department in response to an inquiry about taking this deduction which stated that these receipts were deductible. But this email was not the same as a legally binding ruling issued by the Department, and the Hearing Officer concluded that the response was made without an entire understanding of all of the facts. The Taxpayer also argued that the receipts would be deductible under a different law which allows for receipts to be deducted when the services are paid by an insurance program. But the receipts are deductible only when the services are performed by someone who meets the definition of a healthcare practitioner. The Taxpayer, though contracting with others that may have met this definition, was not a healthcare practitioner itself. This having been decided, the protest was denied.