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California Enacts New Tax on Medi-Cal Managed Care Plans


Healthcare

California has enacted legislation that imposes a sales tax at the rate of 3.9375%, effective July 1, 2013 through June 30, 2016, on the retail sale of Medi-Cal health care services sold at retail in the state. Counties, cities, and districts may not impose or add any additional sales or use tax on the gross receipts. This tax is in addition to the Insurance Gross Premiums Tax.  Sellers who sell such health care plans must register for a seller’s permit, report gross receipts, and remit the sales tax. Sellers are instructed to complete an application by September 10, 2013. Any person or entity who enters into a contract with the State Department of Health Care Services (DHCS) to provide health care services, other than an insurer as defined by Revenue and Taxation Code §12003 or a dental managed care plan, is regarded as a seller and must register with the BOE. Online registration is not available. The amount subject to tax is the total amount received by a seller of Medi-Cal managed care plans in premium or capitation payments for the coverage or provision of all health care services, including but not limited to Medi-Cal services. The taxable amount excludes amounts received pursuant to a subcontract with a Medi-Cal managed care plan to provide health care services to Medi-Cal beneficiaries.  Sellers must file returns quarterly by October 31, January 31, April 30, and July 31. Tax return forms and prepayment forms will be provided by the BOE as appropriate. If a seller’s taxable gross receipts average $17,000 or more per month, two prepayments must be made within each quarter (except for the quarterly period July 1, 2013, through September 30, 2013). When a seller registers with the BOE, the BOE will notify the seller of the seller’s filing basis and whether it is necessary to file prepayments.  Click here for an update on this news item. (CA SB 78;Special Notice L-359, California State Board of Equalization, August 2013)

(08/26/2013)
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