California Pet Tax Takes Effect April 1

Armen Hareyan's picture
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California new taxes rates are taking place, which will effect you pet care cost. State Sales Increasing by 1% on April 1st. Be sure to change the sales tax you are charging your clients on applicable products. People are also calling it as Pet Tax Of California.

The California pet tax will add approximately 9% to the cost of veterinary care for your pets. Since food animals also require veterinary care, the cost of meat, milk, and eggs will also increase if this tax passes. Voters in cities and counties (referred to as taxing “districts”) throughout California have approved new transactions and use taxes in their areas. Some taxes apply to the entire county, and some apply only within city limits. Please read the information below to see if you are affected by these new taxes, which are listed on the reverse side.
Which retailers must collect tax at the new rate?

You must apply the new sales and use tax rate if you:
• Are a retailer in the district and you sell and deliver merchandise within the district.
• Are a dealer of vehicles, undocumented vessels, or aircraft and sell to customers who register them at an address located in the district.
• Collect tax on lease payments you receive for leased property used by the lessee in the district.
• Are a retailer located outside of the district who is engaged in business in the district and you deliver or ship merchandise into the district for use in the district or participate within the district in making the sale.

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You are considered to be engaged in business in the district if you:
a. have any type of business location there,
b. deliver into the district using your own vehicles, or
c. have an agent or representative in the district for the purpose of taking orders, or selling or delivering merchandise.

Note: If you are not required to collect the additional district tax, as described above, the purchaser may be liable for the district tax.
Is there an exemption from the tax rate increase?

In general, fixed-price contracts and fixed-price lease agreements entered into prior to April 1, 2009, are not subject to the tax increase. To qualify as fixed-price, neither party can have the unconditional right to adjust the price for an increase in costs or terminate the contract or lease [Revenue and Taxation Code, sections 7261(g) or 7262 (f)]. In addition, the tax amount or rate must be specifically stated in the contract or lease agreement. If the contract or lease qualifies as fixed-price, you should continue to report and pay the tax at the rate in effect at the time you entered into the contract or lease. The fixed-price contract exemption, however, is designed to protect the business expectations of the parties when they entered into the contract and protect them from an unplanned increase in tax rate. If the tax rate should go down after the terms of your contract have been established, any sales made after the date of the tax decrease would be taxed at the new, lower rate.
Is your address in the city limits or unincorporated county?

District boundaries are generally defined by city and county lines. Many California zip codes overlap city and county lines. To determine which district taxes affect your sales, visit our website: www.boe.ca.gov/sutax/cityaddresses.htm for a listing of city links. If you do not find the city you are looking for on our website, you may contact the city directly to determine whether or not your business or your customer is located within the city boundaries.

California Veterinary Medical Association alerts the veterinarians about the new pet tax in California. For more information please call: 800-400-7115 TDD/TTY: 800-735-2929

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