Senate Bill No. 280

(By Senator Blatnik)

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[Introduced February 7, 1995; referred to the Committee
on Health and Human Resources; and then to the Committee on Finance.]
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A BILL to amend and reenact section sixteen, article twenty-seven, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, relating to taxation; health care provider taxes; and changing the application of the taxes from gross receipts to the net profits of physicians' services.

Be it enacted by the Legislature of West Virginia:
That section sixteen, article twenty-seven, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted to read as follows:
ARTICLE 27. HEALTH CARE PROVIDER TAXES.

§11-27-16. Imposition of tax on providers of physicians' services.

(a) Imposition of tax. -- For the privilege of engaging or continuing within this state in the business of providing physicians' services, there is hereby levied and shall be collected from every person rendering such service an annual broad-based health care related tax.
(b) Rate and measure of tax. -- The tax imposed in subsection (a) of this section shall be two percent of the gross receipts derived by the taxpayer from furnishing physicians' services in this state: Provided, That upon the effective date of the amendment to this section, the tax imposed in subsection (a) of this section shall be two percent of the net profits derived by the taxpayer from furnishing physicians' services in this state, subject to the prior approval or satisfaction of the United States secretary of health and human services that this tax is imposed uniformly. To that end, upon the enactment of the amendment to this section, the secretary of the department of tax and revenue, shall immediately seek such approval or satisfaction.
(c) Definitions. --
(1) "Gross receipts" means the amount received or receivable, whether in cash or in kind, from patients, third-party payors and others for physicians' services furnished by the provider, including retroactive adjustments under reimbursement agreements with third-party payors, without any deduction for any expenses of any kind: Provided, That accrual basis providers shall be allowed to reduce gross receipts by their contractual allowances, to the extent such allowances are included therein, and by bad debts, to the extent the amount of such bad debts was previously included in gross receipts upon which the tax imposed by this section was paid.
(2) "Contractual allowances" means the difference between revenue (gross receipts) at established rates and amounts realizable from third-party payors under contractual agreements.
(3) "Net profits" means gross receipts from furnishing physicians' services minus all expenses, whether direct or indirect, related to the furnishing of physicians' services.
(3) (4) "Physicians' services" means those services that are physicians' services for purposes of Section 1903(w) of the Social Security Act.
(d) Effective date. -- The tax imposed by this section shall apply to gross receipts received or receivable by providers after the thirty-first day of May, one thousand nine hundred ninety-three. The tax imposed by the amendment to this section shall apply to net profits received or receivable by providers after the thirty-first day of May, one thousand nine hundred ninety-six.



NOTE: Subject to the approval of the United States Secretary of Health and Human Services, the purpose of this bill is to change the tax on physicians' services from applying to gross receipts to applying to net profits.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.