Is feed purchased for dogs held for breeding purposes (whose puppies are sold in the regular course of business) exempt from Texas sales tax?

Plain-English summary

The Texas Comptroller's Tax Policy Division responded to a letter asking about the tax treatment of feed purchased for dogs held for breeding purposes, where the puppies (offspring) are held for sale in the regular course of business.

The Comptroller confirmed that such feed may be purchased tax free by giving the seller an exemption certificate in lieu of paying sales tax. The exemption is grounded in Tax Code Section 151.318 and Rule 3.296(a)(2)(A). The letter notes the opinion is based on the facts submitted, and other facts, though similar, may yield different results.

What this means for you

Dog breeders operating as a business

If you keep breeding dogs and regularly sell their puppies as part of a business, feed purchased for those breeding dogs can qualify for a sales tax exemption. To buy the feed tax free, you give the seller a properly completed exemption certificate instead of paying sales tax at the time of purchase.

Feed sellers and retailers

If a customer presents an exemption certificate for feed purchased for breeding animals whose offspring are sold in the regular course of business, the seller may accept the certificate in lieu of collecting sales tax on that sale, consistent with Rule 3.296(a)(2)(A).

Anyone relying on this letter

This letter was issued on specific facts presented by one taxpayer. If your situation differs — for example, if the dogs are not held for breeding purposes or their offspring are not sold in the regular course of a business — the outcome could be different.

Common questions

Q: Do I have to pay sales tax on feed for my breeding dogs?
A: Not if the dogs are held for breeding purposes and their offspring are held for sale in the regular course of business — that feed may be purchased tax free using an exemption certificate.

Q: How do I buy the feed tax free?
A: By giving the seller an exemption certificate in lieu of paying sales tax, as described in this letter.

Q: What is the legal basis for this exemption?
A: Tax Code Section 151.318 and Rule 3.296(a)(2)(A), as cited in the letter.

Q: Can any business relying on this exact letter use it as legal authority?
A: No. The letter states the opinion is rendered based on the facts submitted, and other facts, though similar, may yield different results. STAR letters generally may be relied on only by the taxpayer to whom they were issued.

Citations and references

Statutes and rules:

• Tax Code Section 151.318
• 34 Tex. Admin. Code Rule 3.296(a)(2)(A)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9509L1374G07

Original ruling text

September 26, 1995

Dear **:

Thank you for your recent letter regarding the tax treatment of feed
purchased for dogs held for breeding purposes whose offspring are held
for sale in the regular course of business.

Such feed may be purchased tax free by giving the seller an exemption
certificate in lieu of sales tax. The source of the exemption is Tax
Code Section 151.318 and Rule 3.296(a) (2)(A).

This opinion is rendered based on the facts you submitted. Other
facts, though similar, may yield different results.

You may call me toll free at 1-800-531-5441, ext. 3-4680. The direct
line is 512/463-4680. You may also write to Tax Policy Division,
Comptroller of Public Accounts.

Sincerely,

Al Van Allen
Tax Policy Division