You ask whether sales of medical history identification cards and updates of these cards by ("Company") are subject to the sales tax, and if so, the amount upon which the sales tax is based.
The Company sells identification cards and updates of these cards, containing customers' individual medical histories and medical data. Customers are referred to the Company by cardiologists, diabetic specialists and pharmacists. In compiling the data for each customer's identification card, a registered nurse interviews the customer to obtain his or her medical history and the names and telephone numbers of his or her physicians. This information is then verified, in part by original documentation provided by the customer. The customer's blood pressure, pulse and cardiogram are taken. All of this information is transcribed onto microfiche. The microfiche are inserted into a plastic identification card showing the customer's photograph, name and address. Any vital medical data is embossed on the card.
The customer receives the identification card, a pocket-size cardboard microfiche viewer, a plastic case, and orange decals which, when found by emergency medical personnel, alert them to look for the person's card. The cost to the customer of the property transferred and the initial service is $20.00; updates cost $15.00.
A sales tax is "imposed upon sales at retail of tangible personal property in the commonwealth...." G.L. c. 64H, § 2. "The term 'sale at retail' [does] not include ... personal service transactions which involve no sale or which involve sales as inconsequential elements for which no separate charge is made...." G.L. c. 64H, § 1(13)(c). The Massachusetts Supreme Judicial Court set out the standard for determining whether or not a transaction is a service transaction in Houghton Mifflin Co. v. State Tax Commission:
The test is the object of the transaction. If the buyer's fundamental object is to obtain the item of tangible personal property transferred to it,...the transaction cannot reasonably be considered one for personal service. 373 Mass. 772, 775 (1977).
In the transaction described above, the information imprinted on the identification card or update has been provided by the customer and is verified by the Company in accordance with a routine procedure. The Company performs no individualized research beyond this routine procedure. The card has value in and of itself. Thus, the customer's fundamental object is to obtain the property transferred, i.e., the identification card containing his or her medical history or an updated identification card. Cf., Commissioner v. McGraw-Hill, Inc., 383 Mass. 397, 400, 402-403 (1981). Therefore, the Company's sales of medical history identification cards and updated cards are not service transactions but retail sales of tangible personal property, and are subject to the sales tax.
The sales tax is based on the sales price. G.L. c. 64H, §§ 1(6), 2; Letter Ruling 85-16. The sales price is the total amount paid by a purchaser to a vendor as consideration for a retail sale. G.L. c. 64H, § 1(14); Letter Ruling 85-13; p. 3. The cost of materials used, labor or service cost, and any amount paid for any services that are a part of the sale are included in the sales price. G.L. c. 64H, § 1(14)(a), (b); Letter Ruling 85-13, p. 3.
The total amount charged by the Company for the service and property transferred constitutes the sales price. Therefore, the sales tax is based on the total amount charged by the Company for its service and transfer of property in its sales of medical history identification cards and updates.
Very truly yours,
Commissioner of Revenue