A Friendly Reminder on Sales Tax Treatment of Animal Adoption Fees

Dear taxpayer:

It has come to our attention that some organizations such as yours may not be familiar with the sales tax treatment of animal adoption fees.

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 (see Tax Code Section 151.343, Animal Sold By Nonprofit Animal Shelters). An animal rescue group is generally required to collect sales tax on any sales and animal adoption fees.

Animal Rescue Groups

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 more information, see Publication 96-122, Nonprofit and Exempt Organizations – Purchases and Sales, and Rule 3.322 (g), Exempt Organizations. 

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.

Our goal is to help animal rescue groups come into compliance with the tax laws. We do not intend to pursue back taxes. If you do not have a sales tax permit and do not qualify as an animal shelter, you can apply online at comptroller.texas.gov/taxes/permit, or mail Form AP-201, Texas Application for Sales and Use Tax Permit (PDF) to the Comptroller of Public Accounts, P.O. Box 149355, Austin, TX 78714-9355.

Animal Shelters

The term “animal shelter” is defined in Health and Safety Code Section 823.001 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 (Section 823.003) for animal shelters.

If your organization meets the Health and Safety Code’s definition and standards, charges or fees for animal adoption are exempt from sales tax. For more information on the Health and Safety Code, visit the Texas Department of State Health Services website. 

For more information about sales by nonprofit animal shelters, see sales tax Rule 3.316 (m), Occasional Sales; Transfers Without Change in Ownership; Sales by Senior Citizens' Organizations; Sales by University and College Student Organizations; and Sales by Nonprofit Animal Shelters.

The Comptroller’s Texas Taxes webpage has additional tax information, including rules, statutes, publications, forms and frequently asked questions.

If you have any questions regarding Texas sales and use tax and animal adoption fees, please call us toll free at 800-252-5555 or send us your question using our Texas Taxes Help webpage.  

Sincerely,