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C. Medicine.

Medicine that is administered by a veterinarian as part of an exam or

diagnosis is considered “used” by the veterinarian and not “sold”. It is immaterial whether

such medicine is included in the fee for the exam or is separately stated on the customer’s

invoice. Medicine that is “used” is subject to a use tax based on the veterinarian’s cost of the

medicine and no sales tax is charged to the customer on such medicine, even if separately

stated.

This would include medications, drugs, or anesthetics that are injected or

administered during examinations, diagnostic testing, and surgical or exploratory procedures.

No sales tax is charged to the customer for any drugs administered by the veterinarian in the

performance of these services. The veterinarian would pay the Maine use tax on these items.

In the event that medicine is only “used” by the veterinarian and never sold to a

customer, the veterinarian should pay the Maine sales tax to the vendor at the time of

purchase. If the vendor does not collect the Maine sales tax, the veterinarian can accrue use

tax on the purchase price and report it on their next sales tax return. If a medicine is both

used and sold by the veterinarian the product may be purchased tax exempt from the vendor

and the veterinarian can accrue use tax on the amount of product used by them in the

performance of their service. Documentation of use tax accrual on items falling into this

category should be maintained on a regular basis and kept with the taxpayer’s copy of their

regularly filed sales tax return.

If a veterinarian administers part of a particular medicine to an animal during an exam

and sells the remaining quantity of medicine to the customer, the medicine will be considered

subject to sales tax. In other words, if a bottle of 50 tablets is sold to the customer, but the

veterinarian gives 2 of those 50 tablets to the animal during the exam, the 50 tablets is still

considered sold to the customer as a taxable sale.

There is no sales or use tax due on medications that are discarded due to expiration dates.

4. RECORDKEEPING AND REPORTING REQUIREMENTS

Veterinarians and animal caregivers must register and obtain a valid Maine sales tax account.

This will require filing a Maine sales tax return (ST-7), on a regular basis. These returns must be

filed even if there is no Maine sales/use tax liability. Any sales on which sales tax was collected

must be reported on the “Taxable Sales” line of the return. Any Maine use tax due on purchases

on which there was no Maine sales tax collected must be reported on the “Taxable Purchases”

line of the return.

Sales made for resale or to exempt organizations, must be documented by either a Maine

resale certificate or a permanent exemption certificate. This documentation must be maintained

by the veterinarian and kept on file for review purposes.

5. ADDITIONAL INFORMATION.

The information in this bulletin addresses some of the more common questions regarding the

Sales and Use Tax Law faced by your business. It is not intended to be all inclusive. Requests for

Sales Tax Instructional Bulletin No. 51 - Maine Revenue Services Sales, Fuel & Special Tax Division Page 4