The following example identifies a number of facts and then states a conclusion. This example should be used only as a general guide. The tax status of other situations must be determined after a review of all the facts and circumstances.
A dog owner brings her dog to a veterinarian for professional services. The dog has multiple wounds and a broken leg. The veterinarian sets the broken bone and uses a cast and other appropriate therapeutic medicines on the dog in the course of treatment. The veterinarian also applies some salve to the wounds and gives the remainder of the salve to the dog's owner for application over the next few days. The veterinarian segregates the charges for the veterinary services, including the cast materials, and the medicines. The charge for the salve is also separately stated on the billing invoice. The customer also purchases flea powder, dog food, and toothpaste for the dog.
The gross income for the veterinary services is subject to the Service and Other Activities B&O tax classification. This includes the charges for the cast materials and the medicines. The charge for the salve is considered a retail sale, which is subject to the Retailing B&O and retail sales taxes. The charges for the flea powder, dog food, and toothpaste are also taxable in this manner. If the veterinarian had previously paid sales or use tax on the salve, he or she is allowed to take a deduction for tax paid at source.
|Veterinarian||$4,350||Service & Other Activities|
|Cast materials||$400||Service & Other Activities|
|Vet-administered medicine||$50||Service & Other Activities|
The taxes are reported as follows:
|Service & Other Activities B&O tax||$4,800|
|Retailing B&O tax||$70|
|Retail Sales tax||$70|
* Litter tax is due on food for pet consumption and nondrug store sundry items.