Does our Organization have to pay Sales Tax?
Kansas sales tax law traditionally requires governmental units, nonprofits and other organizations to collect sales tax when they are competing with private enterprise by making retail sales, regardless of how the proceeds of the retail sales are used. When a school or educational institution, school club or organization is selling tangible personal property at retail, or furnishing any of the taxable services enumerated in the law, or is providing entertainment to the ultimate user or consumer, it must collect and remit the applicable state and local sales tax from its customers.
So What do I have to do?
Kansas retailers are required by law to collect the full amount of sales tax due on each sale to the final user or consumer and remit it on a regular basis to the Kansas Department of Revenue.
For every sale of merchandise or taxable services, a Kansas retailer must either collect the total amount of sales tax due or obtain documentation as to why a particular sale is exempt. For more information about selling to exempt entities please read pages 7 and 26 of Publication 1560. When added to the purchase price of taxable goods or services, the sales tax is a debt from the consumer to the retailer. As such, the sales tax is recoverable by the retailer from the customer in the same manner as any other debt. Kansas consumers are likewise obligated to pay the full amount of sales or use tax due on all taxable purchases.
To register, go to Kansas Department of Revenue web site at www.ksrevenue.org and click on “Your Business.” If you select “Business Registration Online,” you will complete the application, receive your account number and print your registration certificate before leaving the site. Otherwise, select “Business Registration” to obtain Publication KS-1216, “Kansas Business Tax Application Booklet,” and the application, Form CR-16. This publication is also available from the Kansas Department of Revenue forms request line or office. You may complete a paper application process by mail, by fax, or in person. Please contact the Tax Assistance center at (785) 368-8222 with any questions about the registration process.
Once your application is processed, your school or organization is assigned a sales tax account number and issued a sales tax registration certificate. Processing time of applications depends on method used to register. Online registration may be completed instantly.
When making retail sales you are required to display your registration certificate in a “conspicuous location” to let your customers know you are duly registered to collect and remit the taxes you are charging them. Have a copy of your registration certificate at each temporary sales location to present should a local or state official request proof of registration. If it is lost or destroyed, request a duplicate from the department’s office. You may copy the certificate. Many suppliers will request a copy of your registration to verify your sales tax number on an exemption certificate.
What is Taxable
The following is a representative but not all-inclusive list of the types of sales by schools and educational institutions which are generally subject to sales tax. The examples illustrate the three general categories of taxable transactions:
- Retail sale, rental or lease of tangible personal property;
- Providing taxable services; and
- Sale of admissions to any place providing amusement, entertainment or recreation.
A retail sale is a sale to the final consumer or user. Tangible personal property is any item to which you can attach a monetary value, has a physical presence and can be moved.
The labor services that are taxable in Kansas are only those services enumerated in the law and listed above. Examples include appliance or car repair, car washes, parking lot painting, and the repair or remodel work of a commercial building.
Taxable admissions include tickets to a concert, dance, fun night, play or sporting event.
If you are engaged in any of these activities (there is no required minimum amount of sales or tax due), you must register with the Department of Revenue to collect sales tax from your students and other retail customers and then report and pay it to the department on a regular basis.
Retail Sale of Goods and Merchandise
- Athletic equipment & shoes
- Bake sales, doughnuts
- Books, workbooks and manuals (obsolete & others)
- Class jewelry, pictures and rings (if the tax is not collected and remitted by the firm selling the merchandise)
- Clothing - T-shirts, etc.
- Concession sales (candy, hot & cold drinks, ice cream, nachos, popcorn, etc.)
- Corsages, flowers and plants
- Family and individual portraits
- Food and beverages
- Freight or delivery charges (when included in the cost of taxable items)
- Graduation gown rentals
- Graduation items (announcements, charms, mugs, robes, tassels, etc.)
- Health supplies
- Home economics projects
- Lock rentals (separate from locker rental)
- Magazine subscriptions
- Meals (if open to the general public)
- Musical instrument rentals
- Newspapers and periodicals
- Party food items
- Printing and duplicating charges
- Reproduction of printed materials
- School pictures
- School supplies (pencils, paper, notebooks)
- School supply kits
- Shop & art projects
- Sporting goods, shoes, sports equipment, etc.
- Storage sheds
- Tote bags
- Towel rentals
- Upholstery sales & repairs
- Vending machine sales (if machine is owned by the school)
Providing Taxable Services
- Auto and truck repair
- Car washes
- Repair of tangible personal property
- Vehicle body work
- Activity tickets
- Admissions (tickets) to school events, including basketball games, carnivals, concerts, dances, football games, fun nights, movies, plays, special events, swim meets, track meets, wrestling meets and other sporting events, etc.
- Admission to amusement parks or rides, museums and planetariums
- Admission to fund-raising events including auctions, chili suppers, haunted houses, home tours, and golf or tennis tournaments
- Lyceum tickets to lectures and other public programs
- Teacher or student banquets (Receipts are exempt if the banquet is held at an outside restaurant which charges the tax.)
How do I collect?
There are two acceptable ways to collect sales tax on retail sales. The sales tax must either be separately stated as a line item on an invoice, or included in the price of the item.
The most common method is to separately state the tax due on the invoice, bill, receipt, or other evidence of the transaction. If the tax is a line item, it must be clearly stated to the public as sales tax, and there must be a separate line on the invoice or receipt for the sales tax.
If the tax is included in the price, it must be clearly stated to the public that the price includes “all applicable sales taxes.” This method is often used by contractors and when it is not practical or convenient to add the tax at the point of sale, such as vending machine sales and the sale of admission tickets and concessions.
The Sales Tax Rate
The Kansas sales tax rate is a combination of the state rate plus any local sales tax imposed by a city and/or county. Sales tax rates vary from locality to locality. Local (city and/or county) sales tax rates may change quarterly.
Effective July 1, 2003, the rate of tax charged on a retail sale of goods or taxable services is generally determined by where the customer takes delivery of the product or service. Retailers selling at various Kansas locations must charge the combined state and local rate in effect at each location. Retailers shipping goods to a Kansas customer in another jurisdiction will charge the tax rate in effect at the customer’s location.
Sales of property shipped to a customer in another state by common carrier (Post Office, UPS, etc.) are not subject to Kansas sales tax. Only Kansas customers must pay Kansas sales tax. However, customers in other states may owe a use tax (page 28) to the state where the item is used or consumed. In the example above, T-shirts sold and shipped to residents of other states would not be subject to Kansas sales tax.
To assist retailers in collecting the correct percentage, the department provides a sales tax jurisdiction code booklet, Publication KS-1700. Publication KS-1700 lists all Kansas counties, incorporated cities and special tax jurisdictions. This publication is available in several formats from the department’s web site or office. Electronic tax jurisdiction and rate look-up systems by address, zip code, and GPS coordinates are available through the department’s electronic filing web site, www.webtax.org.
How do I submit the Sales Tax
When Will I Receive My Tax Returns?
During the final week of each reporting period, the department will mail you a pre-printed sales tax return. Those taxpayers who are eligible to file their sales tax return using the paperless TeleFile system will receive that worksheet with instructions. Taxpayers using our On-Line filing option will not receive a paper return.
A sales tax return is due in a timely manner even if you have not received a pre-printed return from the department. If you have not received your return by the 10th of the month following the end of your reporting period, notify the department and use a blank return to report your sales and tax collected. You may obtain a blank return from the department’s office or voice mail forms order line: (785) 296-4937.
Filing Frequencies & Due Dates
How often you report and pay sales tax is based on the annual amount of tax due; the greater the tax liability, the more frequent the returns must be filed. Returns are due the 25 th of the month following the end of the filing period. A chart of the filing frequencies and due dates for reporting Retailers’ Sales Tax is in Publication KS-1510, Kansas Sales and Compensating Use Tax.
Paperless Filing and Payment Options
Almost all retailers have a paperless option for filing and paying many Kansas taxes. You may use the Internet to file your sales tax return through the On-Line Business Center, or TeleFile the return (ST-16 filers only) using a touch-tone telephone. Tax payments may be made using Electronic Funds Transfer (EFT), check or credit card. Electronic filing and payment offers these advantages:
- Systems are available 24 hours a day, 7 days a week - file your return at any time prior to the due date at your convenience;
- Paperless filing – there is nothing to mail to the department when you use either the EFT or credit card options for payment;
- Confirmation number – no more worries about whether the return has been received;
- Warehousing your payment – the “file now, pay by the due date” option.
You have three ways to pay the tax due on an electronically-filed return. You may use EFT (ACH Debit or ACH Credit), send in your check or money order with a payment voucher, or use a credit card through a third party vendor to pay your tax.
It is most important to keep neat, thorough, and adequate records of sales and receipts. Keeping good records will enable you to:
- accurately complete your sales and use tax returns,
- determine the overall profitability of events and fundraising activities, and
- spend more time on school business and less time on government reports and forms.
Retailers must “keep records and books of all such sales, together with invoices, bills of lading, sales records, copies of bills of sale and other pertinent papers and documents...” (K.S.A. 79-3609). The requirements for electronic and paper format and content are proscribed by K.A.R. 92-19-4b. Your sales tax records must contain the following documents and information:
- Gross receipts from the sale, rental, or lease of tangible personal property in the state of Kansas, including any services that are a part of the sale or lease,regardless of whether the receipts are considered to be taxable or non-taxable;
- all deductions allowed by law and claimed in filing returns;
- the purchase price of all tangible personal property purchased for sale, consumption, or lease in the state of Kansas (the cost of your inventory, equipment, and fixtures);
- all exemption certificates; and
- a true and complete inventory taken at least once a year.
You must keep the above records for the current year and at least three prior years. Your sales tax records must also be available for, and are subject to, inspection by the Director of Taxation or authorized representative (auditor) at all times during normal business hours.
Does a student organizations at K-State need to collect and remit sales tax when they buy items from a retailer and then resell them to members. Specifically the most common item is t-shirts. The organization purchases them, they pay out of the organization's checking account and do pay sales tax. Should they then collect and remit sales tax if they then sell them to their members at cost?
Yes, sales tax needs to be collected. In addition many questions can be answered by consulting our department's Policy Information Library on our web site at www.ksrevenue.org. However, there are unique situations that may require an interpretation or clarification based upon the law, regulations, and specific facts of the case. When this happens, document the question(s) in writing and request a Private Letter Ruling or an Opinion Letter from the department. Mail or fax your request to:
Office of Policy Research
Kansas Department of Revenue
915 SW Harrison St Room 230
Topeka KS 66612-1588