December 20, 2022
This is in response to your request for guidance regarding the Retail Sales and Use Tax treatment of prescription pet food.
Under existing policy, prescription pet foods are treated as prescription medicines for the purposes of the Retail Sales and Use Tax. Prescription pet foods can be purchased in one of two ways: 1) through sale by a veterinarian; or 2) with a prescription provided by a veterinarian. Veterinarians usually prescribe or sell these foods to customers when their pets have been diagnosed with a specific disease, such as liver or kidney disease, or to correct problems such as obesity, cardiac, or digestive problems. They are prescribed during the course of a physical examination. By contrast, nonprescription pet foods are available over the counter (“OTC”), and can be purchased at pet stores and grocery stores alike. Because veterinarians typically prescribe or suggest the use of prescription pet foods for treatment of various diseases or to correct pet illnesses and because they require a veterinarian’s prescription in order to purchase from a third party vendor, they should be treated as prescription medicines, even though the United States Food and Drug Administration (the “FDA”) does not specifically classify these items as drugs.
Medications and other prescription products sold by veterinarians, pharmacies, pet stores, and other sellers on a veterinarian’s prescription are exempt from the Retail Sales and Use Tax under Va. Code § 58.1-609.10. Prior to July 1, 2022, however, veterinarians dispensing or selling medicines or drugs on prescription were deemed to be the user or consumer of all such medicines and drugs, and were required to pay Retail Sales and Use Tax on such purchases unless the medicines and drugs were used or consumed directly in the care, medication, and treatment of agricultural production animals or for resale to a farmer for direct use in producing an agricultural product for market.
Legislation passed during the 2022 General Assembly session, House Bill 551 and Senate Bill 517 (2022 Acts of Assembly, Chapters 551 and 552) amended Va. Code § 58.1-609.10 to exempt veterinarians from Retail Sales and Use Tax on their purchases of prescription medicines and drugs that are administered or dispensed to patients within a veterinarian-client-patient relationship beginning July 1, 2022, and ending July 1, 2025. The legislation also repealed the provision of law that provided that a veterinarian dispensing or selling medicines or drugs on prescription is deemed to be the user or consumer of all such medicines and drugs.
In conclusion, prescription pet food sold on a veterinarian’s prescription or administered or dispensed to patients within a veterinarian-client-patient relationship is entitled to the Retail Sales and Use Tax exemption under Va. Code § 58.1-609.10. This exemption also applies to the purchase of the prescription pet food by the veterinarian.
I hope the above information responds to your inquiry. Should you have any additional questions about this ruling, you may contact ***** in the Office of Policy Development at *****.
Craig M. Burns