How much sales tax should you charge for tick dipping a dog?

The answer to that taxing question in a minute, but first, welcome to the crazy world of what is and is not taxable in a veterinary practice.

You’re probably selling food, treats, pet supplies and meds through your practice. Your state, county and city want their share of transaction privilege tax (sales tax) on applicable items. Here are some general guidelines for what is and isn’t taxable:

Inconsequential items, such as surgical supplies, meds administered by your techs and other routine materials consumed in treatment are considered not taxable if items are less than 15% of the total bill and are not itemized on the bill. If the items used during the treatment represent more than 15% of the total, you must itemize the products and charge sales tax on them. Your fee would still not be subject to taxation.

Likewise, if the item you use is not typically in a form offered for retail sale, such a tick dipping a dog (the answer to our quiz), this is considered an inconsequential item not subject to tax.

Prescription drugs are not taxable, however, any drug that is OTC is taxable, even if you write a prescription for that drug.

One of the trickiest areas concerns dietary pet food. In Arizona, for example, the tax code says food is not a drug and therefore should be subject to tax, even if written on prescription. However, if the food contains a legend drug, then it is exempt if written as a prescription.

In the case of items consumed in running your practice, such as food for animals boarded, shampoo and other small items, these should be purchased at retail so you pay the sales tax up front since you are not reselling them.  Or if previously purchased for resale and you use them, you can add them to your report and pay use tax.

If your practice does not sell retail then you are not required to obtain tax licenses, otherwise, obtain the licenses from the state, county and city, depending on what the rules are in your state. Once you are licensed you should provide your vendors an exemption certificate to avoid paying tax on items that you will be reselling. It’s essential that you carefully track, report and pay the tax on those applicable items you sell. It also is critical that your accounting professional advising you about sales tax be thoroughly familiar with current issues and decisions that can affect your tax responsibilities.

If you have questions about what is taxable and what isn’t, please email or call me. 

Camala C. Bailey, CPA, PC
Specializing in consulting and accounting for the veterinary profession