Were lump-sum horse embryo-transfer services and separate horse boarding charges taxable?

Subject

Horse Embryo Transfer Services

Plain-English summary

Horse embryo-transfer and related professional services were exempt from Florida sales tax. The result applied even when the company sold the embryo-transfer process, recipient mare availability, facility use, off-site veterinarian, and breeding-management assistance as an all-inclusive package.

Separate charges for boarding horses were also exempt because boarding and kennel services were treated as personal services.

What this means for you

The ruling treated the transaction as professional and personal services rather than a taxable sale merely because the contract used a lump-sum purchase price.

Common questions

Q: Were embryo-transfer service charges taxable? No.

Q: Did packaging related services together change the result? No.

Q: Was separate horse boarding taxable? No.

Citations and references

• Fla. Stat. § 212.08(7)(v)1. — professional and personal services
• Fla. Admin. Code r. 12A-1.002(2) — practitioners of the healing arts and animal boarding
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 00A-056

Original ruling text

SUMMARY

QUESTION: What is the taxable status of charges made
pursuant to a contract for horse embryo transfer services,
and related services, for a lump-sum amount.

ANSWER - Based on Facts Below: The charges for horse embryo
transfer services would constitute a professional service
and no sales tax would be due, even if they are part of an
all-inclusive package. Any separate charges for the
boarding of horses would also be tax exempt, as boarding
and kennel services are considered exempt personal
services.

Oct 05, 2000

Re: Technical Assistance Advisement 00A-056
XXX ("company")
Sales Tax
Horse Embryo Transfer Services
Section 212.08(7)(v)1., F.S.
Rules 12A-1.002(2) , F.A.C.

Dear :

This is in response to your letter of August 15, 2000,
requesting the issuance of a Technical Assistance Advisement
regarding the taxable status of horse embryo transfer services,
which your client company provides. You have provided a sample
contract, which is titled "Contract for Embryo Transfer," under
which the company agrees to provided embryo transfer and related
services for a lump-sum amount, designated as the purchase price
for the recipient mare. Your letter provides in part:

The question is whether the services offered by [company]
that are in addition to or unrelated to veterinary services
are subject to sales tax even though they may be part of an
all inclusive package.

The following is a list of the products and/or services
provided by [company] and are all part of the process of
doing related veterinary services:

Availability of a mare to receive embryo transfer.

Facility fee, fee for use of an off site veterinarian.

Technical assistance fee, fee for owner's time and
expertise in reproduction and breeding management.

Boarding, housing horses that have gone through embryo
transfer service or breeding management services.

Law and Discussion

Section 212.08(7)(v)1., F.S., provides:

1. Also exempted are professional, insurance, or personal
   service transactions that involve sales as inconsequential
   elements for which no separate charges are made.

Rule 12A-1.002, F.A.C., dealing with "Practitioners of the
Healing Arts" provides:

(1) All licensed practitioners of the healing arts are the
consumers of the various items of tangible personal
property which they use in the rendition of their
professional services and the tax will apply upon their
purchases of items of tangible personal property, including
equipment except such items as are exempt under Rule 12A1.020.

(2) The tax does not apply to the fees for professional
services rendered by such licensed practitioners. If such
licensed practitioners, apart from their professional
services, are engaged in selling to the public tangible
personal property subject to tax, they are dealers and must
procure dealer's certificates of registration and collect
the tax on all such sales.

(3) The term "practitioners of the healing arts" is deemed
to include veterinarians. When purchased by veterinarians
for the treatment and care of animals, medicines compounded
by licensed pharmacists are exempt, as are antiseptics,
absorbent cotton, gauze for bandages, lotions, vitamins and
worm remedies. Drugs used in connection with medical
treatment, such as penicillin, sulfa, etc., are also
exempt. All instruments and equipment are fully taxable,
as are dog and cat food, soaps, detergents, etc. (See Rule
12A-1.001.)

Rule 12A-1.049(6), F.A.C., provides that "[t]he sales of
livestock for breeding purposes is exempt.

You have stated that none of the products or services involves
the rental or licensing of real property, however, the lump sum
charges do cover the costs of boarding the horses while the
services are being performed. Additionally, you have stated
that the business does not involve the selling of eggs or semen,
both of which are taxable as sales of tangible personal
property. Therefore, based on the information provided, the
charges for horse embryo transfer services, outlined above,
would constitute a professional service and no sales tax would
be due, even if they are part of an all-inclusive package. Any
separate charges for the boarding of horses would also be tax
exempt, as boarding and kennel services are considered exempt
personal services.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S. which is binding on the department only
under facts and circumstances described in the request for this
advice as specified in s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response, your request and

related backup documents are public records under Chapter 119,
F.S., which are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Your name, address, and any other
details which might lead to identification of the taxpayer must
be deleted by the Department before disclosure. In an effort to
protect the confidentiality of such information, we request you
provide the undersigned with an edited copy of your request for
Technical Assistance Advisement, backup material and response
within fifteen days of the date of this advisement.

Sincerely,

Jonathan E. Swift
Tax Law Specialist
Technical Assistance and Dispute Resolution
(850) 922-4840

Control #42218