Proposed Amendments to Regulation 1503, Hospitals and Other Medical Facilities, Institutions and Homes for the Care of Persons, and Regulation 1591, Medicines and Medical Devices

The California Department of Tax and Fee Administration (CDTFA) proposes to amend Regulation 1503 to clarify that medical service facilities are generally service providers to their patients and residents, including those insured pursuant to Part A of the Medicare Act, and on and after January 1, 2019, they are only retailers of property furnished in connection with their medical services if they make a separately itemized charge for the property, possession or control of the property passes to the resident or patient or other customer, and their contract with the resident or patient or other customer specifically provides that title to the property passes to the resident or patient or other customer. The CDTFA proposes to amend Regulation 1591 to clarify that sales of medicines, devices, appliances and supplies for which payment is made under Part A of the Medicare Act qualify as exempt sales to the United States Government “to the extent allowed pursuant to Regulation 1503.”