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Sales Tax for the Veterinarian
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Sales tax

It is important that veterinarians pay close attention to sales tax obligations. Sales tax rules have not changed over the past few years; however, the following are a few reminders to help you avoid problems with the New York State Department of Taxation and Finance.

 

As a general rule, veterinary medical services are not subject to sales tax. In most instances, products and equipment purchased by the veterinarian are subject to sales tax. The veterinarian does not recoup any part of the sales tax he/she pays by charging sales tax to clients. A few exceptions are noted below.

 

Prescription medicine

 

Sales tax must be paid on prescription medicine when it is purchased by the veterinarian. Exemptions are provided for medications used for production animals. Even if you purchase medicine from out of state vendors, you are required to pay New York State sales tax.

 

Prescription food


If a veterinarian "prescribes a certain food for a medical condition, then sales tax does not have to be collected from the client. If food is sold to non-clients, then sales tax must be collected.

 

Exempt medication

 

The sales tax paid by a veterinarian to a vendor for drugs and medicines subsequently used or sold by the veterinarian with respect to food-producing animals (livestock and poultry) are eligible for a tax credit to the veterinarian.


Equipment and/or equipment leases 

 

 

Equipment purchases for you or your hospital, be it items of furniture or medical equipment, must have sales tax charged on the bill. Once again, it does not matter where the piece of equipment or furniture was purchased. Its ultimate destination is in your office and that means sales tax must be paid on it.

 

Boarding and grooming services – in conjunction with medical services 

 

 

If a dog or cat has to stay overnight in your hospital because of a medical reason and you charge the customer a boarding fee, then such fee is not subject to sales tax. If a patient is charged a grooming fee because the animal was infested with ticks, fleas, etc., and there is a "solution dip” associated with the grooming procedure, then such fee charged for the grooming is not subject to sales tax. Sales tax is not charged on veterinary medical care and
services directly related to medical care.


Boarding and grooming services – not medically related

 

Boarding and grooming not directly related to the medical care of the animal is subject to sales tax. In light of New York State’s present economic situation and the interest of the Department of Taxation and Finance in veterinarians, you might want to protect yourself and simply charge a fee of all boarding and grooming services whether medically related or not. Charge your clients the sales tax on the service and remit those taxes on a quarterly basis to New York State Sales Tax.


Three key ways to avoid sales tax problems


1. Always pay sales tax to vendors when purchasing medications, supplies and equipment (except livestock/poultry exemption). This is absolutely essential and applies to all out-of-state purchases as well. If out-of-state vendors or mail order operations are not charging you NYS sales tax, instruct them to do so. If they are not charging you NYS sales tax, you are still obligated to pay it.


2. Regardless of the type of medication, food, product or service being rendered, always record the sales as if a prescription has been issued. You should maintain a record on every client that walks in the door.

 

3. Realize the seriousness of appropriately charging, collecting and remitting NYS sales tax and consult with your accountant if you have any questions.

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