South Carolina: Taxation without compensation

COLUMBIA, S.C. - It took seven long years, but Bobby Horton will finally see his hard work pay off as of Jan. 1, 2013.

That's when home medical equipment in South Carolina will be officially exempt from the state's 6% sales tax.

“We're the only industry in the state that had to pay sales tax but couldn't collect it,” said Bobby Horton, executive director of the South Carolina Medical Equipment Services Association.

In June 2011, the South Carolina General Assembly passed a bill that exempted HME from the state's sales tax, phasing it out in increments between July 2011 and December 2012.

Providers had long objected to the tax because they couldn't collect taxes from key customers—Medicare and Medicaid beneficiaries.

“All these years, we've been paying taxes on stuff we couldn't collect taxes on—that doesn't make any sense,” said Lee Wiles, owner of Orangeburg, S.C.-based Priority Home Medical. “That all came off our bottom line.”

To rub salt in the wound, certain other industries have special exceptions, Horton said.

“There's a cap on automobile, airplane and boat sales tax—$300,” said Horton. “They were paying more taxes on a wheelchair than you would a Cadillac.”

Horton says eliminating the tax should save providers in the state a total of $8 million to $10 million a year.

Still, for providers dealing with audits, competitive bidding and other challenges, the savings are a drop in the bucket.

“This will just replace some of the money I've lost through reimbursement cuts,” said Ken Wells, owner of Florence-based Tucker-Wells Medical. “This is not going to be a big windfall.”