health care facility tax
SB 1259 expands definitions under the transaction privilege tax (TPT) statute to allow a non-profit health care facility under construction to qualify for a TPT exemption.
Legislation was passed in 1993 to allow non-profit health care facilities to make purchases that were exempt from TPT. Recently, the Department of Revenue (DOR) has reinterpreted the legislation to include only facilities that hold a valid certification with the Department of Health Services (DHS). In order to be certified by DHS, a facility must be operational, therefore DOR interprets that a facility under construction does not qualify for the TPT exemption.
Current statute only allows an organization to qualify for the exemption if it spends at least 80% of the monies it receives on health and medical related education or charitable services. If an organization sells off an investment that was donated, and then chooses to reinvest it, the organization may not qualify under the TPT exemption. In addition, an organization that sells off an investment and uses it to purchase, construct or lease a health care facility may also not qualify under current statute.