98-052
Response
August 14, 1998
REQUEST
LETTER
Dear
Ms. Reese,
The COMPANY A is a distributor of
veterinary supplies. We provide a broad
array of products for the veterinarian, ranging from over-the counter resale
items such as diets, leashes and collars to products consumed by the
veterinarian in the provision of service such as surgical supplies and
equipment and diagnostic supplies and equipment. We also offer a large
inventory of pharmaceuticals for all types of animals.
We need written rulings on the
following issues that have arisen recently.
1. Can
a veterinarian be totally exempt from sales tax on all items by submitting an
exemption CERTIFICATE claiming the agricultural producer exemption?
2. If
a veterinarian submits an exemption CERTIFICATE claiming the resale exemption,
can they be totally exempt from sales tax on all items? If not, what types of items would be exempt to the
veterinarian under a resale exemption?
3. Could
you please define veterinary supplies as cited in 60-250 of the Utah State Code
and does this exemption go beyond sales to the agricultural producer to include the veterinarian?
4. Is
service provided by the veterinarian taxable to his clients? How does this impact the taxability of items
the veterinarian purchases from us to provide this service, e.g. disposable
surgical gloves, microscope slides, diagnostic kits, IV tubing, surgical instruments, x-ray developer, etc.?
I appreciate your prompt attention
to this request. If I can be of any assistance in further clarifying the above
scenarios, please call me at #####.
Sincerely,
NAME
August
14, 1998
NAME
ADDRESS
CITY,
STATE ZIP
RE: Advisory
Opinion - Sales Tax on Veterinary Services and Supplies
Dear
NAME,
We have received your request for an
advisory opinion concerning Utah’s application of sales tax on veterinary
services and supplies. We shall address
the impact of current Utah law on these issues below, but first let us address
§60-250, which you referred to in your Question #3. Title 60 of the Utah Code was repealed in 1965 and was replaced
with Title 70A. As there is no mention
of “veterinary supplies” in Title 70A, we do not know, without historical
research, what purpose that old law served.
Nevertheless, any reference to “veterinary supplies” in that old section
of law would have no relevancy today.
As to sales tax and its application
on veterinary services, any charges for medical services performed by a
veterinarian are not subject to sales tax.
However, grooming services are taxable, as Utah law does impose a sales
tax on services to clean tangible personal property, which includes dogs and
other animals.
As to the sale of tangible personal property,
the veterinarian must collect sales tax on all items sold to a customer,
including food, medicine, leashes, collars, or supplies. An exception is found in Utah Admin. Code
R865-19S-49 (copy enclosed), which states that feed, medicine, and veterinary
supplies may be bought tax exempt if used primarily and directly in farming
operations. The veterinarian need not
collect sales tax for these items if the customer gives the veterinarian an
exemption certificate claiming the agricultural producer exemption. The veterinarian can claim this exemption
for his or her own purchases only if he or she will use them primarily and
directly in farming operations as described in Rule R865-19S-49.
When purchasing items of tangible
personal property that he or she intends to resell, the veterinarian may
purchase them tax exempt by issuing the supplier an exemption certificate that
claims the resale exemption. However,
for items purchased to perform his or her medical services, such as disposable
surgical gloves, surgical instruments, etc., the veterinarian is considered the
final consumer of these items.
Accordingly, he or she would need to pay sales tax on these items at the
time they are purchased.
One last service often performed by
veterinarians is animal boarding.
Charges to board an animal are not subject to tax. Where no separate fee or specific amount is
charged for food which is furnished as part of the boarding charges, the
veterinarian is considered to consume the food in providing the service. Accordingly, the veterinarian would need to
pay sales tax on the food when he or she purchases it. On the other hand, should the veterinarian
charge the customer for the food separate from the boarding charges, then the
veterinarian may purchase the food tax free under the resale exemption. The sales tax would be collected when the
customer is charged for the food.
Please remember that when there are charges that are both subject to tax
and tax exempt, the charges must be separately stated or the entire amount is
subject to tax.
Please contact us if you have any
other questions.
For
the Commission,
Joe
B. Pacheco, CPA
Commissioner
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