Animal rescue groups and nonprofit animal shelters have different sales tax responsibilities. While both may be exempt entities and exempt from paying sales tax on their purchases, they generally must collect sales tax on their sales. However, the Texas Tax Code specifically exempts nonprofit animal shelters from collecting sales tax on their animal adoption fees. An animal rescue group is generally required to collect sales tax on any sales and animal adoption fees.
An animal rescue group’s adoption fees are subject to sales and use tax. An animal rescue group that has received tax-exempt status from the Comptroller’s office can purchase items tax free that support the goal of the organization, but the exempt status does not fully extend to their sales. Qualifying tax-exempt nonprofit organizations can have two one-day, tax-free sales each calendar year. If they collect adoption fees during their two annual one-day tax-free sale days, these fees are tax-exempt.
For example, a golden retriever rescue group with a 501(c)(3) status that does not qualify as an animal shelter, as defined in the Health and Safety Code, must collect and remit sales tax on their animal adoption fees. If they have applied for and received Texas sales tax exempt status, they do not have to collect tax on their animal adoption fees for animals adopted during their designated tax-free sale days. Additionally, they can purchase items relating to their exempt purpose tax free such as dog beds and dog food.
Expenses incurred by an animal rescue group and charged to the purchaser of the animal are also taxable. For example, transportation fees for an animal sold to a purchaser and delivered to a Texas location are taxable.
Please note, if you sell a rescue animal to an out-of-state purchaser, the adoption is not subject Texas sales tax and any related charges to the sale are not taxable if you have documentation showing the rescue animal was delivered to a location outside of Texas. You may, however, need to collect another state’s sales tax on the purchase. All states have different tax regulations for the collection of sales tax. It is recommended that you determine the state tax responsibility on the purchase of a rescued animal and related charges for an animal that is transported to another state.
Our goal is to help animal rescue groups comply with the state tax laws. As we are clarifying that the exemption for animal shelters does not apply to an animal rescue group, we are asking for prospective compliance effective Jan. 1, 2020. We do not intend to pursue back taxes. However, if you collected tax prior to Jan. 1, 2020, you must remit the tax to the state. If you do not have a sales tax permit and do not qualify as an animal shelter, you can apply for a sales tax permit using our Texas Online Tax Registration Application, or mail Form AP-201, Texas Application for Sales and Use Tax Permit (PDF) toComptroller of Public Accounts
The term “animal shelter” is defined by law in the Texas Health and Safety Code as a facility that keeps or legally impounds stray, homeless, abandoned or unwanted animals. The shelter must also satisfy the Health and Safety Code’s standards for animal shelters.
If your organization meets the Health and Safety Code’s definition and standards for a nonprofit animal shelter, the charges or fees for animal adoption are exempt from sales tax.
In 2015, the Texas Legislature passed House Bill 855, which requires state agencies to publish a list of the three most commonly used Web browsers on their websites. The Texas Comptroller’s most commonly used Web browsers are Google Chrome, Microsoft Internet Explorer and Apple Safari.