Bulletin Number
VTB 87-9
Tax Type
Retail Sales and Use Tax
Description
Veterinary Medicine
Topic
Exemptions
Date Issued
07-01-1987
Effective July 1, 1987, all sales of medicines and drugs on the prescription or work order of licensed veterinarians will be exempted from the sales and use tax. This exemption is the result of House Bill 1594, enacted by the 1987 session of the General Assembly.
NEW EXEMPTION FOR VETERINARY PRESCRIPTIONS
The new exemption will apply only to medicines or drugs dispensed or sold on the prescription or work order of a licensed veterinarian. Thus, on and after July 1, 1987, veterinarians will no longer be required to collect the sales tax when they simply dispense a prescription refill. This includes refills of prescription diets used in the treatment of animals and prescription treatments for flea control and animal skin conditions.
However, the new exemption will not have any bearing upon other presently taxable retail sales by veterinarians. Thus, those veterinarians who are required to register for collection of the sales tax must continue to collect the tax from customers on retail sales of nonprescription flea spray and flea powder, soap, pet food, and other similar products.
PURCHASES OF MEDICINES AND DRUGS BY VETERINARIANS
Under House Bill 1594, a veterinarian will be deemed the taxable user or consumer of all medicines and drugs that he purchases. As such, medicines and drugs will be treated in the same manner as furniture, supplies, equipment, instruments, and other items purchased by a veterinarian for use in rendering his professional services. A veterinarian should pay the tax to his supplier (or remit the tax directly to the department) when he purchases medicines or drugs or any item used in his practice.
Of course, veterinarians who are required to collect the sales tax will continue to be able to purchase products for retail sale (nonprescription flea spray, pet food, etc.) exempt from the tax when they furnish their suppliers with a resale exemption certificate.
BACKGROUND
As with other professionals, veterinarians are generally deemed to be the taxable users or consumers of all tangible personal property used in their practices. A such, a veterinarian does not collect the sales tax on charges for his professional services. However, when a veterinarian goes beyond the rendition of his professional services and actually sells goods at retail, he must register and collect the sales tax from his customers.
A veterinarian must register to collect the sales tax from his customers only if he maintains an inventory of tangible personal property for sale to customers independent of an examination or office visit. For instance, a veterinarian who maintains an inventory of nonprescription flea spray or flea powder, soap, pet food, or other similar products for sale to customers must register to collect the tax on such sales. When a veterinarian is required to collect the tax, he may purchase goods for resale to customers exempt from the sales tax by presenting his supplier with a resale exemption certificate, Form ST-10.
Those veterinarians who must register for the collection of the sales tax were also required, until the new exemption took effect on July 1, 1987, to collect the tax on refills of prescription medicines or drugs that are dispensed independent of an examination or office visit.
SUMMARY
In summary, a veterinarian will generally pay the tax on all items used in his professional practice. The only exception to this rule is if the veterinarian maintains an inventory of nonprescription flea powder, soap, pet food, and similar items for retail sale to customers, in which case the veterinarian must register with the Department of Taxation and collect the sales tax from his customers who purchase such items independent of an office visit or examination.
Veterinarians who are required to register for collection of the sales tax must collect the tax on all sales of prescriptions made before July 1, 1987 that were made independent of an office visit or examination. However, effective on July 1 1987, prescription medicines and drugs will be exempted from the tax when sold to a customer by the veterinarian. The veterinarian will be required, however, to pay the tax to his suppliers (or to the Department of Taxation directly) when he purchases any medicines or drugs. Also, the new exemption will not relieve the veterinarian from his responsibility to collect the sales tax on retail sales of nonprescription flea powder, soap, pet food, etc.
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