A sleep clinic said it isn't medicine. The court disagreed.

The Alaska Sleep Clinic had a clever argument for skipping state corporate income tax: it doesn't practice medicine, it just runs tests. Patients sleep while machines watch, then go home — no treatment, barely any interaction. A diagnostic operation, not a health provider.

The Alaska Supreme Court didn't buy it. Running those sleep studies is itself a service "in the field of health," the court held July 17 — no small-business tax break, and the clinic owes the state for 2016 through 2018.

Alaska's small-business exemption carves out the field of health, and the clinic bet diagnostic testing fell outside it. The court looked at how the business actually ran and saw medicine everywhere — a board-certified sleep specialist as medical director screening every referral, and marketing built around that expertise. You can't sell your medical credentials, the logic runs, then claim you're not in medicine when the tax bill arrives.

The twist: the IRS looked at the same clinic in 2024 and concluded the opposite. Private letter rulings bind only the IRS, on the facts one taxpayer describes — and the court said the federal ruling rested on different factual representations than the state's record. Two tax authorities, two answers; only Alaska's counts here.

The fallout reaches past one clinic: diagnostic operators statewide now know "we just do testing" won't beat the health carve-out. Where the line falls next, the court didn't say — it decided this clinic, on these facts.