Do out of state breeders pay sales tax on stud fees in KY?

[wgc517]

Anyone know the correct answer to this? Do I have to pay tax on the stud fee for a KY sire if I am boarding and foaling in PA.
The farm last year did not charge me but the farm this year says that I have to pay it. I did not think I did.

[LB]

I'm almost certain that you do have to pay it because the service is produced and sold in Kentucky. It's a sales tax. If you lived in PA and travelled to NY, you'd still have to pay sales tax on stuff you bought in NY even though you're not a NY resident.

[wgc517]

thanks LB,

That makes sense, however I have bought a ring in NY and they mailed it to me and I did not have to pay the taxes.

[Shannon]

I think you can claim back all taxes paid out of state...we can here provincially. Some charge and some don't, it seems to depend on the company doing it. For example, we supply product to the oil patch in Alberta. If we ship out of province we charge the tax that the receiving province requires, not our tax in AB. If we buy out of province, they charge us the tax we pay by law, not their tax. But a few companies I buy from will charge me their tax, regardless, then we claim it back.

[madelyn]

Sorry, Shannon, that is no so down here.

In this case the product is the stallion service, which means that the mare is IN KY at the time that it is sold. When you bought that ring, wgc, you avoided the steep NY taxes by having it shipped, but you were SUPPOSED to pay your own state sales tax on it when you "received" it. The states are getting a bit better about enforcing it - I always pay my KY tax on catalog horse supplies and tack, etc. But my husband is a CPA and I get away with NOTHING..

[wgc517]

As a breeding farm in PA, we do not have to pay sales tax (exempt). I thought maybe it was the same in KY.

[LB]

As a breeding farm in PA, we do not have to pay sales tax (exempt). I thought maybe it was the same in KY.

Unfortunately it's the opposite here. The only animal products and services that are taxed in Kentucky are those relating to horses. Stud fees for cattle, sheep, etc. are not taxed. Nor are their feed and supplies.

But all horse owners are rich so they don't mind paying more--at least that's Frankfort's theory.

[karenkarenn]

Anyone know the correct answer to this? Do I have to pay tax on the stud fee for a KY sire if I am boarding and foaling in PA.
The farm last year did not charge me but the farm this year says that I have to pay it. I did not think I did.

Yes you do. I did with Songandaprayer to board and foal in Ca.

[Jane]

I always had to pay the tax in KY when I sent a mare to be bred. I brought them home and foaled in Canada but that did not make any difference.

[wgc517]

Ok here is another question, why do I not have to pay sales tax on a mare I bought in a KY sale? Would that not be the same or does it have to do with purchasing a service rather than a product?

[LB]

Ok here is another question, why do I not have to pay sales tax on a mare I bought in a KY sale? Would that not be the same or does it have to do with purchasing a service rather than a product?

That's because Kentucky doesn't levy a tax on the purchase of breeding stock (although they do on racing stock). So if you buy a yearling at a KY sale, it's subject to being taxed. If you buy a broodmare, she is not.

[wgc517]

LB,

If what you said is accurate and I am sure it is, then why would a stud fee whose purpose is for breeding still be taxed?

[madelyn]

In KY there is sales tax on breeding fees and racing stock. Riding stock and breeding stock is not taxable.

[wgc517]

Thanks for the clarification Madelyn.

[Sylvie Hebert]

I wonder about shipped semen???I know this is not a TB thing but if I buy semen in Kentucky to be shipped out or let's pretend a frozen embryo?How is it considered???