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See answers to questions below and be sure to forward additional issues that arise from your membership regarding the taxation of services.

Under the new law, all charges made by veterinarians that come within the scope of professional services performed by veterinarians are subject to sales tax.

Sales tax returns are due on a monthly basis, but DOR does allow less frequent filing based upon the amount of sales tax reported annually. DOR adjusts filing frequencies each June. Taxpayers may request a filing frequency change directly from DOR as needed; however, taxpayers may not file less frequently than the payment history requires. Please direct filing frequency requests to KRC.WebResponseSalesTax@ky.gov.

Yes, retail pharmacies should charge sales tax on prescriptions fulfilled for animals under current law. The prescription drug exemption applies only to human beings.

No, any charges to the client for laboratory tests whether in-house or by reference lab are taxable. 

  • Does the new tax apply to outside lab tests? Charges a veterinarian practice pays for outside lab test are also subject to sales tax if the results are used in the veterinarian practice in Kentucky.

​Charges a veterinarian practice pays for outside lab tests are also subject to sales tax if the results are used in the veterinarian practice in Kentucky.

No. Cremation services do not fall within the scope of small animal veterinary services. Neither cremation charges to the veterinary practice nor cremation charges from the veterinary practice to the client are subject to tax. 

Veterinarians may claim a resale exemption for purchases of tangible personal property that are sold to and given to the client. However, they may not claim a resale exemption on purchases of items consumed or used up while providing veterinarian services. A veterinarian practice may issue a completed Kentucky resale certificate (Form 51A105) or a Streamlined Exemption Certificate (Form 51A260) to its suppliers for items it will resell and give to the client. If a veterinarian paid tax on inventory items that were later resold (provided to and delivered to a client), the veterinarian may claim a “tax paid purchase resold” deduction on the sales tax return on which that transaction was reported. However, the “tax paid purchase resold” deduction may not exceed the total tax due on the return. See KRS 139.260 and Kentucky Regulation 103 KAR 31:090 for further guidance.

The veterinarian will owe tax on the purchase of items it consumes. You should report the purchase price of the products for consumption on line 23 of the sales and use tax return and remit the 6% tax due along with the rest of the tax due for the reporting period.

The veterinarian should keep clear client records that tie back to the billings for services rendered. These records should maintain the distinction between small animal and large animal treatments and charges. The new tax law specifically excludes services for equine, cattle, swine, sheep, goats, llamas, alpacas, ratite birds, buffalo, and cervids from taxable small animal veterinary services. In addition, DOR understands the term “small animal” veterinary services to generally refer to companion animals or pets. Mixed veterinary practices should keep clear records on exempt charges for services to livestock and equine vs. taxable services to pets.

Yes, all surgery related charges fall within the category of veterinarian services.

Yes, non-profit veterinarian practices will be liable for the sales tax on their gross receipts derived from the services rendered. These non-profits should bill their customers the tax and collect and remit it accordingly.

Yes, see question #16. In addition, shelters that qualify as 501(c)(3) entities with the IRS and have a purchase exemption authorization with DOR may purchase consumable supplies they use in the performance of their non-profit veterinarian services. Also, see question #18.

Yes, 501(c)(3) charitable, educational, and religious organizations may purchase veterinarian services exempt from sales tax by fully completing a Purchase Exemption Certificate, (Form 51A126) or a Streamlined Exemption Certificate (Form 51A260). The tax law concerning exempt entities has not changed. Entity exemptions will apply to both taxable products and taxable services. There is a presumption that all receipts are subject to tax and veterinarians should charge tax on all their services from July 1, 2018, forward unless the customer provides a completed exemption certificate to the contrary (KRS 139.260).

No, see questions #10 and #13. You should charge tax on the total bill, but there is no reason to itemize more charges on billings than you do currently. The difference will be the calculation of sales tax added to the final billing amount due.

Yes, a couple of examples are the resale certificates (see question #11) and the Kentucky Sales and Use Tax Return (Form 51A102). However, DOR encourages the use of its eFile System as a convenient way to electronically report and pay sales tax. Please see the E-file Quick Start Guide for a tutorial on how to establish a user account for electronic filing.

Based upon the fact that veterinarians participating in these clinics perform the services and charge for the shots, the charges are subject to the 6% sales tax.  

You may contact the Sales and Use Tax Division directly at (502) 564-5170 or send an email to KRC.WebResponseSalesTax@ky.gov.

Yes, the new law also lists pet care boarding services as another one of the new services subject to the 6% sales tax. These services will be taxable when provided by veterinarians as well as by other types of service providers.

Since these laboratory services are also in the category of veterinarian services, charges for the services should also include Kentucky sales tax billed to the veterinarian. The exempt resale provisions under KRS 139.260 apply only to the resale of tangible personal property and digital property.

Generally, businesses operate on an accrual basis by reporting on the sales tax return gross receipts charged for the month in which the sales transaction occurs, even if full payment has not been received. Veterinarians should continue reporting their sales on the accrual basis just as they reported their retail sales prior to July 1, 2018. See Kentucky Regulation 103 KAR 31:011 for further detail (http://www.lrc.ky.gov/kar/103/031/011.htm).

The rate for the new sales tax on services is 6%.

​Yes, the charges paid as a condition of ownership and/or possession of the pet are gross receipts from a sale, so they are subject to sales tax. 

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