When bathing your pet is a medical necessity – Wacky Tax Wednesday

I have a too-big Labrador who loves to swim and frolic at the beach. While a delightful pastime, it isn’t without risk. Because he loves to roll in debris, and since hauling 90+ pounds of muscle off a dead fish isn’t easy, he sometimes exudes a sickening stench. It’s the only time I’ll pay to have him bathed. At least dog washing services are exempt in Washington state, where I live.

Yet pet bathing services are taxable in some states, and taxability sometimes hinges on the reason for the bath or type of bath provided. For example, while tax generally applies when you pay to have someone bathe or groom your pet for you, do-it-yourself dog washing is exempt from sales tax in Connecticut. The state also allows an exemption for pet bathing services that are “an integral part of professional veterinary services.”

Likewise, Tennessee tax law makes a distinction between run-of-the-mill pet bathing services, and those provided for medical purposes. Curiously, to me at least, it also distinguishes between pet bathing services and pet grooming services.

Pet grooming, which includes services such as a haircut, brush-out, and nail care, is generally an exempt service in Tennessee, while charges to bathe an animal are generally taxable. However, unless they’re separately stated, exempt pet grooming services become taxable when combined with taxable bathing services. For example, tax would apply to the entire $105 charge for “bathing and grooming services,” but it would only apply to the $15 charge for pet bathing if the invoice was itemized; the remainder would be exempt grooming charges.

If a veterinarian provides both bathing services and grooming services for non-medical purposes, the same rules for those services offered by non-veterinarians apply: Separately stated bathing services are taxable; separately stated grooming services are exempt; and combined charges for bathing and grooming are taxable.

However, pet bathing services are exempt when provided for medical purposes by a licensed veterinarian, because medical services provided by veterinarians are exempt. Unfortunately, the Department of Revenue doesn’t delve into what makes a bathing service “part of the treatment for a disease or medical condition.”

What’s good for the dog isn’t necessarily good for the cat

That could create conflict, as it did last year in Pennsylvania when an experienced veterinarian argued that the Department of Revenue “erroneously assessed sales tax on animal bathing that was incidental to boarding.”

As in Tennessee, charges for baths provided for medical purposes are exempt in Pennsylvania, while other baths are taxable. The doctor explained in his petition to the Board of Finance and Revenue that “it is his medical opinion that extended boarders, animals staying three or more nights, should receive baths before they go home and, as necessary, during their stay.” This is because “extended boarders are exposed to more bio waste, chemicals, and cleaning agents than short-term boarders, and can become toxic if the residue is not removed.” 

He does charge tax for baths and other discretionary grooming services “provided at the request of the owner,” and when provided after stays of less than three nights. However, he argued “baths for extended boarders are both incidental to nontaxable services and nontaxable medical services.” To support his claim, he provided the Board of Finance and Revenue with a printout from his website, “which reflects that extended boarders receive baths as part of boarding services.”

The Board agreed with the veterinarian that tax should not apply to baths provided to dogs as part of extended boarding services. However, it determined the veterinarian was liable for tax on charges for baths provided to feline boarders and day boarders, “as there is no indication that baths are required for animals falling in those categories.”

In my mind, removing that special eau de rotten fish from my dog would be a medical necessity, if only because the stench makes the rest of the family gag. I’m not sure the Pennsylvania or Tennessee tax authorities would agree.

With distinctions such as these, it’s no wonder sales tax compliance can be so maddening. Even the most conscientious of businesses, like the Pennsylvania veterinarian in the example above, can interpret tax law differently than tax authorities and find themselves out of compliance.

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