UPDATE: February 18, 2016: Senate Bill 6438, concerning improvements to tax and licensing laws administered by the Washington state Department of Revenue (DOR), was proposed by the state on January 20, 2016. The bill includes provisions to formalize DOR policy that animal adoption fees charged by nonprofit animal welfare organizations are NOT subject to retail sales tax. Prior to 2016, DOR policy was inconsistent. Animal advocates responded with an amendment that has been approved by DOR and is being sponsored by Sen. Joe Fain to help ensure that all animal welfare organizations adopting animals benefit from this tax exemption. SB 6438 is on the Senate floor calendar but did not receive a floor vote by yesterday’s cutoff. However, because it is a bill related to state revenues, it could be considered up to the final days of the session.
UPDATE: March 30, 2015: This morning, the Washington state Department of Revenue reversed their decision to apply retail tax on adoption fees, and only apply it to retail products such as leashes and food. In an email to Animal News Northwest, communications director Kim Schmanke said, “We appreciate they came to Olympia to meet with us and provided some valuable information for our deliberation. Everyone at the table agreed that this exemption should be limited to nonprofits (and government-funded shelters) providing adoption services, and not breeders and pet store sales.”Olympia, WA – Officials from the Washington State Department of Revenue (DOR) are meeting today, March 26, with a handful of animal rescue organizations to discuss a recent ruling in which one group may be charged almost $20,000 in back taxes on revenue they earned in adoption and licensing fees over the past seven years, despite their nonprofit status.
The group, the Puyallup Animal Rescue (PAR), based in Eatonville, Wash., finds permanent homes for dogs and cats they rescue from animal shelters in Pierce County and eastern Washington. Last year they re-homed 224 cats and 48 dogs, many who would’ve otherwise been euthanized at the public shelters, according to Vice President and Secretary, Sally Andrews. They have been registered as a nonprofit in Washington state since 1985. Last February Andrews received an email from Maureen O’Connell, a Tax Information Specialist from the DOR, who stated:
“There is no exemption from tax for transfers (sales) of dogs and cats. The charge to transfer animals to new owners (often referred to as adoption fees) is subject to retail sales tax and the retailing business and occupation (B&O) tax.”
Exempted from these taxes are, “governmental or quasi-governmental organizations such as humane societies contracted with city or county governments to provide these services.”
Andrews did the math and determined she may owe close to $20,000.
In the state of Washington according to the DOR’s website:
In Washington, nonprofit organizations are generally taxed like any other business. They must pay business and occupation (B&O) tax on gross revenues generated from regular business activities they conduct. They must pay sales tax on all goods and retail services they purchase as consumers, such as supplies, lodging, equipment, and construction services. In addition, nonprofit organizations must collect and remit retail sales tax on their sales of goods and retail services.
Tax specialists from the Washington Department of Revenue close to this story could not be reached for comment.
Rick Hall, President of Washington Alliance for Humane Legislation is concerned this ruling could affect the hundreds of other animal rescues throughout the state. “Animal adoptions are not sales. They are fees to adopt or license a pet,” he says. He further notes that making exceptions for public animals shelters is a double standard.
“Taxing revenue collected as fees from adoptions, prospectively or retroactively, will have serious, detrimental impacts on highly valued charitable work performed by our state’s nonprofit animal welfare organizations. These organizations, are helping to save animals’ lives and are reducing the animal care and control costs incurred by cities and counties throughout the state.”
Andrews says the money she charges in adoption fees – between $100-$200 for dogs and $95 for cats – goes towards the veterinary and dental services to animals in their care. In addition to her own home she works with around a dozen foster families who temporarily care for the pets until they are permanently adopted. “We are all unpaid volunteers,” she says and adds the $20,000 in back taxes will financially hamper her ability to take in additional pets.
Officer Nikki Smith, supervisor at Metro Animal Services, says the independent animal rescue organizations “help us out drastically.” In addition to the Puyallup Animal Rescue, they work with over a hundred similar nonprofits who take in the harder-to-adopt dogs and cats often because they have been in the kennel too long, are sick or injured, are older in age, or have behavioral problems. Since they started transferring these pets to approved nonprofit rescue organizations, their euthanasia rates have dramatically decreased, according to Smith. Last year Metro Animal Services transferred 288 animals to rescue organizations, adopted out 324 from their own facility, and euthanized 434 unwanted pets. “We love them,” Smith says referring to the smaller rescues. Adoption fees at the shelter are $110 for cats and $130 for dogs, all nontaxable.
The Humane Society for Tacoma and Pierce County is a hopping place. Accepting every animal that comes in the door, last year they found new homes for 5,018 animals, 99% of which were dogs and cats. Despite this success rate 2,157 dogs and cats were euthanized. The number would’ve been much higher however were it not for the life-saving work other offsite animal welfare organizations that saved an additional 788 animals the Humane Society for Tacoma and Pierce County transferred to them.
“It’s really important for us to work together,” says Development Director Marguerite Richmond. “Often they take in animals that are difficult to adopt out. For those animals that’s their only chance. They (the rescues) are hugely important to us.”
Richmond says the Humane Society for Tacoma for Pierce County’s focus has shifted in recent years to work with everyone in the animal rescue community, not just the animals that come into their facility. “And rescues are a big part of that,” she said. Animals adopted out at the shelter also come with adoption fees averaging $50 for cats and between $40-$130 for dogs.
Many animals also find new families at area pet supply stores. PetSmart Charities, a separate nonprofit entity that operates out of PetSmart, Inc. stores, opened adoption centers that work with area shelters and rescues to help find new homes for animals, instead of selling pets acquired from breeders as they had done in the past. PetSmart media relations representative, Steve Pawslowski estimates 1,000 pets a day are adopted from their stores nationwide. They partner with around 3,000 rescue groups at any given time who own the pets and also help them by facilitating adoptions through events. The animal rescue organizations set the adoption fees and get all the money back for that adoption, tax free in Washington state. Both the Humane Society for Tacoma for Pierce County and the Puyallup Animal Rescue bring their dogs and cats to PetSmart for adoption for biweekly adoption events and put their cats on display in the pet center.
Pulling up the driveway at Andrew’s home where she fosters dogs for the Puyallup Animal Rescue is a little like arriving in Sleepy Hollow. Old horses graze in fields under the gaze of tall pines sprinkled with sunlight. Follow the barking and you will find a scattering of sturdy and spacious outside kennels, constructed of wire fencing, aluminum rooftops, doghouse igloos, and clean hay. Like any shelter, the animals seem desperate to get out. The barking is only silenced when a collar is attached to a leash and its time for a walk. Buddy and Rosie are the nearest to the driveway. Standing on hind legs, paws and fingernails protruding the wire fence, they bark with all their might like they’re lives depend on it. They have a lot to say. Their owner was put in hospice and now their futures are questionable. Bonded pairs like them are hard to re-home as most families only want to adopt one dog at a time. But separating them would be unthinkable. Buddy is an Australian Shepherd, 4 years old, and Rosie is a shih tzu mix around 10 years. Originally from Okanogan County they grew up together and the hope is they’ll grow old together in a new loving home. Leashed up we head out of the driveway. Transfixed, they can’t stop staring ahead.
Andrews currently has five dogs and five cats of her own in addition to Buddie and Rosie who are up for adoption. PAR currently has 15 pets in foster care. Taking in new pets and finding them homes is never ending. “It’s hard because there are just so many,” she says.
Looking to adopt a pet?
The Humane Society for Tacoma and Pierce County has pets up for adoption. They also work with Petsmart in Tacoma to show their animals.
Metro Animal Services has pets up for adoption in Puyallup, WA.