Texas Comptroller Don Huffines signed an executive order Oct. 6 to abolish the state tax on medical records and the systems doctors use to access them, the Texas Comptroller of Public Accounts said in a news release.
The order directs the agency to publish a proposed amendment to Rule 3.342, which governs the taxation of information services, according to the release. Under it, electronic health record systems, electronic medical record systems, patient portals and other health care technology used to maintain, access or share medical records would no longer be taxed as information services or data processing services. The amendment will be published in the Texas Register, followed by a 30-day public comment period, the agency said.
“No Texan should have to pay a tax to see their own medical records,” Huffines said in the release. “And no doctor should be taxed for pulling up the chart of the patient sitting in front of them. Healthcare is expensive enough. The last thing government should do is pile a hidden tax on top of it.”
Huffines said he heard about the problem last month at a roundtable that included small business owners and physicians, who told him they were being charged sales tax just to access their patients’ electronic medical records, according to the release.
The release said the tax treatment stemmed from a rule established by previous leadership of the Comptroller’s office. Huffines said the problem is similar to one he found with marketplace fees: a decades-old tax rule stretched to cover things the Legislature never intended.
“When the Legislature wrote these rules, doctors’ offices weren’t running cloud-based record systems and patients weren’t logging into portals,” Huffines said. “A Comptroller doesn’t get to arbitrarily rewrite the Tax Code. If it’s not authorized in the law, it’s not a tax.”
“This is how you lower the cost of healthcare without spending a dime of taxpayer money: Stop taxing it,” Huffines said in the release.
The agency described the move as the latest step in Huffines’ Taxpayer First Project, an effort to bring fairness, transparency, consistency and respect to how Texas collects taxes. Last week, according to the release, he ended a hidden double tax on marketplace fees. The Comptroller’s office said it will continue to review how the information services and data processing taxes are interpreted and may propose additional changes.