As the compounding pharmacy space expands into telemedicine, GLPs, and multi-state dispensing, one critical issue is flying under the radar for many owners: state taxes. If you’re shipping or selling prescriptions across state lines, your tax obligations just got a lot more complex—and potentially risky.
In a recent Atrium24 webinar, Dr. Nicolette Mathey and Scotty Sykes, CPA, CFP® of Sykes & Company, P.A. broke down what every independent pharmacy owner needs to understand about navigating multi-state tax issues. Below are the key takeaways—plus what you can do right now to stay compliant and protect your profits.
💥 Why State Taxes Are a Big Deal for Compounding Pharmacies
Historically, many pharmacies operated as local, brick-and-mortar businesses. But times have changed.
“Now as we’ve all started to get a little bit into telemedicine and into the GLPs… a lot of us are seeing opportunities to get licensed in additional states or to start shipping,” said Dr. Nicolette Mathey.
That expansion into multiple states brings new tax implications—including sales tax, income tax, and even county-level tax rules.
“There’s 50 states and 50 different tax jurisdictions,” said Scotty Sykes. “Then you might have some counties or parishes you’ve got to navigate. So you can really get into the weeds here.”
🧾 What Is Nexus—and Why It Matters
A concept called “nexus” determines whether a state can require your pharmacy to file and pay taxes.
There are two main types of nexus:
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Sales Tax Nexus – Based on transaction volume or total sales into a state (e.g., 200 transactions or $100,000 in sales).
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Income Tax Nexus – Based on how you’re conducting business in a state. Even activities like delivering with your own vehicle, marketing, or hiring contractors could trigger nexus.
“Some states will say, ‘If you’re doing business in our state—even just marketing—you’ve got nexus,’” Scotty explained. “If that happens, you could be on the hook for back taxes, penalties, and interest.”
📦 Prescriptions May Be Exempt, But You Still Have to File
While most prescription medications are non-taxable, that doesn’t mean you’re off the hook.
“Even though prescriptions are nontaxable, you still may need to be filing sales tax returns,” said Scotty. “States are always looking for revenue.”
This is especially true for pet meds, supplements, and OTC products, which are taxable in many jurisdictions.
🧠 Pro Tip: R&D Tax Credits for Compounders
If your pharmacy engages in formulation changes, testing, or problem-solving for prescriptions, you could qualify for R&D tax credits—which could reduce your federal and even state tax liabilities.
“If you’re doing a process of experimentation—like turning a capsule into a cream—you may qualify,” said Scotty. “But you need to document your time, process, and effort to claim the credit.”
🛡️ When In Doubt, Voluntary Disclosure Can Save You
If you’ve been noncompliant in a state, don’t panic. Many states offer voluntary disclosure programs that can waive penalties and reduce interest if you step forward proactively.
“It’s a risk control move,” Nicolette added. “I’ve had states waive fees after I caught up on filings—even when no taxes were due.”
✅ Quick Tips for Pharmacy Owners
🔹 Know which states you’re licensed or shipping to
🔹 Check the sales tax and income tax nexus thresholds for each
🔹 Use your script system reports to track volume by state
🔹 Work with a pharmacy-specific CPA who understands the industry
🔹 Document R&D work carefully to maximize credits
🔹 Don’t ignore compliance—even if you’re only shipping non-taxable prescriptions
“99% of the pharmacies I talk to aren’t thinking about this,” said Scotty. “But you’re a business owner—and this is risk you need to manage.”
🚀 Want to Stay Ahead of Complex Regulations Like These?
At Atrium24 and Dotti, we’re not just talking tax—we’re giving pharmacy owners real tools to grow smarter and stay compliant. Our Dotti Learn platform is packed with webinars like this one, and our email community keeps you up to date on what’s coming next in pharmacy.
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This blog post is brought to you by Dotti, your partner in empowering independent pharmacies through advanced marketing and data analysis tools. With Dotti, transform the way you connect with prescribers and patients, and turn prescriber marketing into a cornerstone of your growth strategy. Learn more at www.atrium24.io