When Dogs are Considered Tangible Personal Propertyby
Whether clients are required to pay sales tax on the charges associated with pet care depends on the option and the state in which the pet boarding/pet sitting occurs.
While sales tax applies to pet boarding services in states like Wisconsin, no tax applies to pet sitting services. What makes a service “pet boarding” vs. “pet sitting?” It seems to be based on whether the owner or the service provider provides the food.
If your clients have pets that are anything like my dog, they probably don’t bring them on vacation. My sweet pooch, Sonny, is too big to fit under the seat of a plane and too stinky for the car. He’s no fun on a leash, has a deafening bark and is a nervous wreck in unfamiliar situations.
I love that dog, but it’s more relaxing for everyone if we leave him when we travel. We basically have four options (as I’m certain your pet-owning clients do):
1. Leave him home alone and have a neighbor feed, water and run him regularly
2. Pay a pet sitter to stay with him
3. Board him
4. Bring him (sometimes we must)
Let’s give an example about the boarding option, which many pet owners tend to do when they go away. According to Wisconsin Department of Revenue Tax Bulletin 188, “The service of boarding pets is subject to Wisconsin sales or use tax. … However, the service of pet sitting that consists of only training, ‘sitting,’ or walking the pet is not taxable when the owner (rather than the service provider) provides all food, food dishes, litter boxes, scratching posts, etc. needed or used during the sitting.”
The bulletin provides three helpful examples. If we lived in Wisconsin and chose Option 1 above, it would be non-taxable. If we chose Option 2 and were sure to provide our own food, bowls, etc., sales tax wouldn’t apply.
However, if we chose Option 3 and relied on the service provider to provide the food, we’d have to pay tax on the associated charges; the pet boarder could purchase the food fed to our dog tax-free (with a resale certificate). Wild, huh? But what if the pet owner furnishes the food but relies on the service provider to provide the bowl?
The law is different in Minnesota. There, “caring for an animal at a care provider’s home” and “caring for an animal at the animal owner’s home” are both taxable services, no matter who provides the food. Sales tax also applies to charges for “walking, exercising, or providing entertainment for animals,” as well as to charges for picking up pet droppings. You can charge for that? And the state gets a cut? Not always...
“Animal care services [in Minnesota] are taxable when provided by anyone who is ‘in the business’ of providing the services,” such as any person or business that solicits sales, advertises, or enters into written contracts to provide services. The Minnesota Department of Revenue is clear that animal care services “are not taxable when provided by someone who is not in the business of providing the services.” If I lived in Minnesota and asked my neighbor to drop in and feed, water, exercise Sonny, or even pick up his droppings, no tax would apply as long as my neighbor didn’t advertise, solicit, or enter into written contracts to provide that service.
There’s a similar policy in New York, where animals like my lovable pooch are considered tangible personal property, the same as a book or a shrub. Furthermore, “maintaining, servicing, and repairing are terms used to cover all activities that relate to keeping tangible personal property in a condition of fitness, efficiency, readiness, or safety or restoring it to such condition.”
Thus, “the maintaining and servicing of pets”— like feeding and walking a dog — is taxable in New York. Generally there’s an exception when the service is provided to guide and other service dogs, or rendered by an individual who doesn’t offer such services to the public as part of a regular trade or business.
Similarly, the Texas Comptroller lists dog grooming as one of many maintenance, remodeling or repair services performed on tangible personal property. Like other states, Texas defines tangible personal property as “personal property that can be seen, weighed, measured, felt, or touched or that is perceptible to the senses in any other manner.”
This certainly describes my dog, who’s perceptible to a slew of senses (did I mention the smell?), but I couldn’t find a specific reference to dog walking or boarding in Texas sales tax law on the comptroller’s website.
Fortunately for dog service providers in Connecticut, the Connecticut Department of Revenue Services features numerous pet boarding services in its Common Sales Tax Questions Concerning New Legislation. It explains that the following services are subject to sales tax in Connecticut as of July 1, 2011:
- Clipping and polishing of pet nails
- Cuddle sessions (when provided as an additional service during pet boarding)
- Dog socials (when provided in connection with boarding or pet daycare) Do-it-yourself dog washing
- Dog walking in connection with dog walking services
- Pet bathing (unless an integral part of professional veterinary services)
- Pet daycare services
- Pet obedience classes
On the other hand, pet sitting at the pet owner’s home isn’t considered a taxable pet boarding service in the Constitution State. Sales tax law is rarely as simple as “all boarding services are taxable” or “all pet-sitting charges are exempt.” That’s what makes it so fascinating for folks who study sales tax and frustrating for the businesses required to collect and remit it.
Gail Cole is a Senior Writer at Avalara. She’s on a mission to uncover unusual tax facts and make complex laws and legislation more digestible for accounting and business professionals — or anyone interested in learning about tax compliance.