The exemptions sought by veterinarians would apply to supplies for all animals, not just those used in agriculture. Photo by Anne Wallace Allen/VTDigger
Veterinarians are hoping to formalize an unofficial sales and use tax exemption that has been applied to some veterinary supplies for 50 years.
Veterinarians and their patients support the exemptions, which have been in place since 1969 relating to some human medical supplies and to some animals used in agriculture. Over the years, the exemptions came to be applied to a wide range of veterinary supplies used on all animals, companion or otherwise.
Several years ago, the Tax Department started looking more closely at its statutes and identified the exemptions as an area that could be interpreted more narrowly, said Will Baker, the Tax Department’s general counsel.
“[The Tax Department] said they never really meant for medical supplies for companion animals to be exempt, even though for 50 years, they let that go through,” said Linda Waite-Simpson, an independent consultant working on the legislation for the Vermont Veterinary Medical Association. Now, “they are looking at the statute in a different way.”
Veterinarians pushed back against the changes, saying an adjustment to the exemptions would cost them money.
Waite-Simpson said the VVMA is seeking a clearer statute that exempts all supplies on companion and agricultural animals – in effect, formalizing a practice that has been in place for decades.
“They’re not the bad guys,” she said of the Tax Department. “This is what they felt the Legislature was saying to them. It was very confusing for us. We want to do the right thing, and we want to make sure our members are paying the taxes they are tasked to pay by the Legislature, but we want to make the point that the current statute is very confusing for everybody.”
The VVMA and individual veterinarians are supporting bills currently before lawmakers in both the House and Senate that would apply exemptions to all animal supplies, not just those for animals used in agriculture.
“Our guidance was not precise,” Baker said. “Ultimately, they would prefer a wider exemption that goes to just all animals, whether it’s pet or whether it’s livestock. That’s not for the Tax Department to contemplate; that would be a law change.”
Ericka Canales, co-owner of the Long Trail Veterinary Center in Williston, said narrowing the exemptions to exclude certain veterinary equipment would cost a veterinarian setting up a new practice $20,000 in increased startup costs. She used a $60,000 X-ray machine as an example.
“If my machine dies after May 1, and we don’t get this bill passed, I’ll have to pay 7 percent sales tax on this equipment” when the veterinarian office purchases another, Canales said. Williston has a 1 percent local option sales and use tax in addition to the state tax.
She estimated the annual cost of losing the exemptions at $8,000 to $10,000 for her clinic, which has two veterinarians.
The changes requested in the bills, H.441 and S.130, call for no change in tax policy, said Jill Skochdopole, a veterinarian who owns Ryegate Small Animal Hospital. They would be revenue-neutral because there would be little change in veterinarians’ tax liability. Skochdopole testified to the House Ways and Means committee in mid-March.
“What the tax department has suggested would be a significant change in policy that would unfairly target pet owners,” she told lawmakers. Skochdopole said she gets 35 percent of her gross income from product sales, of which 16 percent is subject to sales tax. The other 84 percent of those product sales are for prescription drugs, which are tax-exempt right now.
Narrowing the exemptions would add to her own costs and to her clients’ costs, Skochdopole said.
“For us on our side of the state, New Hampshire and the internet will have yet a bigger advantage,” she said.
Read the story on VTDigger here: Veterinary physicians push for tax exemption bill.
