Tax Type
Retail Sales and Use Tax
Description
Veterinary medicine; Prescription medicines
Topic
Taxability of Persons and Transactions
Date Issued
04-24-1989
April 24, 1989
Re: Ruling Request/ Sales and Use Tax
Dear******************
This will reply to your letter of February 13, 1989 seeking confirmation that ********** is reporting sales tax to the department in an appropriate manner.
FACTS
In a partnership with another veterinarian, you are engaged in the practice of veterinary medicine and also operate a retail pharmaceutical sales outlet ("the pharmacy") at a local livestock sale, for the sale of prescription and nonprescription medicines, drugs and supplies. Based on information you recently provided to a member of my Tax Policy Division staff, you only sell prescription medicines and drugs, pursuant to your own prescription or that of your partner, while you sell nonprescription medicines and supplies to anyone who patronizes your pharmacy.
Since it opened about a year ago, you have purchased all your supplies for the pharmacy on a sales tax exempt basis, under a resale certificate of exemption. In addition, since most of your customers at the livestock sale are agricultural producers and maintain exemption certificates on file with the pharmacy, you do not charge them sales tax on their purchases. However, when purchasing drugs and supplies needed for your veterinary practice through the pharmacy, you pay the tax on such purchases. You ask for permission to continue to purchase your supplies on this basis.
RULING
Prescription Medicines and Drugs
Since July 1, 1987, Virginia Code §58.1-608(21) has exempted from the sales and use tax, "medicines ... (and) drugs ... dispensed by or sold on prescriptions or work orders of ... veterinarians." However, this code section continues, "any veterinarian dispensing or selling medicines or drugs on prescription shall be deemed to be the user or consumer of all such medicines and drugs." (Emphasis added)
It is our understanding, based on information received from the State Board of Veterinary Medicine that no special license is required, other than a veterinarian's license, for a veterinarian to sell prescription and nonprescription drugs through a retail sales outlet such as the pharmacy. As such, the pharmacy is deemed to be a part of your practice for licensing purposes.
From the foregoing, it is clear that a veterinarian may not purchase prescription medicines and drugs exempt of the tax under any circumstances. Therefore, you must pay the tax to suppliers on all prescription medicines and drugs that you dispense or sell, whether such medicines are provided directly to clients during an office visit, or sold through your pharmacy. of course, you need not charge sales tax when billing clients for such prescription medicines and drugs.
Nonprescription Items
As stated in the enclosed Tax Bulletin 87-9, a veterinarian must register to collect the sales tax from customers when he maintains an inventory of items for sale to customers independent of an examination or office visit. Under such circumstances, a veterinarian may purchase these items exempt from the sales tax pursuant to a resale exemption certificate, Form ST-10.
Therefore, you may continue to purchase any nonprescription items to be sold through your pharmacy, pursuant to resale exemption certificate. In addition, you need not charge the tax when selling any of such items to clients who present an agricultural exemption certificate ST- 18. However, if any of such items initially purchased exempt of the tax for resale are subsequently used in your veterinary practice, you must remit use tax on such items directly to the department.
I hope that the foregoing has responded to your questions, but let me know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner