U.S. Supreme Court Declines to Review Tax on Medical Equipment Sold to Federally Insured Customers

The U.S. Supreme Court has denied a taxpayer’s request to review a decision by the Mississippi Supreme Court which held that a Mississippi law requiring a medical equipment retailer to pay sales tax on equipment sold to customers covered by the Federal Employees Health Benefits Plan (FEHBP) was not preempted by a federal law that prohibits states from levying a tax directly or indirectly on insurance carriers who participate in the FEHBP. The Mississippi tax was not preempted by the federal law because it was not a direct or indirect tax on a carrier or an underwriting or plan administration subcontractor with respect to any payment made from the health benefits fund. The taxpayer was a retailer of medical equipment and not “a carrier or an underwriting or plan administration subcontractor of an approved health benefits plan.” As a result, the state did not directly impose the tax on one of the prohibited entities. Additionally, since the state did not require that the tax be charged to its customers or their insurance carriers, or that it be reimbursed by the fund, the state did not indirectly tax a prohibited entity with respect to a payment from the fund. (Mobility Medical, Inc. v. Mississippi Department of Revenue, U.S. Supreme Court, Dkt. No. 13-651, petition for certiorari denied March 24, 2014)

Posted on April 29, 2014