AVMA challenges 'fairness' of Internet sales tax moratorium

AVMA challenges 'fairness' of Internet sales tax moratorium

Sep 01, 2011

NATIONAL REPORT — In a move to help veterinary practices become more competitive with online pharmacies, the AVMA threw its support to abolishing a federal moratorium on Internet sales taxes to out-of-state customers.

The Executive Board of the American Veterinary Medical Association (AVMA) okayed the position statement at its summer meeting.

The board adopted the policy for two reasons—fairness and quality control, says Dr. John DeJong, DVM, District I of the AVMA Executive Board.

"This definitely affects companion-animal practices," DeJong says. "All veterinarians in private practice are affected at some level."

Currently, a federal moratorium on taxing Internet transactions is considered to give online pharmacies a competitive edge, allowing them to charge less than most veterinary practices.

Congress has blocked state and local governments from levying sales taxes on Internet transactions and certain other forms of electronic commerce since the late 1990s, according to AVMA. Lawmakers have since extended the law three times, most recently with the Internet Tax Freedom Act Amendments Act of 2007, which continued the sales-tax moratorium through Nov. 1, 2014.

The AVMA State Advocacy Committee, which proposed the new position statement, explained in its recommendation to the Executive Board that veterinary clinics in many states selling drugs on-site must charge sales tax, while Internet pharmacies can sell the same drugs across state lines at cheaper prices because they aren't subject to the same tax requirements.

This price advantage for online retailers ranges from 4 percent to 9.75 percent, depending on state and local sales tax laws, the committee reports.

DeJong estimates about 10 percent of his housecall practice, Boston Mobile Veterinary Clinic, is made up of pharmaceutical sales. "It's not huge, but it is considerable," DeJong says of the heartworm, antibiotic and steroid prescriptions he fills.

"Veterinarian incomes are down throughout the country," he adds.

Brian Maxwell, DVM, of the Adobe Animal Hospital in Los Altos, Calif., says pharmacy sales are a significant part of the Silicon Valley practice. "It isn't a small amount, that's for sure," he says.