Supreme Court ruling provides sales tax victory for veterinarians

Published on June 21, 2018


Veterinary voices guiding public policyThe U.S. Supreme Court made a major ruling in favor of veterinarians today, allowing states to require online retailers to collect sales tax. The AVMA has been a vocal proponent of this policy for many years, and we welcome this news for the veterinary profession.

For decades, online retailers have been able to skirt sales tax laws because of an outdated statute established prior to today’s thriving e-commerce market. A 1992 Supreme Court decision, Quill v. North Dakota, ruled not to require online retailers to collect sales tax unless they have a physical presence in the state. Instead, the law requires consumers to remit sales taxes on their own – a system that doesn’t work as intended. Ultimately, this creates an unintended tax loophole and provides online retailers an unfair tax advantage of up to 10 percent over brick-and-mortar businesses.

Many veterinary practices offer a range of products to customers including medications, flea and tick preventives, medicated food and treats, leashes and training devices, bedding, and other pet supplies. Since the 1992 ruling, they have been at a significant competitive disadvantage – because veterinarians, like other small, local business owners, have to collect sales tax from customers. Today’s ruling, issued in the case of South Dakota v. Wayfair, should help rectify the situation.

The ruling allows, but does not require, states to begin having online retailers collect and remit sales tax in the same way that brick-and-mortar business already do. It is a critical step toward leveling the playing field for all retailers and businesses, including veterinarians. The AVMA asked the court to take this position in legal briefs filed last year and again in the spring.

While the ruling offers a strong starting place for more equitable sales tax collection, laws will still vary by state, and Congressional action is likely needed to set a tax collection framework. AVMA will continue working closely with Congress to promote sales tax parity on a national basis.

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