Connecticut State Department of Revenue Services

Ruling 98-2, Sales and Use Taxes / Business Management Services / Business Management Consulting Services

FACTS:

A company (the "Company") assists nursing homes with the Medicaid resident admissions process by performing the following functions, which would otherwise be performed by the nursing home’s social services department or by its administrative department:

  1. Completing the resident patient intake form.
  2. Assigning a case worker to the nursing home to track a resident patient’s Medicaid admission process or the patient’s Medicaid eligibility.
  3. Acting as the admission liaison with the resident patient’s family and the nursing home.
  4. Either completing the Medicaid application forms, or assisting the resident patient in completing the forms.

ISSUE:

Whether the Company’s services in furnishing assistance with Medicaid procedures are taxable as business management services or business management consulting services under Conn. Gen. Stat. §12-407(2)(i)(J).

DISCUSSION:

"Business management services" are defined in Conn. Agencies Regs. §12-407(2)(i)(J)-1(e) as "the controlling or directing of . . . all or a portion of the core business activities . . . of a service recipient." "Business management consulting services" are defined in Conn. Agencies Regs. §12-407(2)(i)(J)-1(f) as "furnishing advice and assistance on matters pertaining to the management of core business activities . . . of a service recipient." The term "core business activities" is defined in subsection (h) of the regulation as "activities directly related to a service recipient's lines of business involving sales of products, property, goods or services to others, its capital structure, its budgeting and its short-range, long-range or strategic planning."

The core business of the nursing homes to which the Company renders its services is to provide health care. The determination of the Medicaid eligibility of resident patients and assisting resident patients with the completion of Medicaid applications fall outside the core business of providing health care. (See also Ruling Nos. 97-1 and 93-6, in which medical claims processing services rendered to health care providers were held not to be directly related to the core business of the service recipients.)

RULING:

The Company’s services in furnishing assistance with Medicaid procedures are not taxable under Conn. Gen. Stat. §12-407(2)(i)(J) either as business management services or business management consulting services.

LEGAL DIVISION

February 24, 1998