Can a commercial dog breeder buy dog food tax-free for its breeding dogs and puppies as a production or farming input?

Plain-English summary

The petitioner runs a commercial dog-breeding kennel in NY and buys dog food to feed its breeding dogs and their puppies, which it later sells to the public at retail and to dealers at wholesale. It asked whether that dog food is exempt from sales tax.

The Office of Counsel concluded the dog food is taxable. Sales tax applies to every retail sale of tangible personal property (Tax Law 1105(a)) unless an exemption applies, and none does:

• Production exemption (1105-B): exempts supplies used or consumed directly and predominantly in producing tangible personal property for sale by manufacturing, processing, generating, assembling, refining, mining, or extracting. The statute is specific about the qualifying activities, and breeding or raising animals is not among them.
• Farming exemption (1115(a)(6)(A)): exempts property used predominantly in producing tangible personal property for sale by farming -- but the regulations state in 20 NYCRR 528.7(b), Example 2 that "the breeding of dogs, cats and other pets or laboratory animals is not farming."

Because neither exemption (and no other) applies, the dog food is subject to sales tax.

What this means for you

Commercial breeders, kennels, pet producers

Even though you produce animals you sell, NY does not treat breeding pets as "farming" or as a qualifying "production" activity. Inputs like dog food, bedding, and similar supplies are taxable -- the manufacturing/processing and farming exemptions do not reach pet breeding. (Genuine agricultural livestock farming is treated differently; this opinion is specifically about breeding dogs and other pets.)

Common questions

Q: I sell the puppies I produce -- isn't the dog food a production input?
A: No. The production exemption (1105-B) lists specific activities (manufacturing, processing, etc.), and breeding/raising animals is not one of them.

Q: Isn't raising animals 'farming'?
A: Not for breeding pets. The regulations expressly say breeding dogs, cats, and other pets is not farming (528.7(b), Example 2), so the farming exemption does not apply.

Citations and references

• Tax Law section 1105(a) (sales tax on tangible personal property)
• Tax Law section 1105-B (exemption for supplies used in production by manufacturing/processing)
• Tax Law section 1115(a)(6)(A) (farming production exemption)
• 20 NYCRR section 528.7(b) (breeding of dogs/cats/pets is not farming)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2013.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a13_14s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-13(14)S
Sales Tax
May 24, 2013

Office of Counsel
Advisory Opinion Unit
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S120620C

The Department of Taxation and Finance received a Petition for Advisory Opinion
from name and address redacted. Petitioner, a commercial dog breeder, asks whether the
dog food that he feeds to his breeding dogs and their puppies is exempt from sales tax.
We conclude that the dog food fed to breeding dogs and puppies is not exempt
from sales tax imposed under Tax Law Section 1105(a) because the exemptions under
sections 1105-B and 1115(a)(6)(A) of the Tax Law do not apply to dog breeding.
Facts
Petitioner submits the following facts: Petitioner is a commercial dog breeder who
owns and operates a commercial dog breeding kennel in New York. Petitioner purchases
dog food to feed to his breeding dogs and their offspring puppies. The puppies are later
sold to the general public at retail prices and to dealers at wholesale prices.
Analysis
Tax Law section 1105(a) imposes a sales tax on “the receipts from every retail sale
of tangible personal property, except as otherwise provided in this article.” Tax Law
section 1105-B exempts from sales tax “supplies” used or consumed directly and
predominantly in the production of tangible personal property for sale “by manufacturing,
processing, generating, assembling, refining, mining or extracting . . .” However, Tax Law
section 1105-B is quite clear as to the types of production activities that qualify for the
exemption; the breeding or raising of animals is not encompassed in those enumerated
activities. Accordingly, the purchase of dog food by Petitioner that is used to feed
breeding dogs and their offspring puppies is not exempt from sales tax under section 1105B of the Tax Law.
Tax Law section 1115(a)(6)(A) exempts from sales tax retail sales of tangible
personal property used or consumed predominantly in the production for sale of tangible
personal property by farming. Section 528.7(b) of the Sales and Use Tax Regulations
specifically lists in Example 2 that “[t]he breeding of dogs, cats and other pets or
laboratory animals is not farming.” Petitioner’s purchase of dog food to feed his breeding
dogs and their puppies is not exempt from sales tax under section 1115(a)(6)(A) of the Tax

-2-

TSB-A-13(14)S
Sales Tax
May 24, 2013

Law. Furthermore, we conclude that no other exemption applies to the purchase of dog
food described here. Accordingly, Petitioner’s purchase of such dog food is subject to
sales tax.

DATED: May 24, 2013

NOTE:

/S/
DEBORAH R. LIEBMAN
Deputy Counsel

An Advisory Opinion is issued at the request of a person or entity. It is limited to
the facts set forth therein and is binding on the Department only with respect to
the person or entity to whom it is issued and only if the person or entity fully and
accurately describes all relevant facts. An Advisory Opinion is based on the law,
regulations, and Department policies in effect as of the date the Opinion is
issued or for the specific time period at issue in the Opinion. The information
provided in this document does not cover every situation and is not intended to
replace the law or change its meaning.