Current through Register Vol. 24-06, March 15, 2024
(1)
Introduction. This section explains Washington's business and
occupation (B&O), retail sales, and use tax applications to sales and
services provided by veterinarians. It explains the tax liability resulting
from the performance of professional services and the sale of medicines and
supplies for use in the care of animals. This section also explains the tax
liability of persons who provide other services for live animals including
grooming, boarding, training, artificial insemination, and stud
services.
(2)
Business and
occupation tax. Persons providing services for live animals are subject
to the B&O tax as follows:
(a)
Service and other activities. The service and other activities
B&O tax applies to the gross income derived from veterinary services. For
purposes of this section, "veterinary services" includes the diagnosis, cure,
mitigation, treatment, or prevention of disease, deformity, defect, wounds, or
injuries of animals. It also includes the administration of any drug, medicine,
method or practice, or performance of any operation, or manipulation, or
application of any apparatus or appliance for the diagnosis, cure, mitigation,
treatment, or prevention of any animal disease, deformity, defect, wound, or
injury. "Veterinary services" does not include the therapeutic use of an item
of personal property opened and partly administered by the veterinarian or by
an assistant under his or her direction, and taken by the customer for further
administration by the customer to the animal, provided the charge for the item
is separately stated on the invoice.
(i) The
gross income derived from veterinary services includes the amount paid by a
customer for any drug, medicine, apparatus, appliance, or supply administered
by the veterinarian or by an assistant under his or her direction, even when
the charge is separately stated on the invoice from charges for other
veterinary services.
(ii) The
service and other activities B&O tax applies to the gross income derived
from grooming, boarding, training, artificial insemination, stud services, or
other services provided to live animals. However, if the person providing these
services also sells tangible personal property to a consumer for a separate and
distinct charge, the charge made for the tangible personal property is subject
to the retailing classification of B&O tax.
(b)
Retailing. The retailing
classification of B&O tax applies to the gross income from the sale of
drugs, medicines, or other substances or items of personal property to
consumers when the sale is not part of veterinary services. The retailing
classification applies only when the veterinarian does not administer, or only
administers part of the drug, medicine, or other substance or item of personal
property to the animal with further administration to be completed by the
customer. Adequate records must be kept by the veterinarian to distinguish
drugs, medicines, or other substances or items of personal property that are
administered as part of veterinary services from those that are sold at retail.
The retailing classification also applies to gross income from the sale of
tangible personal property for which there is a separate and distinct charge,
when sold by persons providing grooming, boarding, training, artificial
insemination, stud services, or other services for live animals.
(3)
Retail sales tax.
The retail sales tax applies to all the retail sales identified under
subsection (2) of this section, unless a specific exemption applies.
(a)
Sales to veterinarians and others
who provide services to live animals. Sales of tangible personal
property to veterinarians for use or consumption by them in performing
veterinary services are retail sales upon which the retail sales tax must be
collected. Such sales include, among others, sales of medicines, bandages,
splints and other supplies primarily for use by veterinarians in performing
their professional services. Sales of tangible personal property to persons who
provide grooming, boarding, training, artificial insemination, stud services,
or other services for live animals for use or consumption by those persons in
performing their services are also retail sales upon which the retail sales tax
must be collected.
Sales to veterinarians and others who purchase tangible
personal property for the purpose of resale in the regular course of business
without intervening use by the buyer are sales at wholesale, and not subject to
the retail sales tax. The buyer must present the seller with a resale
certificate for purchases made before January 1, 2010, or a reseller permit for
sales made on or after January 1, 2010, to document the wholesale nature of any
sale as provided in WAC
458-20-102A (Resale certificates)
and WAC 458-20-102 (Reseller permits).
Even though resale certificates are no longer used after December 31, 2009,
they must be kept on file by the seller for five years from the date of last
use or December 31, 2014.
(b)
Sales to consumers. Tangible
personal property sold by a veterinarian to a consumer that is carried away by
or left with the consumer is a retail sale and the retail sales tax must be
collected. Items of personal property include those that the veterinarian may
have opened and used for therapy but were taken by the consumer to complete the
therapy. The tax applies whether the tangible personal property was sold at the
time the professional services were performed or was sold subsequently,
provided the charge for the item is separately stated. Sales to a consumer of
tangible personal property by a person who provides other than veterinary
services to live animals and who separately states the charges, are subject to
retail sales tax and the retail sales tax must be collected. (See WAC
458-20-210 for additional
information regarding sales to farmers.)
(c)
Exemptions. A retail sales
tax exemption is available for sales of feed for purebred livestock used for
breeding purposes, provided the seller obtains a completed Farmers' Certificate
for Wholesale Purchases and Sales Tax Exemptions certificate from the buyer.
Also exempt are sales of semen for use in the artificial insemination of
livestock. These sales remain subject to the retailing B&O tax. (See WAC
458-20-210 for additional
information regarding exemptions for farmers.)
(4)
Use tax. The use tax
complements the retail sales tax by imposing a tax of like amount upon the use
within this state as a consumer of any tangible personal property purchased at
retail, where the user has not paid retail sales tax with respect to the
purchase of the property used. (See also WAC
458-20-178.) If the seller fails
to collect the appropriate retail sales tax, the purchaser is required to pay
the retail sales or use tax directly to the department unless the purchase
and/or use is exempt from tax. Complementary use tax exemptions are available
for the use of those items identified in subsection (3)(c) of this section.
Veterinarians and others who provide services to live animals are required to
pay use tax on any samples that they acquire or give away unless retail sales
tax or use tax has been previously paid on these samples.
(5)
Examples. The following
examples identify a number of facts and then state a conclusion. These examples
should be used only as a general guide. The tax status of other situations must
be determined after a review of all of the facts and circumstances.
(a) A dog owner brings her dog to a
veterinarian for professional services. The dog has multiple wounds and a
broken leg. The veterinarian sets the broken bone and uses a cast and other
appropriate therapeutic medicines on the dog in the course of treatment. The
veterinarian also applies some salve to the wounds and gives the remainder of
the salve to the dog's owner for application over the next few days. The
veterinarian segregates the charges for the veterinary services, including the
cast materials, and the medicines. The charge for the salve is also separately
stated on the billing invoice. The gross income for the veterinary services is
subject to the service and other activities B&O tax classification. This
includes the charges for the cast materials and the medicines. The charge for
the salve is considered a retail sale, and subject to the retailing B&O and
retail sales taxes. If the veterinarian had previously paid sales or use tax on
the salve, he or she is allowed a tax paid at source deduction. (See also the
discussion of tax paid at source deductions in WAC
458-20-102.)
(b) AB boards other person's horses for a
fee. When AB bills the customer, AB separately lists the charges for the
boarding services and the feed. The gross income received by AB for boarding
services is subject to B&O tax under the service classification. The
charges for the feed are subject to the retailing B&O and retail sales
taxes. However, a retail sales tax exemption is available for any sales of feed
for purebred livestock, if the livestock is used for breeding purposes and AB
obtains a completed Farmers' Certificate for Wholesale Purchases and Sales Tax
Exemptions certificate from the customer.
(c) CD trains and boards dogs for various
lengths of time. CD bills the customer a lump sum amount for the training and
boarding, including feed for the dogs. The gross income received by CD is
subject to B&O tax under the service classification. CD must pay retail
sales tax or use tax on the feed it purchases for the dogs.
(d) EF is a farrier and shoes horses for
others. When EF performs this service, he lists a separate charge on the
invoice for the horseshoes. The charge for the horseshoeing service is subject
to B&O tax under the service classification, and the separate charge for
the horseshoes is subject to the retailing B&O and retail sales taxes. EF's
purchases of the horseshoes are purchases for resale and not subject to the
retail sales tax.
Statutory Authority:
RCW
82.32.300,
82.01.060(2),
chapters
82.04,
82.08,
82.12 and
82.32 RCW. 10-06-070, §
458-20-222, filed 2/25/10, effective 3/28/10. Statutory Authority:
RCW
82.32.300. 99-08-033, § 458-20-222,
filed 3/31/99, effective 5/1/99; 83-08-026 (Order ET 83-1), § 458-20-222,
filed 3/30/83; Order ET 70-3, § 458-20-222 (Rule 222), filed 5/29/70,
effective 7/1/70.