In a recent private letter ruling, the Texas Comptroller of Public Accounts has decided that providers offering pre-litigation medical records retrieval services are subject to pay sales tax on “copy fees”. As JD Supra reports, this ruling pertains specifically to fees pertaining to a number of client charges, among them copying, optical character recognition (OCR), electronic Bates labelling and bookmarking of records.
This determination could impact the way legal professionals approach medical records retrieval and their investments in e-discovery services. Given that such services often entail significant copy fees, this ruling could imply a notable increase in the overall costs of litigation.
While the ruling is from the Texas Comptroller, it is a reminder that the applicability of sales tax to legal processes and services is a continuous topic of discussion among tax authorities in different jurisdictions. Therefore, it is critical that legal professionals, law firms and corporations are aware of these changing tax laws and their potential implications.
It is recommended that firms closely monitor state and federal laws and consult tax professionals, where necessary, to ensure compliance and avoid unexpected fees in the wake of the recent Texas ruling.