Nebraska Health Clinic Licensure – a Basis for Sales Tax Exemption for RHCs
In 2012, the Nebraska legislature amended the state statutes governing the sales tax exemption for health clinics to include clinics owned by one or more nonprofit hospitals or health systems for the purpose of reducing the cost of health services. Historically, this provision required ownership by “two” or more such nonprofit hospitals or health systems. Neb. Rev. Stat. §77-2704.12 (Cum. Supp. 2014).
This amendment was first considered in 2008 for the purpose of leveling the playing field between rural health clinics owned and operated by county hospitals (which would enjoy tax exemption by virtue of the county’s authority over the county hospital and its operations including rural health clinics) as compared to rural health clinics owned and operated by nonprofit hospitals (which did not enjoy sales tax exemption).
Interestingly, the statute does not specifically require that the tax exempt health clinic be licensed as a health clinic, but the implementing regulation promulgated by the Nebraska Department of Revenue does requires such licensure. REG-1-090.
In order to qualify for the tax exemption, it appears that a nonprofit hospital-owned rural health clinic would have to do two things:
- Obtain health clinic licensure from the Nebraska Department of Health and Human Services (because few, if any, Medicare-certified rural health clinics held Nebraska health clinic licenses prior to 2012); and
- Apply for the sales tax exemption on an official Nebraska Department of Revenue form.
The health clinic licensure statutes do not expressly state that rural health clinics are eligible for health clinic licensure, indeed the language initially leaves some doubt:
(1) Health clinic means a facility where advice, counseling, diagnosis, treatment, surgery, care, or services relating to the preservation or maintenance of health are provided on an outpatient basis for a period of less than twenty-four consecutive hours to persons not residing or confined at such facility. Health clinic includes, but is not limited to, an ambulatory surgical center or a public health clinic.
(2) Health clinic does not include (a) a health care practitioner facility (i) unless such facility is an ambulatory surgical center, (ii) unless ten or more abortions, as defined in subdivision (1) of section 28-326, are performed during any one calendar week at such facility, or (iii) unless hemodialysis or labor and delivery services are provided at such facility, or (b) a facility which provides only routine health screenings, health education, or immunizations.
Neb. Rev. Stat. §71-416 (Reissue 2009). This language can be confusing as to whether a rural health clinic is a “health care practitioner facility,” since licensed health care professionals are the principal staff members in a rural health clinic, and most rural health clinics are not ambulatory surgical centers and do not perform abortions, hemodialysis or labor and delivery services.
In response to an inquiry, the Nebraska Department of Health and Human Services has verified that it does accept applications for licensure as a health clinic from Medicare-certified rural health clinics.