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Last Updated: 5/17/2018

Fees and Free or Discounted Services

​​Collection and Other Fees

Any amounts received from sources that keep a fee before paying you are taxable. The total amount is subject to tax, before any fees or commissions are withheld.

Common entities that may retain a fee before remitting payment include:

  • billing services
  • collection agencies
  • credit card processing vendors
  • patient financing companies

Any fees retained by these entities must be included in gross receipts.

Example 1: A collection agency collects $100 from a patient for services you provided. The agency keeps $30 as a commission and sends you the remaining $70. The full $100 is taxable.

Example 2: A patient pays $1,000 for a service you provided with a credit card. The credit card processing vendor keeps a percentage of the sale as a fee before depositing the remaining amount in your bank account. The full $1,000 is taxable.

Free or Discounted Services 

Free or discounted services provided to individuals who provide goods or services in return are taxable. Common examples include providing services to:

  • employees and their families as part of the employee’s compensation package
  • other professionals through professional discount agreements
  • other individuals when bartering or trading for goods or services

Determining the taxable amount in these cases depends on how you are reimbursed for the service. For more information on how to calculate the taxable amount for free or discounted services, see MinnesotaCare Tax Fact Sheet 5, Free and Discounted Patient Services.

Note: If you provide discounted services to individuals who do not provide any goods or services in return, the taxable amount is the actual amount you received. If the service is provided free of charge, there is no tax due on the service.