Electronic Medical Records Credit

  1. What is the electronic medical records credit?
  2. Who is eligible to claim the credit?
  3. Who is not eligible to claim the credit?
  4. What is an electronic medical record?
  5. What is a health care provider?
  6. How do I know if my software qualifies?
  7. Do installation, maintenance, training, and support costs associated with information technology hardware and software purchases qualify for the credit?
  8. Do lease payments made to a third party electronic medical record service provider qualify for the credit?
  9. How do I become certified?
  10. Can I amend Schedule EM-C after it has been submitted?
  11. What is the amount of credit?
  12. Is there a maximum dollar amount for the credit?
  13. What if the total expenses claimed by all applicants exceed the maximum credit amount?
  14. When does the information technology hardware and software have to be purchased?
  15. What if I am a fiscal year filer?
  16. What form is used to claim the credit?
  17. Am I required to submit any documentation with my tax return?
  18. Is the credit refundable or nonrefundable?
  19. Does the credit have to be included in income?

  1. What is the electronic medical records credit?

    The electronic medical records credit is available to Wisconsin licensed health care providers that purchase information technology hardware and software and use it to maintain medical records in electronic format.

  2. Who is eligible to claim the credit?

    An individual, estate, trust, C-corporation, or LLC disregarded as a separate entity may claim the credit.

  3. Who is not eligible to claim the credit?

    Partnerships, LLCs treated as partnerships, and tax-option (S) corporations cannot claim the credit; however, the eligibility for claiming the credit and the computation of the credit is based on the amount the entity pays for information technology hardware and software. The credit computed by those entities can pass through to the partners, members, and shareholders.

  4. What is an electronic medical record?

    An electronic medical record is a record of health-related information that includes patient demographic and clinical health information and has the capacity to provide clinical decision support, to support physician order entry, to capture and query information relevant to health care quality, and to exchange and integrate electronic health information with and from other sources.

  5. What is a health care provider?

    A health care provider is any of the following that are licensed under the Wisconsin statutes: nurse, chiropractor, dentist, physician, physician assistant, perfusionist, respiratory care practitioner, physical therapist, podiatrist, dietitian, athletic trainer, occupational therapist, occupational therapy assistant, optometrist, pharmacist, acupuncturist, psychologist, social worker, marriage and family therapist, professional counselor, speech-language pathologist, audiologist, massage therapist, bodywork therapist, a partnership of any providers listed above, a corporation or limited liability company of any providers listed above, a cooperative health care association that directly provides services through salaried employees in its own facility, a hospice, an inpatient health care facility, a community-based residential facility, and a rural medical center.

  6. How do I know if my software qualifies?

    The software must comply with the federal health information technology standards under title 45, Code of Federal Regulations (CFR), Part 170. The Office of the National Coordinator for Health Information Technology will issue a federal certification number to software that meets the qualifications of title 45 CFR 170. To verify that the software you purchased or will purchase is certified, the following website provides a searchable listing of all the software that has been certified: http://oncchpl.force.com/ehrcert/CHPLHome. The correct edition of software for the 2013 calendar year is the "Combination of 2011 and 2014 Edition."

    Choose the appropriate practice type of either ambulatory or inpatient. Click either "browse" to search all inpatient products or "search" to search for the software product by name. Once in the software product list, click the blue hyperlink of the product purchased and the CHPL product number will be displayed at the top of the screen. Enter this number in the CHPL Product Number section located in column B of Schedule EM-C.

  7. Do installation, maintenance, training, and support costs associated with information technology hardware and software purchases qualify for the credit?

    If the installation, maintenance, training, and support costs are included in the package price of the hardware and software and not separatedly stated on the invoice, the costs are allowed in the computation of credit. However, if the installation, maintenance, training, and support costs are separately stated on the invoice, they are not allowed in the computation of the credit.

  8. Do lease payments made to a third party electronic medical record service provider qualify for the credit?

    Lease payments that a claimant pays to lease hardware and health care software from a health care system or another third party are eligible for the credit.

  9. How do I become certified?

    Applicants will have from January 2, 2014 through January 31, 2014 to file Schedule EM-C, Electronic Medical Records Credit Certification, with the Department of Revenue. Applicants are encouraged to complete Schedule EM-C electronically through My Tax Account, the department's free online tax system. Filing electronically reduces errors, paperwork, and time.

    To file Schedule EM-C electronically:

    The certification schedule will require the applicant to provide the following information: the information technology hardware and software purchased, the amount paid, and the federal certification number. The department will notify applicants of the amount of credit they are certified for by the end of February 2014.

  10. Can I amend Schedule EM-C after it has been submitted??

    Applicants may amend a 2013 Schedule EM-C until January 31, 2014. To amend a 2013 Schedule EM-C, complete another 2013 Schedule EM-C with the correct amounts and check the amended return box in the upper right hand corner of the schedule. After January 31, 2014, no amended returns will be accepted.

  11. What is the amount of credit?

    The credit is equal to 50 percent of the amount paid during the year by a health care provider for information technology hardware and software that is used to maintain medical records in electronic format. However, this amount may be limited if the total amount of credits claimed exceeds the maximum amount.

  12. Is there a maximum dollar amount for the credit?

    The maximum amount of credits that may be claimed by all applicants in the taxable year is $10,000,000.

  13. What if the total expenses claimed by all applicants exceed the maximum credit amount?

    If the total amount of hardware and software expenses paid in the calendar year by all claimants exceeds $20,000,000, the total available credits of $10,000,000 will be allocated to each certified applicant in proportion to the amount paid during the calendar year.

    Example: Health Care Providers A, B, and C are certified to claim the electronic medical records credit for the following amounts paid in 2013 for certified hardware and software:

    A     
    B     
    C     
    Total
    $  8,000,000
    $12,000,000
    $  4,000,000
    $24,000,000

    The $10,000,000 of available credits are allocated to A, B, and C based on their proportionate share of the total amount of $24,000,000 paid.

    Health Care Provider A is allocated a credit of $3,333,333 computed as follows: ($8,000,000 ÷ $24,000,000) x $10,000,000.

    Health Care Provider B is allocated a credit of $5,000,000 computed as follows: ($12,000,000 ÷ $24,000,000) x $10,000,000.

    Health Care Provider C is allocated a credit of $1,666,667 computed as follows: ($4,000,000 ÷ $24,000,000) x $10,000,000.

  14. When does the information technology hardware and software have to be purchased?

    Because the allocation of the credits occurs on a calendar year basis, the hardware and software certified for the 2013 taxable year must be purchased between January 1, 2013 and December 31, 2013. This will be true regardless if the company is filing on a fiscal year or calendar year basis.

  15. What if I am a fiscal year filer?

    A fiscal year filer will include the amounts paid for information technology hardware and software purchases for the time period January 1, 2013 through December 31, 2013 on the 2013 Schedule EM-C (Electronic Medical Records Credit Certification). The fiscal year filer will allocate the credit awarded for the calendar year to its respective fiscal taxable years.

    Example: An applicant has a fiscal year beginning October 1, 2012 and ending on September 30, 2013. The applicant filed a certification request on a 2012 Schedule EM-C for the period of October 1, 2012 through December 31, 2012 by January 31, 2013.

    By January 31, 2014, the applicant will file a 2013 Schedule EM-C for the amounts paid for information technology hardware and software from January 1, 2013 through December 31, 2013.

    The applicant paid the following amounts for certified information technology software and hardware:

    Date Amount
    11/02/12
    02/04/13
    08/01/13
    09/27/13
    10/22/13
    12/16/13
    $20,000
    $  8,000
    $  5,000
    $  4,000
    $  3,000
    $10,000

    The applicant is awarded electronic medical record credits of $10,000 and $12,000 for the calendar years 2012 and 2013 respectively.

    The department notified the applicant on February 28, 2013 of the credit that may be claimed based on the expenses paid in the 2012 calendar year. In this example the applicant may claim an electronic medical records credit of $10,000.

    For expenses paid in the 2013 calendar year, the department will notify the applicant of the allowable credit by February 28, 2014. In this example, the applicant is eligible for a credit of up to $15,000 ($30,000 x 50% = $15,000) for the 2013 calendar year; however, the department has allocated a credit of $12,000. (See questions 10, 11, and 12 for more information about the department's allocation process.)

    Because the applicant has a fiscal taxable year that begins in 2012 and ends in 2013, an allocation is required in order to determine the amount of credit that may be claimed in the 2012 and 2013 taxable years. The credit awarded for the 2013 calendar year must be allocated to the applicant's fiscal year based on a ratio consisting of the amounts paid during the calendar year that fall within the dates of the applicant's fiscal year divided by the total amounts paid in the 2013 calendar year, with the result multiplied by the applicant's credit awarded for the 2013 calendar year.

    Computation for taxable year 2012 (10/1/2012 – 9/30/2013):

    2012 Calendar Year Certification

    $20,000
    $20,000 X $10,000 = $10,000

    2013 Calendar Year Certification

    $17,000 1
    $30,000 2 X $12,000 = $6,800

    The amount of $16,800 is entered on line 1 of the 2012 Schedule EM.

    ($10,000 + $6,800 = $16,800).

    1 $8,000+$5,000+$4,000
    2 $8,000+$5,000+$4,000+$3,000+$10,000

    Computation for taxable year 2013 (10/1/2013 - 9/30/2014):

    From 2013 Calendar Year Certification

    $13,000 3
    $30,000 4 X $12,000 = $5,200

    Enter the amount of $5,200 on line 1 of the 2013 Schedule EM.

    3 $3,000+$10,000
    4 $8,000+$5,000+$4,000+$3,000+$10,000

  16. What form is used to claim the credit?

    Wisconsin Schedule EM, Electronic Medical Records Credit, will be used by applicants to claim the credit.

  17. Am I required to submit any documentation with my tax return?

    The only documentation you are required to submit with your tax return is Wisconsin Schedule EM—Electronic Medical Records Credit.

  18. Is the credit refundable or nonrefundable?

    The credit is nonrefundable so any amount not used to offset the current Wisconsin income or franchise tax liability may be carried forward for 15 years.

  19. Does the credit have to be included in income?

    The credit is income and must be reported as income on the claimant's Wisconsin franchise or income tax return in the year in which the credit is computed.

FOR MORE INFORMATION PLEASE CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Corporation Franchise/Income Tax Assistance
PO Box 8906
Madison, WI 53708-8906
Phone: (608) 266-2772
Fax: (608) 267-0834
Email: DORFranchise@revenue.wi.gov

Page last updated January 22, 2014