SB 688,
as amended, Galgiani. Sales and use taxes: exemptions: animals:begin delete drugend deletebegin insert drugsend insert and medicines.
Existing sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state, and provides various exemptions from those taxes. Existing sales and use tax laws, with certain exceptions, define a retailer as a seller who makes any retail sale of tangible personal property and as a person who makes more than 2 retail sales of tangible personal property during any 12-month period, and defines a retail sale as a sale of tangible personal property for any purpose other than resale in the regular course of business.
Existing sales and use tax law provides that a licensed veterinarian is a consumer
of, and not a retailer of, drugs and medicines used or furnished by the veterinarian in the performance of his or her professional services, so that the retail sale subject to tax is the sale of drugs andbegin delete medicineend deletebegin insert medicinesend insert to the licensed veterinarian.
This bill wouldbegin delete repealend deletebegin insert, until January 1, 2018, suspendend insert the provision that a licensed veterinarian is a consumer of drugs and medicines used or furnished by the veterinarian in the performance of his or her professional services.
This bill wouldbegin insert, until January 1, 2018,end insert exempt from sales and use taxes the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, drugs and medicines used, furnished, or sold by a licensed veterinarian, a city, county, city and county, or other local government animal shelter, or a nonprofit animal welfare or rescue organization for the treatment of animals.begin insert This bill would require the Legislative Analyst’s Office to, by January 1, 2017, with information provided by the State Board of Equalization, conduct and submit a study to the Senate Committee on Budget and Fiscal Review, the Assembly Committee on Budget, the Assembly Committee on Revenue and Taxation, and the Senate Committee on Governance and Finance.end insert
The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing law authorizes districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which conforms to the Sales and Use Tax Law. Amendments to state sales and use taxes are incorporated into these laws.
Section 2230 of the Revenue and Taxation Code provides that the state will reimburse counties and cities for revenue losses caused by the enactment of sales and use tax exemptions.
This bill would provide that, notwithstanding Section 2230 of the Revenue and Taxation Code, no appropriation is made and the state shall not reimburse any local agencies for sales and use tax revenues lost by them pursuant to this bill.
This bill would take effect immediately as a tax levy, but its operative date would depend on its effective date.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.
The people of the State of California do enact as follows:
Section 6018.1 of the Revenue and Taxation
2Code is repealed.
begin insertSection 6018.1 of the end insertbegin insertRevenue and Taxation Codeend insert
2begin insert is amended to read:end insert
begin insert(a)end insertbegin insert end insert A licensed veterinarian is a consumer of, and shall
4not be considered a retailer within the provisions of this part with
5respect to, drugs and medicines used or furnished by him or her
6in the performance of his or her professional services.
7For the purposes of this section, “drugs and medicines” includes
8substances or preparations intended for use in the diagnosis, cure,
9mitigation, treatment, or prevention of disease in animals and
10which is commonly recognized as a substance or preparation
11intended for this use. The term
includes legend drugs, pills and
12capsules (other than vitamins), liquid medications, injected drugs,
13ointments, vaccines, intravenous fluids, and medicated soaps if
14those soaps are available only to veterinarians. The term does not
15include vitamins, shampoos, pet foods, prescription diet foods,
16artificial diets, flea powders, and flea sprays.
17(b) This section shall be inoperative from the period beginning
18on the operative date of the act adding this section until January
191, 2018.
Section 6358.3 is added to the Revenue and Taxation
21Code, to read:
(a) There are exempted from the taxes imposed by
23this part the gross receipts from the sale of, and the storage, use,
24or other consumption in this state of, drugs and medicines used,
25furnished, or sold by a licensed veterinarian, a city, county, city
26and county, or other local government animal shelter, or a nonprofit
27animal welfare or rescue organization for the treatment of animals.
28(b) For purposes of this section:
29(1) “Animal” includes any member of the animal kingdom other
30than humans, and includes fowl, fish, and reptiles, whether wild
31or domestic.
32(2) “Drugs and medicines” includes any substance or
preparation
33intended for use in the diagnosis, cure, mitigation, treatment, or
34prevention of disease in animals and which is commonly
35recognized as a substance or preparation intended for this use. The
36term includes legend drugs, pills and capsules (other than vitamins),
37liquid medications, injected drugs, ointments, vaccines, intravenous
38fluids, and medicated soaps if those soaps are available only to
39veterinarians. The term does not include vitamins, shampoos, pet
P4 1foods, prescription diet foods, artificial diets, flea powders, and
2flea sprays.
3(3) “Licensed veterinarian” means a person licensed pursuant
4to Chapter 11 (commencing with Section 4800) of Division 2 of
5the Business and Professions Code.
6(4) “Nonprofit animal welfare or rescue organization” means
7any organization, formed and operated for the primary purpose of
8prevention of abuse, neglect, or exploitation of animals, that is
9exempt from tax under Section 23701 as an organization described
10in Section 23701d.
11(c) (1) The Legislative Analyst’s Office shall, by January 1,
122017, with information provided by the board, conduct a study as
13described in paragraph (2), and submit the study to the Senate
14Committee on Budget and Fiscal Review, the Assembly Committee
15on Budget, the Assembly Committee on Revenue and Taxation,
16and the Senate Committee on Governance and Finance.
17(2) The study shall measure the following:
end insertbegin insert
18(A) The effect of the exemption provided by this section on the
19number of Internet purchases of veterinary medicine.
20(B) The effect of the exemption provided by this section on the
21cost of veterinary medicine to consumers.
22(C) The effect of the exemption provided by this section on the
23number of veterinary visits in the aggregate.
24(d) This section shall become inoperative on January 1, 2018,
25and as of that date is repealed.
Notwithstanding Section 2230 of the Revenue and
27Taxation Code, no appropriation is made by this act and the state
28shall not reimburse any local agency for any sales and use tax
29revenues lost by it under this act.
This act provides for a tax levy within the meaning of
31Article IV of the Constitution and shall go into immediate effect.
32However, the provisions of this act shall become operative on the
33first day of the first calendar quarter commencing more than 90
34days after the effective date of this act.
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