Sales and Use Tax for California Veterinarians
If you practice veterinary medicine in the State of California, you probably have a relationship with the Board of Equalization (BOE). It’s the agency responsible for collecting sales and use taxes for products sold through your practice. Here’s a quick recap of the rules governing your tax liability.
As a general rule, you are liable for payment of sales tax on products purchased for resale to customers. Such products typically include flea powders, leashes, animal carrying cases, grooming aids, pet foods, and vitamins. With your resale certificate in hand, your vendor will not collect sales tax from you when you bring them into inventory. However, tax is due upon sale to your customers. A few exceptions apply:
- Medicine provided as part of a professional service
- Products used as part of a boarding service unless billed as separate line items
- Sale or use of feed for food animals or nonfood animals destined for sale to others
- Sale to other resellers provided the purchaser supplies a valid resale certificate
Medicine sold separately is taxable as a retail sale unless it is for purposes of disease prevention for food animals or nonfood animals destined for sale to others. Purchasers must have a drug exemption certificate to benefit from this treatment. Partial exemptions may be available for sales of selected products used primarily or exclusively by farmers, ranchers, or other growers.
Your vendor is liable for sales tax on products purchased for use in your practice. If you resell a product purchased for internal use, you’ll get a credit on your sales tax reporting form. Conversely, if you purchase a product for resale and consume it in your practice, you’ll owe a “use tax” on that product.
Tax for items sold on credit are due at the time of sale, not when you collect payment. You can reduce your liability by accounting for insurance, financing charges, and bad debt provided you have adequate records to itemize these charges.
You must report ALL of your sales to the BOE and pay sales and use tax applicable on the taxable portion of gross receipts. The reporting interval is determined by the BOE based on your reported sales or anticipated sales at the time of registration. Businesses with less than $100,000 in gross receipts are not required to register with the BOE.
You may not take a deduction for a loss due to robbery, theft, or shoplifting. However, you can get a credit if you pay sales or use tax to a retailer located outside of California.