Which dog-breeding purchases were exempt from Kansas sales tax for breeding stock, puppies held for sale, and offspring kept for breeding?

Plain-English summary

Breeding dogs and qualifying inputs used to produce or hold puppies for sale or breeding were exempt from Kansas sales tax.

The business bought puppies and adult dogs for resale as breeding stock and also maintained its own small breeding kennel.

The Department said these purchases were exempt:

• dogs used as breeding stock;
• food for puppies held for sale;
• food for breeding stock and offspring retained for breeding;
• consumable production items such as prescription and nonprescription drugs and flea control;
• vaccinations and similar items for puppies held for sale or breeding; and
• collars when sold with the dog.

The breeder had to provide the vendor an ingredient or component part exemption certificate.

The ruling distinguished these business-production and resale uses from ordinary pet ownership. It did not state that purchases for pets were exempt.

What this means for you

Dog breeders

Track which animals are breeding stock, held for sale, or retained for breeding. Keep inventory and breeding records supporting the exempt purpose.

Purchasing teams

Give vendors the required exemption certificate for qualifying food, drugs, vaccinations, flea control, and items transferred with the dog.

Pet retailers and owners

Do not extend the ruling to items bought for ordinary pets. The exemption depended on breeding production or resale.

Common questions

Q: Were breeding-stock dogs exempt?
A: Yes.

Q: Was food for puppies held for sale exempt?
A: Yes.

Q: Were veterinary drugs and flea-control products exempt?
A: Yes for the breeding-stock and held-for-sale uses described.

Q: Were collars exempt?
A: The ruling included collars when sold with the dog.

Citations and references

• K.A.R. 92-19-59 — Kansas Private Letter Ruling procedure

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2004-029

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

June 28, 2004

XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX

Dear XXXXXXXXXX,

This is a formal response to your letter dated XXXXXXXXXX. In that letter, you stated:

However, we are confused about breeding stock. There are times that we purchase puppies and adult dogs to sell to breeders for breeding stock. We also have a small breeding kennel (four females and one male) of our own and often sell puppies or adult dogs for breeding stock as well. These are not pets. They are confined to the kennel and are used for breeding purposes to raise offspring. We believe that the offspring should be classified as pets if and when they are sold to pet stores or individuals.

The purchase of dogs used as breeding stock is exempt from Kansas retailer’s sales tax.

Food purchased for puppies that will be sold is exempt from sales tax, as is all food purchases for breeding stock and offspring kept for breeding purposes. The breeder must provide the vendor of these goods with an ingredient or component part exemption certificate.

Purchases of tangible personal property for the consumption of breeding stock are considered consumed in production and exempt from sales tax. This would include items which are consumed or “used up” in the process of producing puppies for the pet market including food, all drugs, both prescription and nonprescription, flea control, etc. The breeder must provide the vendor of these goods with an ingredient or component part exemption certificate.

Most purchases of tangible personal property for puppies that will be sold or kept for breeding purposes are exempt from sales tax. This would include such items as food, vaccinations, flea control, drugs, and collars (if sole with the dog), etc. All drugs, both prescription and nonprescription, purchased for puppies held for sale or breeding are not taxable. The breeder must provide the vendor of these goods with an ingredient or component part exemption certificate.

This is a private letter ruling pursuant to K.A.R. 92-19-59. It is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to an accurate determination by the department, this ruling is null and void. This ruling will be revoked in the future by the operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or published revenue ruling, that materially effects this private letter ruling. If I may be of further assistance to you, please contact me at your earliest convenience at (785) 296-5330.

Sincerely,

Mark Ciardullo
Tax Specialist

Date Composed: 06/30/2004 Date Modified: 06/30/2004

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