Georgia Veterinary Clinic Sales Tax Audit
If your veterinarian clinic has been selected for a sales tax audit by the Georgia Department of Revenue, then, you should know that the human rules of consumption do not apply to animals. Georgia, like 47 other states, do not charge sales tax on pharmaceuticals and prescribed medication. For example, you do not pay sales tax on your flu shot at Walgreens. However, that same simple rule does not apply to animals that get similar vaccines.
So, the next question is how to arrange your documents for a sales tax audit. Assume you are administering vaccine A to a dog. Vaccine A is fully taxable. If you are not charging sales tax on the vaccine, then, the GDOR is looking to see whether or not you have collected sales tax on the vaccine. If you collected sales tax, the investigation ends right there. However, if you did not collect sales tax, then, you have to look at the next level – what is the vaccine composed of and did you collect sales tax on the medications with compose vaccine A. Now, assume Medication B and C are used to create vaccine A. If sales tax was paid on medication B and C at the time of purchase by the clinic, then the investigation ends right there. However, if sales tax was not paid on medication B and C nor sales tax was ever paid on the end product, vaccine A, then, the GDOR will demand payment of sales tax on the cost of the entire sale price of the vaccine.
In essence, the auditor needs to see if the vaccine corresponds to vendors and tax was paid on the items. There is a lot of tracing back to follow the stream of sales tax which was paid to make the end produce. Furthermore, if an item was purchase for resale and then used within the clinic, then, the tax must also be paid on that item.
The Factor: In determining the factor, the auditor will review sales and exemptions.
FORMULA FOR DETERMINING THE DREADED FACTOR:
Entire 36 month audit period DIVIDED 6 month sample MULTIPLIED by unremitted tax for the 3 year period = Sales Tax Liability
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Georgia Veterinary Clinic Sales Tax Audit
