On October 20, 2003, the Director of the Iowa Department of Revenue issued a Declaratory Order in Smart Document Solution, Docket No. 03-30-6-0134. The Petitioner in this case locates and copies health and medical records for attorneys, insurance companies, governmental entities, patients, physicians, hospitals and other requesting entities. Petitioner's employees go to the location where the records are being kept. The employee makes photocopies of the requested records and then mails them directly to the requesting customer. Or the employee of the Petitioner may electronically scan documents into a laptop computer that is owned by the Petitioner and save the records. The employee then electronically sends the information to the Petitioner's Georgia headquarters. The Petitioner then sends the information to the customer in the format requested by the customer. In this Petition, the Petitioner set forth the various fees that can be imposed on these transactions and wished to know the taxability of each. The Director ruled the following on each fee:
1. Basic/retrieval fee: This fee is for a service and is not subject to tax. This fee covers the cost of locating the requested information or medical records. To be subject to Iowa sales or use tax, a service must be an enumerated service under the Iowa Code. The service of retrieving information as described in the Petition, is not a taxable enumerated service.
2. Quickview delivery fees: This is a fee imposed by the Petitioner for electronic access and view of the requested information via the Internet and is not subject to Iowa sales tax. This fee does not fall under the service of communications because it is the fee charged for access to documents via the Internet. The fee is not for a communication service provided by the Petitioner for the Customer. Nor is this fee an Internet access fee. The Petitioner is not an Internet service provider. It is simply a charge for accessing documents via the Internet. Such a fee is not a taxable enumerated service in Iowa.
3 and 4. Per page fee (hardcopy and electronically scanned): This fee is subject to Iowa sales tax. Iowa Code section 422.43(11) provides that printing is a taxable service. Department rule 701 IAC 16.51(1)"a"(4) is one of the rules that implements the taxability of printing and this rule states that the service of printing is considered to be the sale of tangible personal property in Iowa and is, therefore, subject to Iowa sales tax. Under this department rule, "printing" is defined as including:
"but is not limited to, any type of printing, lithographing, mimeographing, photocopying and similar reproduction. The following activities are nonexclusive examples of property which are subject to tax: printing of pamphlets, leaflets, stationery, envelopes, folders, bond and stock certificates, abstracts, law briefs, business cards, matchbook covers, campaign posters and banners for the users thereof. (emphasis added)
Based on the foregoing, the fee imposed for photocopies and for scanned documents (photocopying and similar reproduction) would be subject to Iowa sales tax as the sale of tangible personal property.
5. Postage Fee: Based on the manner in which the Petitioner itemizes the billing of this item, the postage should not be subject to Iowa sales tax. Taxability of postage/freight depends on the manner in which it is contracted for or itemized. Department rule 701 IAC 15.13 governs the taxability of freight and other transportation costs. In essence, this rule provides that if freight or other transportation charges are either separately contracted for, separately itemized, or are separately stated from the sales agreement, then such charges are not subject to Iowa sales or use tax.
6. Handling fee: Handling fees are considered to be part of the gross receipts in Iowa and subject to Iowa tax. Even if the handling fees are itemized, they are still considered to be part of the price for the tangible personal property being sold and subject to Iowa sales tax.
7. E-disclose fee: This fee is not subject to Iowa sales tax. An E-disclose fee is a fee imposed for the service rendered by the Petitioner involving the tracking of the delivery of the information being sent to the Customer. The gross receipts from this type of service are not derived from an enumerated service in Iowa.
8. Certification fee: This fee is also not subject to Iowa sales tax. This fee is imposed for the service of certifying the information gathered by the Petitioner and sent to the Customer. This is not an enumerated service in Iowa and is not subject to Iowa sales tax.
9. Notarization fee: This fee is not subject to Iowa sales tax. This fee is imposed for the service rendered by the Petitioner which consists of notarizing information by the Petitioner before it is sent to the Customer. This is not an enumerated service in Iowa and is not subject to Iowa sales tax.
10. Deposition fee: This fee is not subject to Iowa sales tax. This fee is imposed by the Petitioner for the service of affirming that the information obtained by the Petitioner is suitable to be utilized in a legal deposition. This service is not an enumerated service in Iowa and is not subject to Iowa sales tax.
11. Docustore fee: This fee is not subject to Iowa sales tax. This fee is imposed by the Petitioner for providing electronic storage of information for the customer. This is not an enumerated service and is not subject to Iowa sales tax.
12. Are the scanners, laptop computers and similar electronic media utilized by the Petitioner to perform its services deemed to be processing equipment so as to be exempt from Iowa sales and use tax when purchased?
Here, the Petitioner is not processing the data, but is simply scanning information into the computer system and subsequently sending it to the customer in the medium requested. The data being scanned or entered is not being manipulated or processed in any manner. Consequently, the Petitioner is not engaged in the business of processing data and the scanners, laptop computers and similar electronic media used by the Petitioner to perform these activities would not be exempt from Iowa sales or use tax at the time of purchase. Taxability of these items would occur if these items were purchased in Iowa or for use in Iowa.