Kansas Sales Tax
Revised November 16, 2011
Table of Contents
.030 Taxable Sales
.040 Exempt Sales
.060 Sales Tax Rate
.070 Reporting Sales Tax
.080 Records Maintained
This guide has been prepared to assist Kansas State University (KSU) departments in the collection and reporting of the Kansas Sales Tax. The Kansas Retailers' Sales Tax was enacted in 1937. In addition to the state sales tax, counties and cities in Kansas have had the option of imposing a local sales tax since 1978 with the approval of a majority of its voters. The local taxes are required by law to be administered by the Kansas Department of Revenue and are added to the state rate to arrive at the total sales tax percentage collected by Kansas retailers from their customers.
For a Kansas sales tax exemption certificate to be provided to vendors for University purchases or for information regarding the University's sales tax exemption status in other states, please contact KSU Purchasing office at (785) 532-6214. For Project Exemption Certificates (a project specific sales tax exemption number to be provided by the department to the contractor(s) for materials purchased on the University's behalf), departments are to contact Campus Planning and Facilities Management at (785) 532-6377. Construction projects are to be handled by Campus Planning and Facilities Management and obtaining a project exemption certificate is part of the process. Refer to PPM 7800 for more details regarding construction/repair projects.
The Kansas sales tax is not an expense to the department. It is to be paid by the customer to the department. Each department with taxable sales is responsible for the collection of the appropriate sales tax. It is unlawful for a customer to refuse to pay the sales tax due on a taxable transaction.
All retail sales of goods and services are considered taxable unless specifically exempt. Therefore, for every sale of merchandise or taxable services in Kansas, the sales receipt, invoice or bill must either:
- show that the total amount of sales tax due was collected, or
- be accompanied by a completed sales tax exemption certificate.
The Kansas Sales Tax generally applies to three types of transactions.
- The retail sale, rental or lease of tangible personal property including the sale or furnishing of utilities;
- Charges for labor services to install, apply, repair, service, alter, or maintain tangible personal property; and
- The sales of admissions to places providing amusement, entertainment or recreation services including admissions to state, county, district and local fairs.
Sales tax exemption generally fall into three types of categories.
- buyers who are exempt,
- specific items that are exempt, and
- uses of an item which makes it exempt.
The following exemptions are listed on the monthly sales tax report:
- Sales to other retailers for resale
- Returned goods, discounts, allowances and trade-ins
- Sales to U.S. government, State of Kansas, & Kansas political subdivision
- Sales of ingredient or component parts of tangible personal property produced
- Sales of items consumed in the production of tangible personal property
- Sales to nonprofit hospitals or nonprofit blood banks, tissue or organ bank
- Sales to nonprofit education institutions
- Sales to qualifying sales tax exempt religious and nonprofit organizations
- Sales of farm equipment and machinery
- Sales of manufacturing machinery and equipment
- Sales of alcoholic beverages
- Non-taxable labor services, original construction and residential remodeling
- Deliveries outside of Kansas
- Other allowable deductions (itemize)
Most exemptions from sales tax require a buyer to present an exemption certificate and the exemption is to be on file in the selling department to avoid the collection of sales tax. The appropriate Kansas exemption certificate from your customer is to be obtained at the time of the sale or no later than the actual delivery of the taxable item or service. No exemption certificate is required from other KSU departments.
Although exempt by law, entities must still support their exemption with a completed exemption certificate. Effective January 1, 2005, Kansas law required all sales tax exempt entities to obtain and utilize only exemption certificates issued by the Kansas Department of Revenue. These certificates contains the exempt entity's NAME, ADDRESS, and TAX EXEMPTION NUMBER issued by the Kansas Department of Revenue. (Please note that this new exemption procedure will not apply to farmers, to purchases by the federal government, or to the manufacturing and processing related exemptions, or other use-based exemptions.) Also, the Tax-Exempt Identification Number is separate and apart from a Kansas Sales Tax Registration Number, format 004-XXXXXXXXX-F0X, required of anyone (including exempt entities) making retail sales of taxable goods, services or admissions in Kansas.
Kansas Department of Revenue booklet on exemption certificates and copies of exemption certificates is located at http://www.ksrevenue.org/pdf/pub1520.pdf.
If recurring exempt sales of the same type are made to the same customer an exemption certificate is not required for each transaction. Instead a blanket exemption certificate can be accepted to cover future sales of the same type. Most of the certificates in the Kansas Department of Revenue booklet may be used as blanket certificates. When a blanket exemption certificate is accepted a new certificate is required every year.
There are two acceptable ways to collect sales tax from customers. 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 indicated 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". Regardless which method is used the sales tax is to be separately listed on the University deposit slip. Sales tax is to be recorded using the subcode R6909.
Under the destination based sourcing rules, the rate of sales tax due on in-state sales will be the combined state and local sales tax rate in effect where the customer takes delivery/possession of the purchased item(s). Under this rule, the seller will continue to collect the sales tax rate in effect at the seller's place of business for over-the-counter transactions. If the item(s) is shipped or delivered to the purchaser, the seller will collect the combined sales tax rate in effect at the location where the purchaser received the item(s). This will be the location where the seller delivers the item(s) to the purchaser, or if the seller ships the item(s), it will be the customer's shipping address.
To assist you in collecting and reporting the correct rate of sales tax, the Kansas Department of Revenue has developed Publication KS-1700, Sales Tax Jurisdiction Code Booklet. This booklet can be accessed at http://www.ksrevenue.org/salesratechanges.html This booklet is an alphabetical listing of all Kansas county and city sales tax rates, their jurisdiction codes for tax reporting, and the effective dates of the tax.
A sales tax rate locator is also available. Tax rates can be obtained by entering an address, zip code, latitude & longitude or by well head number. The Kansas Sales and Use Tax Address Tax Rate Locator is available at https://www.kssst.kdor.ks.gov/lookup.cfm.
Sales and sales tax collections are to be reported to the Division of Financial Services using the Kansas Retail Sales Tax Report and Approval of Payment form. All receipts/sales regardless whether taxable or not are to be shown on item 1 with any applicable deductions shown under item 2. This means interdepartmental sales are included in item 1 and then deducted in item 2. This form is to be completed and submitted to the Division of Financial Services by the 5th of the following month. The Division of Financial Services will consolidate all sales tax reports and submit a consolidated University report to the Kansas Department of Revenue. The appropriate sales tax will be shown as an expense to the account listed on the report.
The sales tax records must contain the following documents and information in accordance with K.A.R. 92-19-4b:
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 as of June 30.
All questions regarding sales tax are to be referred to the Division of Financial Services, Fund Balancing (785)532-1838 regarding sales tax reporting, Purchasing at (785) 532-6214 for exemption certificates, and Financial Reporting and Asset Management (785) 532-6525 regarding taxable sales.