ISVMA revels in tax victory

SPRINGFIELD, ILL. — Veterinarians will no longer be considered retailers by the Illinois Department of Revenue (IDOR).

Months of negotiations between the Illinois State Veterinary Medical Association (ISVMA) and the Illinois Department of Revenue (IDOR) concluded with a written definition of veterinary services and the tax that applies.

A compromise was demanded by ISVMA after years of veterinary practice audits and confusion regarding what services fall under use tax or retail tax. The most recent audit trail snared an estimated 45-50 practices.

"The agreement means veterinarians will no longer be required to pay a local service tax, will be able to pay use tax on the cost price of everything they transfer to clients and will not be confused by what sales tax a product or service falls under, avoiding adverse audits," says Peter Weber, ISVMA executive director.

Weber and audit consultants from J.D. Michael & Associates and representatives of IDOR established a bright-line test that enables each veterinary practice to understand the appropriate taxes to IDOR.

ISVMA also accomplished a re-establishment of veterinarians as deminimus service providers, eliminating the need for DVMs to register with IDOR for a retail certificate.

"We are so happy a compromise has been reached," Weber says. "This is a great victory that will affect all state veterinarians."

Veterinary practices now will pay a use tax to suppliers based on the cost price and will not have to register or file sales-tax returns as long as items are transferred to clients as a medical service.

Although many flea control products and shampoos can be purchased without a prescription, the products will be filed under the use tax when notations are made in clients' records citing need for the product after consultation.

"If a veterinary practice does not sell any retail products, they will not have to register with the IDOR and will not be required to pay a local service tax," Weber says. "We are recommending that veterinarians avoid selling such products like leashes, toys and food dishes."

Veterinary practices that sell items to a client without consultation must list the items sold under retail tax.

Veterinarians who have been audited or are currently undergoing an audit are being referred to the association's consultants and might be eligible for relief under the terms of the new agreement.