IOWA SALES TAX AND VETERINARY SERVICES

VETERINARY SERVICES

The professional services of a veterinarian are exempt from sales tax. This applies to services rendered to livestock raised for agricultural or dairy purposes, or production for market. Services rendered to companion pets and draft animals are also included in this exemption.

Pet Grooming

The “cosmetic” service of grooming pets, whether performed by a veterinarian or professional groomer, is taxable. However, if pet grooming is part of a medical service, it is exempt since the grooming is an integral part of veterinary care. If pet grooming is done for both veterinary and cosmetic reasons, the primary purpose for the treatment will determine if sales tax should be collected.

In situations where the charge for the cosmetic treatment and the veterinary treatment is invoiced separately, sales tax should be collected only on the cosmetic portion of that billing.

Farm livestock are not considered companion pets, and the gross receipts from the grooming of livestock are exempt.

Laboratory Testing of Animals

Test laboratory services performed on humans or animals are exempt from sales tax. This includes semen analysis for fertility purposes.

PURCHASES

Veterinarians may purchase items for resale tax free. When claiming exemption, the veterinarian should provide the seller with an Iowa Sales Tax Exemption Certificate (pdf).

If the veterinarian paid sales tax when purchasing items from his or her supplier and later sold those goods at retail, an adjustment can be made on the veterinarian’s sales tax return by entering the amount paid for the items as an “other” exemption on line 4 of the return.

Veterinarians may be responsible for consumer’s use tax on items that were purchased outside of the state for use in Iowa and on which tax had not already been paid.

Supplies

The purchase of supplies is taxable. Taxable supplies generally include capital or business assets that are used in the course of the veterinarian’s business or practice that are not resold. Magazine subscriptions, professional journals or publications, office stationery, furniture, and surgical equipment are all examples of capital assets that are taxable to a veterinarian as he/she is the final consumer or end user of those items. Other examples of supplies that a veterinarian might use include disposable hypodermic syringes, ear tags, hog rings, lubricants, marking chalk, oxygen.

Treating Livestock

Purchases of food, drugs, medicines, bandages, dressings, serums, tonics, etc., which are used in treating livestock raised as a part of agricultural production, are exempt from tax.

Treating Pets

Any purchases of food, drugs, medicines, bandages, dressings, serums, tonics, which are used in treating companion pets and other animals (for hobby purposes) are taxable when purchased by a veterinarian and consumed in performing veterinary services. Sales tax on these items should be paid to the vendor. Otherwise, the tax can be reported on line 2 of the veterinarian’s sales tax return as goods consumed.

Tools, Machinery, and Equipment

A veterinarian’s purchase of tools, machinery, or equipment used to aid in performing veterinary services is subject to sales tax.

However, if used primarily in livestock production, the purchase of machinery and equipment is not taxable, but veterinarians should be cautious in claiming this exemption. For example, equipment used to aid in performing veterinary services to both livestock and pets must be used primarily in livestock production to be exempt.

SALES

Livestock

Sales by a veterinarian of food, insecticide, medication, pesticide, etc., used to prevent or treat diseases or for treatment of livestock raised for agricultural production are exempt from sales tax.

Tangible Personal Property

Any sales of tangible personal property used in treating pets and animals other than livestock are subject to sales tax. Other taxable sales by a veterinarian for companion pets and other animals include, but are not limited to, these items: tags, grooming items, collars, leashes, and any drugs, medications, bandages, and dressings. These should be billed separately from any veterinary services provided.

Local Option Sales Tax

Through June 30, 2008, Iowa has two local option sales taxes: the “regular” local option sales tax (LOST) and the school infrastructure local option tax (SILO). Beginning July 1, 2008, SILO is no longer collected as a separate tax. The "regular" local option tax remains in effect.

Local option tax generally applies to the same goods and services that are subject to sales tax. Products, services or organizations that are exempt from sales tax are usually exempt from local option tax.

The same services or supplies that a veterinarian provides that are subject to sales tax are also subject to local option tax if the service or product is performed or delivered in a local option tax jurisdiction.

There is no special application or permit number for local option tax. It is paid with any sales tax that is due on the quarterly sales tax return.

COMPANION PETS AND OTHER ANIMALS

Animals such as horses (also see information below on draft horses), mules, dogs, cats, animals used for racing, and other creatures are not generally considered livestock raised for agricultural production because they are not used for food or clothing.

LIVESTOCK DEFINED

“Livestock raised for agricultural production” is any domestic animal raised on a farm as a source of food or clothing. Following is a partial list of animals that are considered to be livestock.

Mink and bees are examples of animals which are not livestock, even if raised on a farm as a source of food or clothing.

Pets are not livestock.

DRAFT HORSES

Draft horses or those breeds of horses which are commonly thought of as draft horses, such as Belgian, Clydesdale, Percheron, and Shire, are exempt from tax. This includes all services performed on draft horses.

REGISTERED VEHICLES

Vehicles subject to registration, or any implement customarily drawn by or attached to a registered vehicle, are subject to Iowa's one-time registration fee. The fee is imposed on the purchase price at the rate of 5%. This includes camping trailers and horse trailers.

78-531 (9/05/08)