Training on Electronic Medical Records System Taxable in Virginia

Monday, October 13th, 2014

A doctor holding a medical record.

The Virginia Tax Commissioner ("Commissioner") recently ruled that a surgery center's purchase of training services with a medical records system was subject to tax.

The taxpayer operated a surgery center as well as retail optical stores. It purchased an electronic medical records system (i.e. software). Along with the system, the taxpayer purchased implementation and training services. The charges for the training were listed as instructor fees in the contract.

Virginia taxes sales of tangible personal property, including hardware and canned software. It does not generally tax sales of professional services such as training. Tax applies to the price of a taxable sale. The price is the total amount for which a taxable item is sold, including any services that are part of the sale.

The Commissioner determined that the training services were part of the sale of the records system. The sale of the training services was a part of the same contract as the sale of the records system. The charge for training was therefore taxable as part of the charge for the records system.

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