Texas physicians' potential liability under the state's new
franchise tax got a bit smaller in March thanks to revised
developed at the urging of TMA.
The revised rules to be adopted by Texas Comptroller Susan Combs
will allow physicians to deduct copayments and deductibles paid by
Medicare, Medicaid, and other patients from taxable revenues. The
revisions also will allow physicians to deduct expenses, such as
employee compensation and benefits or cost of goods sold, that are
associated with Medicare, Medicaid, and other excluded revenue.
Under rules published Dec. 28, physicians were allowed to
exclude payments from Medicare, Medicaid, TRICARE, the Children's
Health Insurance Program, and workers' compensation plans from
their taxable revenue but would have had to pay tax on deductibles
and copayments received from patients covered under those
TMA had argued that disallowing exclusion of deductibles and
copayments from taxable revenue violated legislative intent. State
Rep. John Otto (R-Dayton) also wrote a letter to Comptroller Combs
stating that disallowing exclusion of compensation costs and cost
of goods sold from taxable revenue was contrary to legislative
TMA still is working to resolve several other concerns with the
proposed rules, including disallowing exclusion of compensation
expenses related to uncompensated care and a provision that states
that any partial payment renders a service ineligible for the
uncompensated care exclusion.
Franchise tax returns for 2007 will be due in May.
, March 17, 2008