How did Utah tax veterinary medical services, grooming, supplies, agricultural and resale purchases, animal boarding, and separately charged food?

Plain-English summary

Utah Private Letter Ruling 98-052 separated veterinary professional services from grooming and sales of products.

Veterinary medical services were not taxable. Animal grooming was taxable because Utah treated it as cleaning tangible personal property, including dogs and other animals.

Veterinarians had to collect tax when selling products to customers, but agricultural and resale exemptions could apply when their specific conditions were met.

Medical services and grooming

Charges for medical services performed by a veterinarian were not subject to sales tax.

Grooming services were taxable.

The Commission explained that Utah taxed services to clean tangible personal property and treated dogs and other animals as tangible personal property for that purpose.

Products sold to customers

A veterinarian generally had to collect sales tax on tangible personal property sold to a customer.

The response listed:

• Food.
• Medicine.
• Leashes.
• Collars.
• Supplies.

The product's use or a valid exemption certificate could change the result.

Agricultural-producer exemption

Utah Admin. Code R865-19S-49 allowed feed, medicine, and veterinary supplies to be purchased tax-free when used primarily and directly in farming operations.

A veterinarian did not have to collect tax on a qualifying sale when the customer supplied an exemption certificate claiming the agricultural-producer exemption.

The veterinarian could claim that exemption for the clinic's own purchase only when the veterinarian would use the item primarily and directly in farming operations under the rule.

An agricultural certificate did not make every purchase by a veterinarian exempt.

Resale purchases

A veterinarian could buy tangible personal property tax-free for resale by giving the supplier a resale-exemption certificate.

That exemption did not apply to items consumed while the veterinarian performed medical services.

The Commission treated the veterinarian as the final consumer of items such as:

• Disposable surgical gloves.
• Surgical instruments.
• Other supplies used in providing medical services.

The veterinarian owed sales tax when buying those consumed items.

Animal boarding

Charges to board an animal were not taxable.

Food furnished as part of the boarding service received different treatment depending on the invoice:

• If there was no separate food charge, the veterinarian consumed the food while providing the boarding service and owed tax when purchasing it.
• If food was separately sold to the customer, the veterinarian could buy it tax-free for resale and collect tax from the customer.

When an invoice contained taxable and exempt charges, the response said they had to be separately stated or the entire amount was taxable.

Obsolete statutory reference in the request

The requester cited section 60-250 and asked for a definition of veterinary supplies.

The Commission said Utah Code title 60 had been repealed in 1965 and replaced by title 70A. It found no current relevance in the old veterinary-supplies reference.

Holding

Under the ruling:

• Veterinary medical services were not taxable.
• Animal grooming was taxable.
• Retail sales of food, medicine, leashes, collars, and supplies were taxable unless an exemption applied.
• Qualifying farm-use items could be sold tax-free with an agricultural-producer exemption certificate.
• Resale inventory could be purchased tax-free.
• Items consumed in medical services were taxable to the veterinarian.
• Animal boarding was not taxable.
• Bundled boarding food was taxable to the provider, while separately sold food was taxed to the customer.
• Taxable and exempt invoice charges had to be separately stated.

What this means for you

Veterinarians and veterinary clinics

Classify each revenue and purchase stream: medical care, grooming, product sales, farm-use sales, clinic-consumed supplies, boarding, and food.

Veterinary-supply distributors

An exemption certificate must match the transaction. A veterinarian is not automatically exempt on all purchases.

Animal boarding businesses

Separately charging food can shift the tax point from the provider's purchase to the customer's retail purchase.

Accountants and tax professionals

Review item use, resale intent, farm-use eligibility, exemption certificates, and invoice presentation under current law.

Common questions

Q: Were veterinary medical services taxable?

A: No.

Q: Was animal grooming taxable?

A: Yes.

Q: Could a veterinarian use an agricultural exemption for every purchase?

A: No. The item had to be used primarily and directly in farming operations.

Q: Could resale inventory be purchased tax-free?

A: Yes, with a resale-exemption certificate.

Q: Who paid tax on surgical gloves and instruments used in treatment?

A: The veterinarian, as the final consumer.

Q: Was animal boarding taxable?

A: No.

Q: How was food included with boarding treated?

A: The provider owed tax on bundled food; separately sold food could be bought for resale and taxed to the customer.

Key source language

• Medical and grooming services: “any charges for medical services performed by a veterinarian are not subject to sales tax. However, grooming services are taxable”
• Farm-use items: “feed, medicine, and veterinary supplies may be bought tax exempt if used primarily and directly in farming operations.”
• Consumed supplies: “the veterinarian is considered the final consumer of these items.”
• Bundled charges: “when there are charges that are both subject to tax and tax exempt, the charges must be separately stated or the entire amount is subject to tax.”

Citations and references

• Utah Admin. Code R865-19S-49

Source

• Landing page: Utah Private Letter Rulings
• Official ruling: Utah PLR 98-052
• Fetch note: the exact official URL returned HTTP 404 to a direct request and was then retrieved through Sofya.

Original ruling text

98-052

Response August 14, 1998

REQUEST LETTER

Dear Ms. Reese,

The COMPANY A is a distributor of veterinary supplies. We provide a broad array of products for the veterinarian, ranging from over-the counter resale items such as diets, leashes and collars to products consumed by the veterinarian in the provision of service such as surgical supplies and equipment and diagnostic supplies and equipment. We also offer a large inventory of pharmaceuticals for all types of animals.

We need written rulings on the following issues that have arisen recently.

1. Can a veterinarian be totally exempt from sales tax on all items by submitting an exemption CERTIFICATE claiming the agricultural producer exemption?

2. If a veterinarian submits an exemption CERTIFICATE claiming the resale exemption, can they be totally exempt from sales tax on all items? If not, what types of items would be exempt to the veterinarian under a resale exemption?

3. Could you please define veterinary supplies as cited in 60-250 of the Utah State Code and does this exemption go beyond sales to the agricultural producer to include the veterinarian?

4. Is service provided by the veterinarian taxable to his clients? How does this impact the taxability of items the veterinarian purchases from us to provide this service, e.g. disposable surgical gloves, microscope slides, diagnostic kits, IV tubing, surgical instruments, x-ray developer, etc.?

I appreciate your prompt attention to this request. If I can be of any assistance in further clarifying the above scenarios, please call me at #####.

Sincerely,

NAME

RESPONSE LETTER

August 14, 1998

NAME

ADDRESS

CITY, STATE ZIP

RE: Advisory Opinion - Sales Tax on Veterinary Services and Supplies

Dear NAME,

We have received your request for an advisory opinion concerning Utah�s application of sales tax on veterinary services and supplies. We shall address the impact of current Utah law on these issues below, but first let us address �60-250, which you referred to in your Question #3. Title 60 of the Utah Code was repealed in 1965 and was replaced with Title 70A. As there is no mention of �veterinary supplies� in Title 70A, we do not know, without historical research, what purpose that old law served. Nevertheless, any reference to �veterinary supplies� in that old section of law would have no relevancy today.

As to sales tax and its application on veterinary services, any charges for medical services performed by a veterinarian are not subject to sales tax. However, grooming services are taxable, as Utah law does impose a sales tax on services to clean tangible personal property, which includes dogs and other animals.

As to the sale of tangible personal property, the veterinarian must collect sales tax on all items sold to a customer, including food, medicine, leashes, collars, or supplies. An exception is found in Utah Admin. Code R865-19S-49 (copy enclosed), which states that feed, medicine, and veterinary supplies may be bought tax exempt if used primarily and directly in farming operations. The veterinarian need not collect sales tax for these items if the customer gives the veterinarian an exemption certificate claiming the agricultural producer exemption. The veterinarian can claim this exemption for his or her own purchases only if he or she will use them primarily and directly in farming operations as described in Rule R865-19S-49.

When purchasing items of tangible personal property that he or she intends to resell, the veterinarian may purchase them tax exempt by issuing the supplier an exemption certificate that claims the resale exemption. However, for items purchased to perform his or her medical services, such as disposable surgical gloves, surgical instruments, etc., the veterinarian is considered the final consumer of these items. Accordingly, he or she would need to pay sales tax on these items at the time they are purchased.

One last service often performed by veterinarians is animal boarding. Charges to board an animal are not subject to tax. Where no separate fee or specific amount is charged for food which is furnished as part of the boarding charges, the veterinarian is considered to consume the food in providing the service. Accordingly, the veterinarian would need to pay sales tax on the food when he or she purchases it. On the other hand, should the veterinarian charge the customer for the food separate from the boarding charges, then the veterinarian may purchase the food tax free under the resale exemption. The sales tax would be collected when the customer is charged for the food. Please remember that when there are charges that are both subject to tax and tax exempt, the charges must be separately stated or the entire amount is subject to tax.

Please contact us if you have any other questions.

For the Commission,

Joe B. Pacheco, CPA

Commissioner

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