KY Sales Tax Update (HB 366): The Loophole!

Over the past few weeks my office has been asked numerous times about the new tax on “luxury services” in Kentucky, including veterinary and pet care services. After much thought below is the loophole all veterinarians should read! 

If you haven’t heard, starting July 1, 2018 *all* veterinarians in the state of Kentucky will be required to charge 6% sales tax on all professional services (which now means all goods and services). Specifically the law reads the following is subject to sales tax:

“Small animal veterinary services…; Pet care services, including but not limited to grooming and boarding services, pet sitting services, and pet obedience training services…”

The KVMA submitted several inquiries to the Department of Revenue to clarify what constituted veterinary and pet care services and imagine this…they said everything veterinarians do is a professional service (i.e. cremation, outside lab work, etc.). However, the DOR also said that all non-veterinarians providing pet services and pharmaceuticals as well as non-profit clinics will also have to charge sales tax under the new law.

Essentially, every invoice from a Kentucky veterinarian, or out-of-state mobile veterinarians providing services in Kentucky, will have a flat 6% sales tax charge on every invoice. It would be advisable for every hospital to update/review their resale certificates with distributors and ensure the staff is accurately charging the hospital account for consumables (use tax). 

The loophole. Lucky for us the state legislature in its ultimate wisdom only applied the tax law to “luxury pets” such as those commonly considered small animals, but exempted cattle, swine, sheep, goats, llamas, alpacas, ratite birds, buffalo, and cervids…oh, and horses. As we all know, horses are the ultimate non-luxury pet, especially those poor derby horse owners struggling for quality veterinary care in the state. So my hospital would like to declare that it will no longer be seeing “small animals” only non-luxury, exempt, horse-hybrids. I attached photos of our newest clients: Kentucky Chrome, the miniature appaloosa heeler; Affirmed, the miniature shetland corgi; and Clementine, the miniature Hackney Tab.