Is prescription pet food exempt from Colorado sales tax — and does it matter whether you buy it from your veterinarian or from a pet store?

Plain-English summary

Someone asked the Colorado Department of Revenue whether prescription pet food — the special diets a vet prescribes for a sick animal — is exempt from sales tax. The answer turns on a definitional quirk and, crucially, on who sells it.

Colorado exempts the sale of prescription drugs when a "licensed provider" (which includes veterinarians) furnishes them as part of professional services to a patient — and "patient" includes animals. So at first glance, vet-prescribed food might look like an exempt prescription drug. But both the Colorado Food and Drug Act and the federal Food, Drug, and Cosmetic Act explicitly exclude food from the definition of a "drug." So prescription pet food cannot be exempt as a prescription drug.

There's a second door, though. Colorado also exempts nonprescription drugs or materials, and vet-prescribed pet food may qualify under that provision — but only if all of these are true:

• it's prescribed by a veterinarian;
• it's provided to the patient as part of the veterinarian's professional services;
• it's purchased from the veterinarian who prescribed it; and
• it leaves the veterinarian's premises with the patient.

The bottom line is a point-of-sale rule: the same bag of prescription food is potentially exempt when your vet dispenses it as part of treatment, but taxable when you buy it somewhere else. A sale by a pet food store — even of identical prescription food — is not exempt.

Because this is a General Information Letter, it's general guidance only and not binding on the Department.

What this means for you

Veterinarians and veterinary clinics

If you prescribe a therapeutic diet and dispense it from your clinic as part of the animal's care — and the food leaves with the patient — Colorado treats it as potentially exempt (as a nonprescription drug or material). Keep the prescription tie and the professional-services context documented. If you're just retailing pet food that nobody prescribed, that's a normal taxable sale.

Pet stores and online pet retailers

Selling prescription pet food does not make the sale exempt. The exemption is tied to the prescribing veterinarian dispensing it as part of treatment, so a pet store's sale of the same product is taxable. Collect tax accordingly.

Pet owners

Don't assume "prescription" means "tax-free." The food is potentially exempt only when you buy it from the vet who prescribed it and take it home with your pet. Buy it at a store and you'll generally pay sales tax.

Accountants and tax professionals

The analysis is a two-step: (1) prescription pet food is not an exempt prescription drug because food is carved out of the "drug" definition by both § 25-5-402(9)(c), C.R.S. and 21 U.S.C. § 321(g)(1); (2) it may instead ride the nonprescription drug or material exemption (§ 39-26-717(1)(k)), conditioned on the prescription, professional-services delivery, purchase-from-the-prescriber, and leaves-with-the-patient requirements in the § 39-26-717(1)(f) regulations. The exemption is provider-specific, so the reseller channel breaks it.

Common questions

Q: Is prescription pet food exempt from sales tax in Colorado?
A: Potentially — but only when it's prescribed by a veterinarian, provided as part of the vet's professional services, purchased from that prescribing vet, and taken home with the patient. It qualifies as a nonprescription drug or material, not as a prescription drug (food is excluded from the "drug" definition).

Q: I bought the exact same prescription food at a pet store — is that exempt?
A: No. A sale by anyone other than the prescribing veterinarian, such as a pet store, is not exempt and is taxable.

Q: Why isn't vet-prescribed food just an exempt prescription drug?
A: Because both Colorado's Food and Drug Act and the federal Food, Drug, and Cosmetic Act exclude food from the definition of a drug. So it can't be exempt on the prescription-drug theory; it has to fit the separate nonprescription-drug-or-material exemption.

Q: Does this cover city sales tax?
A: No. The Department administers state and state-administered local taxes only. Colorado's self-collected home-rule cities set their own rules. Check with each home-rule city.

Citations and references

Statutes and rules:
- § 39-26-104, C.R.S. (sales tax on tangible personal property)
- § 39-26-717(1)(a), C.R.S. (prescription-drug exemption; licensed provider includes veterinarians; patient includes animals)
- § 39-26-717(1)(k), C.R.S. (nonprescription drugs or materials exemption)
- § 39-26-717(3), C.R.S.; § 12-64-103(10)(a), C.R.S. (definition of licensed provider)
- § 25-5-402(9)(c), C.R.S. (Colorado Food and Drug Act; food excluded from "drug")
- 21 U.S.C. § 321(g)(1) (federal Food, Drug, and Cosmetic Act; food excluded from "drug")
- Department Regulation § 39-26-717(1)(f)(iii)(A) (furnished as part of professional services); § 39-26-717(1)(f)(i)(C) (purchased from the prescriber; leaves the premises with the patient)
- Department of Revenue FYI Sales 4 (Taxable and Tax Exempt Sales of Food and Related Items)

Source

• Landing page: https://tax.colorado.gov/sales-use-tax-letter-rulings
• Original PDF: https://tax.colorado.gov/sites/tax/files/documents/GIL-18-004.pdf

Original ruling text

Office of Tax Policy
P.O. Box 17087
Denver, CO 80217-0087
[email protected]

GIL-18-004
February 8, 2018
XXXXXX
Attention: XXXXXX
XXXXXX
XXXXXX
Re: Taxability of Prescription Pet Food
Dear XXXXXX,
You submitted a request for guidance on behalf of XXXXXX (“Company”) to
determine the taxability of prescription pet food.
The Colorado Department of Revenue (“Department”) issues general information
letters and private letter rulings. A general information letter provides a general
overview of the relevant tax issues, but is not binding on the Department. A private
letter ruling provides a specific determination for a specific set of facts, is binding
on the Department but not on the taxpayer, and requires payment of a fee. For
more information about general information letters and private letter rulings, please
see Department Rule 1 CCR 201-1, 24-35-103.5.
The Department treats this request as a general information letter. It is important
to remember that general information letters, such as this one, are general
discussions of tax law and are not binding on the Department. If Company would
like the Department to issue a private letter ruling on the issue raised here,
Company can submit a request and pay the fee in compliance with Department
Rule 1 CCR 201-1, 24-35-103.5.
Issue
Is the sale of prescription pet food exempt from sales tax?
Discussion
Colorado levies sales tax on the sale of tangible personal property.1 Some tangible
personal property, such as prescription and nonprescription drugs, are exempt
from sales or use tax if the item sold satisfies the statutory requirements for the
exemption. Colorado exempts the sale of prescription drugs when furnished by a
“licensed provider” as part of professional services provided to a patient.2 A
1

§39-26-104 C.R.S.

2 §39-26-717(1)(a), C.R.S.

“licensed provider” is any person authorized to prescribe drugs including, but not
limited to, veterinarians.3 A prescription drug includes prescription drugs dispensed
or furnished to animals. However, the Colorado Food and Drug Act4 and the
Federal Food, Drug, and Cosmetic Act5 exclude food from the definition of a drug.
While pet food is excluded from exemption as a prescription drug, pet food
prescribed by a veterinarian may still be eligible for exemption as a nonprescription
drug or material.6 Prescription pet food must be provided to a patient as part of the
professional services offered by the veterinarian.7 In order to qualify for the
exemption, the prescription pet food must be purchased from the veterinarian that
prescribed the food and leave the veterinarian’s premises with the patient.8 A sale
of prescription pet food by anyone other than the prescribing veterinarian, such as
a pet food store, will not be exempt.
Miscellaneous
This letter represents the good faith opinion of Department personnel who are
knowledgeable on state taxes issues. However, the Department does not make a
specific determination here on any of the issues raised and the Department is not
bound by this general information letter.
The Department administers state and state-administered local sales and use
taxes. This letter does not address sales and use taxes administered by home-rule
cities and home-rule counties. You may wish to consult with local governments
which administer their own sales or use taxes about the applicability of those
taxes. Visit our web site at www.colorado.gov/tax for more information about state
and local sales taxes.
Enclosed is a redacted version of this letter. Pursuant to statute and regulation,
this redacted letter will be made public within 60 days of the date of this
letter. Please let me know in writing within that 60 day period whether you have
any suggestions or concerns about this redacted letter.
Sincerely,

Office of Tax Policy
Colorado Department of Revenue

3 §§ 39-26-717(3), 12-64-103(10)(a), C.R.S.
4 §25-5-402(9)(c)

5 21 U.S.C. § 321(g)(1)

6 §39-26-717(1)(k), C.R.S.

7 Department Regulation §39-26-717(1)(f)(iii)(A)
8 Department Regulation §39-26-717(1)(f)(i)(C)

2

DR 4010A (06/11/14)