Sales tax has to be charged in Texas if a Contracted biller does private pay collections?


I am a new owner of a medical billing business. I was recently told by a prospective client that her current contracted biller does not handle private pay collections because she (the biller) would have to charge sales tax. Does this sound accurate? I am in Texas.


According to the publication on the Texas state Comptroller Site for taxable services, the only thing I could find is the mention of Debt Collection that sayes:

"Any activity performed for consideration to collect or adjust a delinquent debt, to collect or adjust a claim, or to repossess property subject to a claim, including activity performed in furtherance of the satisfaction or compromise of a debt or claim."

This may be where the prospective client or their current billing service is getting this.

I haven't heard of this being applied to private payments before for a health care provider.

You may want to contact the Texas State Comptrollers office here and and ask them about this particular service or situation. I know some state tax agencies like ours (Alabama) are very helpful in answering these type of questions.

I'll also post on the site so others can comment on their experience.

Thanks for the question.

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Sep 26, 2011
Thanks, still a question, though.
by: Anonymous

Thanks! Did you mean by the quote above that charging sales tax is required?

Answer - The wording in the quotes is taken directly from the Texas state Comptrollers website describing debt collection. The way I understand that is it only applies to delinquent debts. But you may want to ask the Texas state Comptroller directly and see what their response is. Hope this helps - Thanks again!

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