Memo Explains Texas Tax Implications of Designated Doctor Exams

Austin, TX (WorkersCompensation.com) -- While it's probably not the first thing that comes to mind when someone says "workers' compensation," tax law is often implicated when insurance carriers pay out on covered bills.

As the Texas Division of Workers' Compensation recently highlighted in a memo, when it comes to medical examinations, sales and use taxes could be involved.

The memo, which was issued in the wake of a Private Letter Ruling from the Texas Comptroller of Public Accounts, emphasized that charges from designated doctor exams under state law are subject to state sales and use tax.

"The Comptroller concluded that designated doctor exams ordered by the Texas Department of Insurance, Division of Workers’ Compensation (DWC) are taxable insurance services," the memo explained. "Designated doctors are responsible for collecting and remitting sales and use tax on charges to workers’ compensation insurance carriers for designated doctor exams."

Neither the state nor the injured employee pay for any portion of a designated doctor exam -- only the carrier does.

What if the paying entity is tax exempt?

"Designated doctors may accept an exemption certificate instead of collecting tax on exams for exempt governmental entities ... such as self-insured political subdivisions or religious, educational, and public service organizations," the memo clarified.

To stay current on Texas rules and regulations as well as all 53 U.S. jurisdictions, visit WorkCompResearch

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