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Florida Sales Tax Rules Amended Affecting Veterinarians in Florida
The Florida Department of Revenue recently amended rules regarding sales tax and veterinarians. The purpose of the changes to Rule Chapter 12A-1, F.A.C. (Sales and Use Tax), was to update, consistent with current statutory provisions, the application of tax to drugs, medicines, and medical products, supplies, and devices used in the treatment of human disease, illness, or injury, and in the treatment of animals.
The Department of Revenue created Rule 12A-1.0215, F.A.C. (Veterinary Sales and Services) in an effort to create a Rule that addresses Sales and Use Tax applicable to the veterinary profession, according to Robert P. Babin, Director, Legislative and Cabinet Services.
A copy of Rule 12A-1.0215, F.A.C. Veterinary Sales and Services can be downloaded from the FVMA's website from the Member Alerts portal or by clicking the following link Click Here!
The amended rules were not a result of this year's Legislative Session. They were a result of the Department's audit and review of current rules to ensure they were supported by current statutory authority.
Based on the Department's review, there are three significant changes in the recently amended rules.
1. "Prescription Diets" Are Now Subject to State Sales Tax
The revised Rule provides that the sale of "prescription diets" by veterinarians is now subject to state sales tax unless federal or state law requires that it be dispensed only by prescription. Specifically, for "prescription diets" to be exempt they would need to be labeled: "Caution: Federal law restricts this drug to sale by or on the order of a licensed veterinarian." As of this date, the FVMA has been unable to identify any "prescription diets" that qualify for sales tax exemption.
There were no changes in the amended Rule as it relates to "Prescription Drugs" which provides that the sale of prescription drugs to or by veterinarians are specifically exempt from sales tax. "Prescription Drugs" being defined as those substances or preparations that are required by federal or state law to be dispensed only by a prescription. Specifically, "veterinary prescription drugs" means those drugs labeled: "Caution: Federal law restricts this drug to sale by or on the order of a licensed veterinarian."
2. Non-Prescription Medications Are Exempt or Taxable Depending on Method of Delivery
Sales Tax Exempt When:
Under current Florida statute, Non-Prescription Medications containing commonly recognized substances
possessing curative or remedial properties are exempt from sales tax when:
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· Purchased by a licensed veterinarian who orders and dispenses the substance as treatment for a diagnosed health disorder of an animal;
AND
· The substance is applied to, or consumed by, animals for the alleviation of pain or the cure or prevention of sickness, disease or suffering. (Medication cannot be itemized and a charge included on an invoice to the client.)
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Are Taxable When:
A veterinarian sells a non-prescription drug to a client.
3. New Exemption Certificate For Non-Prescription Medication, Products and Devices
Commonly recognized substances possessing curative or remedial properties may be purchased exempt from tax when the licensed veterinarian, or an authorized representative of the licensed veterinarian, extends an exemption certificate to the selling dealer certifying that the purchased substance possessing curative or remedial properties will be ordered and dispensed and applied to or consumed by, an animal(s) for the alleviation of pain or the cure or prevention of sickness, disease, or suffering of an animal(s).
Failure to provide an exemption certificate to your selling dealer or distributor could result in you paying tax that isn't required.
FVMA members are encouraged to review the newly created Rule 12A-1.0215, F.A.C. (Veterinary Sales and Services) to ensure that their practices are sales tax compliant. The amended rules went into effect July 12, 2010.
Should you have any questions or need any additional information please feel free to contact the Florida Department of Revenue at (850) 922-4729.
The FVMA's legal and regulatory advocacy representatives attended the Rules Workshop in Tallahassee in an effort to preserve the Department's long standing interpretation that "prescription diets" were tax exempt. However, after a long and exhaustive appeal the Department of Revenue reported that they couldn't find statutory support for the exemption of prescription diets, and thus, were unable to grant that exemption. They interpreted the statute to read that veterinarians may purchase both drugs and curative substances tax free. However, the statute only permits a tax free sale by a veterinarian of one type of item – a drug. Florida's current statute does not permit the veterinarian to sell a non-drug item without collecting tax on the sale, according to Robert P. Babin, Director, Legislative and Cabinet Affairs.
The FVMA's Legislative Committee is evaluating legislation to specifically exempt prescription diets for animals when sold by a veterinarian. A recommendation to the FVMA Executive Board should be forthcoming from that committee.
Sales tax updates will be posted on the FVMA website under the Member Alert portal at FVMA's website as more information becomes available.
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