Kansas Sales and Compensating Use Tax Information Booklet

Sales and Compensating Use Tax Information Booklet
Pub. KS-1510 Sales Tax and Compensating Use Tax Booklet Rev. 11-22
Sales Tax and
Compensating
Use Tax
Welcome to the Kansas business
community! This publication has been prepared

by the Kansas Department of Revenue (KDOR) to
assist you in understanding how the Kansas sales
and use tax applies to your business operation. Inside
you will find information on what is taxable, what is
exempt, how to collect, report, and pay your sales and
use tax electronically, and other information of general
interest to businesses. Our goal is to make collecting
and paying these taxes as easy as possible and to
help you avoid costly sales or use tax deficiencies.
By law, businesses are now required to submit
their Sales, Compensating Use and Withholding Tax
returns electronically. Kansas offers several electronic
file and pay solutions – see page 15. For the most
up-to-date electronic information, visit our website.

ksrevenue.gov
Pub KS-1510
(Rev. 12-22)

TABLE OF CONTENTS
KANSAS SALES TAX......................................... 	3

KANSAS CUSTOMER SERVICE CENTER....... 	15

Local Sales Tax
Distribution of Revenue
Sales Tax and Your Business

File, Pay and Make Updates Electronically
What Can I Do Electronically
Requirements to File and Pay
Pay By Credit Card
Wire Transfers

SALES THAT ARE TAXABLE............................ 	3
Retail Sale, Rental or Lease of Tangible
Personal Property
Taxable Services
Admissions

RETAILERS’ SALES TAX................................... 	16
Completing the ST-36
Sample Completed Sales Tax Filing
COMPENSATING USE TAX............................... 	18

SALES TAX EXEMPTIONS................................ 	 6

Retailers’ Compensating Use Tax
Consumers’ Compensating Use Tax
Reporting and Paying Consumers’
Compensating Use Tax
Sample Completed CT-10U filing
Reciprocal Discounts
Reporting and Paying Retailers’ Compensating
Use Tax
Sample Completed CT-9U filing
Midwest Border States Compact

Exempt Buyers
Buyers Who are Not Exempt
Items Exempt from Sales Tax
Uses That Are Exempt
Other Special Situations
KANSAS EXEMPTION CERTIFICATES........... 	9
Using Exemption Certificates
REGISTRATION AND TAX NUMBERS............. 	9
Who Must Register
How to Register
Sales Tax Account Numbers
Your Registration Certificate

ADDITIONAL INFORMATION............................ 	21
Important Reminders
Reporting Business Changes
Correcting a Return
Obtaining a Sales Tax Refund
When Returns are Late
Personal Liability for Unpaid Taxes
About Our Billing Process
Bond Requirements
Audits
When in Doubt...

RETAILER RESPONSIBILITIES........................ 	10
The Cardinal Rule
Collecting Tax from Your Customers
Sales Tax Records
Exemption Certificates
Local Sales Tax Application on Destination-Based
Sourcing
Unique Sourcing Situations
The Sales Tax Base
Sales Tax Treatment of Selected Types of Sales
and Incentives

OTHER KANSAS TAXES.................................... 	25
RESALE EXEMPTION CERTIFICATE (ST-28A)	 28
MULTI-JURISDICTION EXEMPTION
CERTIFICATE (ST-28M)............................... 	29

DETERMINING THE FILING FREQUENCY...... 	15

TAXPAYER ASSISTANCE................BACK COVER

Your Filing Frequency

If there is a conflict between the law and information found in this publication, the law remains the final authority. Under no circumstances
should the contents of this publication be used to set or sustain a technical legal position. A library of current policy information is also
available on the Kansas Department of Revenue’s website at: ksrevenue.gov
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of Revenue then distributes local sales tax revenues to the
counties and cities in which they were collected using the
information provided by retailers on their tax filings.

KANSAS SALES TAX
Kansas is one of 45 states plus the District of Columbia*
that levy a sales and the companion compensating use tax.
The Kansas Retailers’ Sales Tax was enacted in 1937 at the
rate of 2%, increasing over the years to the current state rate
of 6.50%.
2.00% (1937)	
2.50% (1958)	
3.00% (1965)	

4.00% (1986)	
4.25% (1989)	
4.90% (1992)	

5.30% (2002)	
6.30% (2010)
6.15% (2013)

SALES TAX and YOUR BUSINESS

Sales tax is paid by the final consumer of taxable goods or
services to you, the retailer. A Kansas retailer is responsible for
collecting sales tax from its customers on taxable transactions.
In collecting sales tax, you are acting as an agent or partner
with the Department of Revenue. A retailer holds the tax in
trust for the state, and then sends it to the Department of
Revenue on a regular basis using an electronic filing method.
Paying sales tax is the duty of your customers — it is unlawful
for a customer to refuse to pay the sales tax due on a taxable
transaction. When added to the purchase price of taxable goods
or services, the sales tax is a debt from the consumer to the
retailer, and as such, is recoverable by the retailer from the
customer in the same manner as any other debt.

6.50% (2015)

*	 Alaska,

Delaware, Montana, New Hampshire, and Oregon do not have
a general sales or use tax. Purchases made in these states by Kansas
consumers are automatically subject to Kansas use tax. See Kansas Use
Taxes, herein.

LOCAL SALES TAX

In addition to the state sales tax, counties and cities in
Kansas have the option of imposing a local sales tax. Before
imposing a local sales tax, the governing body of the city or
county must receive the approval of a majority of its voters.
Cities may levy a local sales tax in five-hundredth percent
increments (0.05%). Counties may levy a local sales tax in
one-fourth percent increments (0.25%, 0.50%, etc.). Cities are
authorized to impose a maximum sales tax rate of 3% (2%
general and 1% special). Counties are authorized to impose
a maximum 1% general sales tax rate. Legislative action is
required for more than 1%.
Although these are local taxes, the law requires them to
be administered by the Kansas Department of Revenue. The
local rate(s) are added to the state rate to arrive at the
total sales tax percentage collected by Kansas retailers
from their customers. Local tax applies whenever a state
tax is due if the tax situs for the sale is in a county or city with
a local tax with a few exceptions.

SALES THAT ARE TAXABLE
Kansas sales tax generally applies to three types of
transactions.
1)	 The retail sale, rental, or lease of tangible personal
property, including the sale or furnishing of utilities within
the state of Kansas;
2)	 Charges for labor services to install, apply, repair,
service, alter, or maintain tangible personal property; and
3)	 The sale of admissions to places providing amusement,
entertainment or recreation services, including admissions
to state, county, district, and local fairs.

If you are engaged in any of these activities, you must
collect sales tax from your customers. What follows is a
detailed discussion of each of these general categories with
examples. The law (K.S.A.) or regulation (K.A.R.) on which it
is based is also included.

EXAMPLE: The combined state and local sales tax rate
in Garden City is 8.95%; the 6.50% state, a 1.45% Finney
County tax, plus a 1% Garden City tax. The combined state
and local sales tax rate for Finney County, outside the city
limits of Garden City, is 7.95%; the 6.5% state, plus a 1.45%
Finney County tax.
IMPORTANT: The combined tax rate that is charged is based
on the destination of the goods or service. In other words,
the rate in effect where the customer takes delivery of the
merchandise or makes first use of a taxable service. See Local
Sales Tax Application Destination Based Sourcing, herein.

RETAIL SALE, RENTAL OR LEASE OF
TANGIBLE PERSONAL PROPERTY

To be taxable, the sale must first be a retail sale; defined
as follows.
RETAIL SALE — an exchange of tangible personal property
(goods, wares, merchandise, products and commodities) for
money or other consideration to the final user or consumer
occurring within the legal boundaries of the state of Kansas.

Sales for resale (purchase of inventory), and sales to
wholesalers and others who are not the final consumer are
not taxed. However, these sales must be accompanied by an
exemption certificate — see Exemption Certificates herein.
Kansas sales tax also does not apply to goods shipped to
another state. See Out-of-State Sales, herein.

Sales Tax Jurisdictions
To assist you in collecting and reporting the correct rate of
sales tax, the Department of Revenue has developed Pub. KS1700, Sales Tax Jurisdictions, which contains 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. The Department of Revenue provides updates throughout
the year of any quarterly tax rate changes, as well as additional
jurisdictions imposing a local sales tax. This information is
available on our website, as is a sales tax rate locator where
tax rates can be obtained by entering an address or zip code.

Tangible personal property — any item to which you
can readily attach a monetary value (food, clothing, furniture,
vehicles, computers, equipment, books, tapes, etc.).

DISTRIBUTION OF REVENUE

All state, county, and city sales tax collections are remitted
to the Department of Revenue and the department deposits
the state sales tax revenues into the state general fund, with a
portion designated for the state highway fund. The Department

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Tangible personal property has a physical presence, it can
be owned or leased and can be moved. Tangible personal
property is different from intangible personal property (stocks
and bonds) or real property (land or buildings). Other types of
taxable sales of tangible personal property listed in Kansas
sales tax law follow. Exceptions are noted.
CONSTRUCTION MATERIALS. Materials and supplies
sold to contractors, sub-contractors, or repairmen for use by
them in construction projects are subject to sales tax.

Exceptions: Materials purchased by a contractor using

the vehicle is not registered in Kansas and is removed
from Kansas within 10 days of the purchase;
–	 Motor vehicles or trailers transferred by a person to a
corporation solely in exchange for stock or securities
in that corporation (the original sale is taxable — the
transfer to the corporation is not);
–	 Motor vehicles or trailers transferred by one corporation
to another when all of the assets of such corporation are
transferred to the other corporation;
–	 Rolling stock used by a common carrier in interstate
commerce;
–	 Motor vehicles or trailers sold by an immediate
family member to another immediate family member.
Immediate family members are lineal ascendants or
descendants and their spouses.

a special project exemption number issued by the Kansas
Department of Revenue or its authorized agent are exempt.
COIN-OPERATED DEVICES. Sales made from any coin-

operated device, dispensing or providing goods, amusement,
or services are taxable. Examples include any type of vending
machine, and car washes, and video or arcade game machines.
Exception: Coin-operated laundry services (washers or
dryers) are exempt from sales tax. Laundry detergent, bleach,
etc. purchased from a vending machine are taxable.
COMPUTER SOFTWARE. Sales of prewritten computer

software and the services of modifying, altering, updating,
or maintaining computer software are subject to sales tax.
Computer equipment and hardware are also taxable. Sales
and/or services relating to customized software are exempt.
See EDU-71R Information Guide on our website.
MEALS AND DRINKS. Meals or drinks sold to the public at
any restaurant, private club, drinking establishment, catered
event, café, diner, dining car, hotel, etc. are taxable. Drinks
containing alcoholic liquor are subject to the Liquor Drink Tax
rather than sales tax. Cereal Malt Beverage license holders
(3.2% beer) do not collect the Liquor Drink Tax; instead, they
collect Kansas Retailers’ Sales Tax on their drink sales. If
selling other goods and services other than alcoholic and
cereal malt beverages, the business must register for and
collect Retailers’ Sales Tax.
CMB permit holders are allowed to sell beer not more than
6% alcohol by volume in addition to CMB. These CMB permit
holders will collect the applicable state and local sales tax on
the sale of both CMB and beer. Retail liquor stores that sell
beer will continue to collect the 8% liquor enforcement tax on
those sales of beer. Other goods or services sold by a retail
liquor store on their licensed premises (excluding the sale of
lottery tickets) are subject to state and local sales tax which
includes the sale of cereal malt beverage. For additional
information see NOTICE 18-04.
For more information on the sale of meals and drinks
consult Pub. KS-1540, Kansas Business Taxes For Hotels,
Motels and Restaurants. Exception: Free meals furnished
to employees of public eating places are not taxed if the
employee’s work is related to the furnishing or sale of such
meals. Reduced cost employee meals are subject to tax based
on the reduced price.
PREPAID TELEPHONE CARDS. Sales of prepaid
telephone calling cards or authorization numbers and the
recharge of the card or number are taxable. Exception: There
is no sales tax on the 911 service fee imposed on prepaid
telephone cards.
MOTOR VEHICLES AND TRAILERS. The sale or
exchange of motor vehicles is a taxable transaction. When
you buy a car, truck, or other vehicle from a registered dealer,
you must pay the sales tax to the dealer. When you buy a
motor vehicle or trailer from an individual, you must pay the
sales tax to the county treasurer upon registration. The rate of
tax is determined using the sourcing rules for motor vehicles
outlined herein. For more information on the sale of motor
vehicles see Pub. KS-1526, Sales and Use Tax for Motor
Vehicle Transactions and EDU-32A How Kansas Motor
Vehicle Dealers Should Charge Sales Tax on Vehicle Sales.
Exceptions: The following transactions are not taxed:
–	 Motor Vehicles, semi trailers, pole trailers or aircraft
sold to a bona fide resident of another state, provided

UTILITIES. Included in the definition of tangible personal
property are utilities. The following are subject to the state
and local sales tax (exceptions noted):
Cable, community antennae, and other subscriber radio and
television services.
Digital Satellite TV Subscriptions. Exception: The
subscription fee is subject to the state sales tax only – local
taxes do not apply.
Electricity, gas, propane and heat. Exception: Agricultural
and residential use of these utilities are exempt from state
sales tax, but are subject to applicable local sales taxes in
effect at the customer’s location.
Telephone and Telegraph Services, Intrastate, interstate or
international telecommunications services and any ancillary
services sourced to Kansas. Exceptions: Any interstate or
international 800 or 900 service; any interstate or international
private communication service; any value-added nonvoice
data service; any telecommunication service to a provider
of telecommunication services, including carrier access
service; or any service or transaction defined in this section
among entities classified as members of an affiliated group
as provided by 26 U.S.C. 1986.
Telephone Answering Services, mobile phone services,
beeper services, cellular phone services, and other similar
services.

Rental or Lease of Property
Tangible personal property is taxable not only when it is sold
at retail, but also when it is rented or leased. The sales tax is
added to each rental or lease payment made, including “lease
with option to buy” contracts and “rent to purchase” contracts.
EXAMPLE: A Pittsburg, Kansas office equipment company
leases copiers for $150 per month. Added to each monthly
invoice will be the state sales tax plus the local sales tax in
effect where the leased copier is located.

Other examples of items commonly leased or rented that
are taxable include: appliances; hotel and motel rooms1;
boats; motor vehicles2; computers; movie videos/DVDs;
equipment; tools; furniture; and trailers. Exceptions: Movies,
films, and tapes rented to movie theaters are exempt since the
sales tax is collected on the admission charge. Also, tangible
personal property used as a dwelling (such as a mobile home)
is exempt from sales tax when leased or rented for more than
28 consecutive days.
Rooms rented for 28 consecutive days or less may also be subject to
a transient guest tax.
2
Vehicles rented for 28 consecutive days or less are also subject to a
vehicle rental excise tax.
1

NOTE: Tangible personal property purchased for the purpose

4

of leasing or renting, such as the purchase of cars (rental fleet)
by a car rental agency, is exempt from sales and use taxes. This
is considered to be a purchase of inventory for resale, and the

rental agency would provide the seller with a completed ST-28A,
Resale Exemption Certificate.

flood, tornado, lightning, explosion, windstorm (80 mph
or more), ice loading and attendant winds, terrorism, or
earthquake. “Utility structure” means transmission and
distribution lines owned by an independent transmission
company or cooperative, the Kansas electric transmission
authority or natural gas or electric public utility.
–	 Construction, reconstruction, restoration, replacement, or
repair of a bridge or highway.

TAXABLE SERVICES

A service is work done for others as an occupation
or business. Kansas sales tax applies to the services of
installing, applying, altering, repairing, servicing, or
maintaining tangible personal property.

CAUTION: Many service professionals provide both taxable
and nontaxable services. There are also other special rules that
apply to contractors and the labor services industry not discussed
here. Consult the Policy Information Library on our website for
additional information about specific service situations.

Installing
Installation services include installing plumbing, wiring,
cabinets, light bulbs and other fixtures in an office building,
planting trees, shrubs or grass, or installing tires or parts on
a vehicle.
EXAMPLE: A Colby, Kansas automotive repair shop installs a

The following sales tax guideline has been issued by the
Department of Revenue and is available on our website.
•	 Pub. KS-1550 Sales and Use Tax for the Agricultural
Industry

muffler on a New York resident’s automobile in Colby. The total
bill (muffler and labor) is subject to the state and local sales tax
in effect in Colby, Kansas.

ADMISSIONS

Applying
This category of taxable services includes painting,
wallpapering, applying fertilizer/weed killer, waxing floors,
and resurfacing parking lots. All of these services involve
the application of tangible personal property — the paint,
wallpaper, fertilizer, weed killer, wax, or asphalt/gravel.

An admission or fee charged to any place providing
amusement, entertainment, or recreation services is taxable.
Taxable admissions include:

Altering
Services such as furniture refinishing, upholstery work,
modifying or updating computer software, sewing, and
alteration services change or alter the furniture, software, or
clothing, and are taxable.
Repairing, Servicing, and Maintaining
Repair, service, and maintenance of tangible personal
property includes these types of services:
•	 appliance repair or service
•	 car repair or service
•	 dry cleaning, pressing, dyeing & laundry services (dry cleaning
and laundry services are also subject to the Dry Cleaning
Environmental Surcharge)
•	 maintenance agreements
•	 pet grooming
•	 tool sharpening (saws, knives, etc.)
•	 warranties (including extended & optional)
•	 washing, waxing, or detailing vehicles

Following is a representative list of services that are NOT
TAXABLE because they do not involve the installation,
application, service, maintenance, or repair of tangible
personal property:
accounting	
architectural	
broadcasting	
child care	
chimney-sweeping	

cleaning	
legal services
consulting	mowing
engineering	
snow removal
excavating	
towing/moving
hair styling	
trash hauling

Exceptions for Residential and Original Construction:

Taxable services are exempt when performed in conjunction
with the following.
–	 Original construction of a building or facility.
–	 Restoration, reconstruction, remodeling, or renovation of a
residence.
–	 Addition of an entire room or floor to an existing building or
facility.
–	 Completion of any unfinished portion of an existing building
or facility for the first owner.
–	 Restoration, reconstruction, or replacement of a building,
facility or utility structure damaged or destroyed by fire,

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Tickets to a concert, sporting event, movie, circus, rodeo,
or any other event where a ticket is required;
Admissions to a fair, amusement park, zoo, antique or
craft show, club, or other facility charging an admission fee
or cover charge;
Dues or Memberships that entitle someone to use a facility
for recreation or entertainment, such as a health club, country
club, or the Knights of Columbus;
Fees and charges for participation in sports, games, and
other recreational activities.
Exceptions: The following admissions and fees have been
granted a sales tax exemption.
–	 Admission to any cultural and historical event that occurs
once every three years.
–	 Sales of tangible personal property (such as a button)
which will admit the buyer to an annual event sponsored
by a 501(c)(3) nonprofit organization.
–	 Fees and charges by Kansas political subdivisions for
participation in sports, games and other recreational
activities. This includes city baseball and softball leagues,
or green fees or swimming pool fees at city or county
owned facilities.
–	 Fees and charges by a 501(c)(3) youth recreation
organization, exclusively providing services to persons
18 years of age or younger, for participation in sports.
Examples include: youth basketball, baseball, football,
softball, or soccer leagues.
–	 Entry fees and charges for participation in a special event or
tournament sanctioned by a national sporting association
to which spectators are charged an admission. Examples
of entry fees exempt under this provision include: 1)
American Bowling Conference (ABC) tournament; 2)
Professional Golfers Association (PGA) tournament;
3) National Hot Rod Association (NHRA) race; and 4)
Professional Rodeo Cowboys Association (PRCA) rodeo.
–	 Fees charged by nonprofit humanitarian service providers
exempt from property tax for participation in sports, games,
and other recreational activities. Qualifying nonprofit
service providers include: the American Red Cross, Big
Brothers & Big Sisters, Boy Scouts, Girl Scouts, YMCA,
YWCA, community health centers, and local community
organizations.
–	 Membership dues to military veterans organizations and
their auxiliaries, such as the Veterans of Foreign Wars and
the American Legion.
–	 Membership dues charged by a nonprofit 501(c)(3)
organization whose sole purpose is to support a nonprofit
zoo.

SALES TAX EXEMPTIONS
Included with the taxable transactions in the previous
section were some of the exceptions, or exempt sales. Other
lawful sales tax exemptions fall into three general categories.
These are:
•	 buyers who are, and are not exempt,
•	 specific items that are exempt, and
•	 uses of an item which makes it exempt.

EXEMPT BUYERS

Direct purchases of goods or services by the following
entities are exempt from sales tax (for a complete list see
Pub. KS-1520, Kansas Exemption Certificates:
•	 The U.S. Government, its agencies and instrumentalities
•	 The state of Kansas and its political subdivisions, including
school districts, counties, cities, port authorities, and
groundwater management districts
•	 Elementary and secondary schools
•	 Noncommercial educational radio and TV stations
•	 Nonprofit blood, tissue, and organ banks
•	 Nonprofit educational institutions
•	 Nonprofit 501(c)(3)* historical societies
•	 Nonprofit hospitals
•	 Nonprofit 501(c)(3)* museums
•	 Nonprofit 501(c)(3)* primary care clinics/health centers
•	 Nonprofit 501(c)(3)* religious organizations
•	 Nonprofit 501(c)(3)* zoos

*	 The 501(c)(3) designation refers to an Internal Revenue Code section

exempting certain organizations from income tax. There is NOT an
automatic exemption from sales tax for non-profit organizations. They
must apply for an exempt entity certificate.

Exception: When the state of Kansas or nonprofit hospital
operates a taxable business (such as a public cafeteria or
gift shop), or when a political subdivision sells or furnishes
the utilities of electricity, gas, heat or water (except certain
water retailers - see below), non-inventory items purchased
for use in these taxable businesses are taxable to the
otherwise exempt group.

To claim its exemption, the exempt buyer must complete
and furnish the appropriate exemption certificate to the seller
(see Kansas Exemption Certificates, herein). The sale must
also be a direct purchase — billed directly to the exempt buyer
and paid for by a check or voucher from the exempt buyer.
Purchases made by agents or employees of an exempt buyer
with their personal funds are taxable. Exception: Purchases
of hotel rooms by U.S. government employees on official
business are exempt, regardless of the method of payment.
Exempt Entity Identification Numbers. To help retailers
identify the exempt buyers discussed in this section, the
Department of Revenue will assign an Exempt Entity
Identification Number and issue a Tax-Exempt Entity Exemption
Certificate to qualified exempt buyers. From that date, Kansas
exempt entities claiming a sales or use tax exemption must
provide this completed exemption certificate (which includes
their tax exempt number) to the retailer. See Pub. KS-1520.
Other Exempt Buyers
Sales tax exemptions are also granted to the following
entities. Where applicable, the exemption certificate designed
for that particular exemption is noted.
Certain Nonprofit Medical Educational Organizations
— The following 501(c)(3) organizations are exempt from
paying sales tax when buying items for the listed uses, and

6

also exempt from collecting sales tax when these items are
sold by or on behalf of the exempt organization for the stated
purposes. This exemption is for goods and merchandise
only. These organizations must still pay or collect sales tax
on taxable services and admissions.
•	 American Diabetes Association, Kansas Affiliate, Inc.
•	 American Heart Association, Kansas Affiliate, Inc.
•	 American Lung Association of Kansas, Inc.
•	 Kansas Alliance for the Mentally Ill, Inc. and Kansas
Mental Illness Awareness Council
•	 Kansas Chapters of the Alzheimer’s Disease & Related
Disorders Association, Inc.
•	 Kansas Chapters of the Parkinson’s Disease Association
•	 National Kidney Foundation of Kansas and Western
Missouri
•	 HeartStrings Community Foundation
•	 Cystic Fibrosis Foundation, Heart of America Chapter
•	 Spina Bifida Association of Kansas
•	 CHWC, Inc.
•	 Cross-Lines Cooperative Council
•	 Dreams Work, Inc.
•	 KSDS, Inc.
•	 Lyme Association of Greater Kansas City, Inc.
•	 Dream Factory, Inc.
•	 Ottawa Suzuki Strings, Inc.
•	 International Association of Lions Clubs
•	 Johnson County Young Matrons, Inc.
•	 American Cancer Society, Inc.
•	 Community Services of Shawnee, Inc.
•	 Angel Babies Association
Certain Water Retailers — Public water suppliers who pay
the Clean Drinking Water Fee are exempt on all purchases
of property or services for that utility. See NOTICE 04-08.
Diplomatic Tax Exemption — Certain foreign missions and
officials are entitled to a tax exemption based on reciprocal
treaty agreements. Those entitled to tax exemption must
present a Tax Exemption Card issued by the Office of Foreign
Missions (OFM) of the U. S. Department of State. Details
are in NOTICE 04-09.
Domestic Violence Shelters — Property and services
purchased by or on behalf of the domestic violence shelters
that are member agencies of the Kansas coalition against
sexual and domestic violence (KCSDV) are exempt.
Habitat For Humanity — This organization may buy the
materials that will be incorporated into its housing projects
without sales tax. The exemption applies only to housing
materials. Habitat for Humanity must still pay sales tax on all
of its other purchases of goods or taxable services.
Korean War Memorial — Property and services purchased
by or on behalf of a 501(c)(3) nonprofit corporation organized
to construct a Korean War Memorial are exempt from
sales tax. The Department of Revenue has issued Project
Exemption Certificates (PECs) to the qualifying entities.
Parent-Teacher Associations — A PTA or PTO is exempt
from paying sales tax when buying goods and services. It is
also exempt from collecting sales tax on its sales of tangible
personal property, but must collect tax when selling taxable
services or admissions.
Religious Organizations — All sales of tangible personal
property and services purchased by a 501(c)(3) religious
organization, and used exclusively for religious purposes,
are exempt. Religious organizations also qualify to request a
PEC so that materials purchased or furnished by a contractor
to construct or remodel facilities for the religious organization
are also exempt.
Rural Volunteer Fire-Fighters — Property or services
purchased by or on behalf of rural volunteer fire-fighters and
used exclusively by them in the performance of their duties
and functions are exempt from sales tax.

Youth Development Programs — Sales of tangible
personal property to a nonprofit organization for nonsectarian
comprehensive multi-discipline youth development programs
and activities, and all sales of tangible personal property
by or on behalf of such organization are exempt from tax.
Examples include: Boy Scout and Girl Scout Councils and
Troops. Exception: Sales of taxable services and sales of
property customarily used for human habitation (such as
beds, chairs, bedding, and lamps) are taxable to a nonprofit
youth development organization.

Rolling stock (trucks, buses, tractor-trailers, etc.), repair or
replacement parts, and motor fuels purchased by ICC carriers.
Warehouse machinery & equipment, racking systems.

An exemption certificate must be completed for these sales
to be exempt. A detailed description of purchases qualifying
for exemption is a part of each exemption certificate.
Other Exempt Items
The following items are exempt from sales tax in Kansas
and do not require an exemption certificate:

For a complete list of all tax exempt entities, see Pub.
KS-1520, available on the Department of Revenue website.

Food stamp purchases
Child Nutrition Act (WIC program) purchases
Lottery tickets
Prescription drugs and insulin
Orthopedic appliances
Prosthetic Devices and Mobility Enhancing Equipment
purchased by an individual for whom it was prescribed in
writing by a licensed physician, chiropractor, optometrist,
dentist, or podiatrist is not taxed [K.S.A. 79-3606(r)]. Exempt
devices and mobility enhancing equipment include canes,
chairlifts, crutches, eyeglasses, orthodontic braces, prosthetic
limbs and braces, wheelchairs, and accessories attached to
motor vehicles, such as wheelchair lifts or specialized hand
or foot controls, oxygen delivery, kidney dialysis equipment
and enteral feeding systems. Repair and replacement parts
for the exempt equipment are also exempt if you have the
original prescription order on file. NOTE: The labor services
to install mobility enhancing equipment is taxable.

BUYERS WHO ARE NOT EXEMPT

The previous list of exempt buyers contains a number of
nonprofit organizations. A common misconception is that all
nonprofit organizations are exempt from sales tax. A federal
exemption issued under section 501(c) of the Internal Revenue
Code applies ONLY to federal and state INCOME TAX,
this exemption does not extend to sales tax. Groups and
organizations that are NOT EXEMPT from paying Kansas
sales tax include:
•	
•	
•	
•	
•	

alumni associations
charitable and benevolent organizations
clubs and professional associations
labor unions
athletic or sporting organizations

ITEMS EXEMPT FROM SALES TAX

NOTE: The Prosthetic Devices and Mobility Enhancing

Items used by these industries and groups are exempt
from sales tax:

Equipment exemption does not apply to hot tubs,
whirlpools, motor vehicles, or personal property which
when installed becomes a fixture to real property.
Repair and replacement parts for hearing aids, including
the batteries, when sold by a person licensed in the practice
of dispensing and fitting hearing aids pursuant to K.S.A. 745808 are exempt. See NOTICE 04-05 on our website. The
labor services of repairing hearing aids when repaired by
a person licensed in the practice of dispensing and fitting
hearing aids pursuant to the provisions of K.S.A. 74-5808,
are also exempt from Kansas sales tax.

Aircraft sales, parts, and repair services for carriers in
interstate or foreign commerce. Also sales of aircraft repair,
modification and replacement parts and sales of services
employed in the remanufacture, modification and repair of
aircraft. See NOTICE 04-06.
Broadcasting equipment purchased by over-the-air
free access radio and television stations to generate their
broadcast signals.
Drill bits and explosives used in the exploration of oil and gas.
Drugs and pharmaceuticals sold to veterinarians.
Farm machinery and equipment. See also Pub. KS-1550,
Kansas Sales and Use Tax for the Agricultural Industry.

USES THAT ARE EXEMPT

Other items are exempt from sales tax because of how
they are used.

NOTE: Work-site utility vehicles that are not more than 800

Agricultural Animals
Sales of agricultural animals, including fowl (i.e., cattle,
chickens, hogs, ostriches, sheep, etc.); and aquatic animals
and plants are exempt when used in:

pounds, 48 inches wide with four nonhighway tires, a steering
wheel and has bench or bucket seating for at least two people
side by side, may be purchased exempt from sales tax when
used exclusively in farming and ranching.
Also, precision farming equipment, purchased and installed
on farm machinery and equipment, is exempt from sales tax.

Food sold to groups providing meals to the elderly and
homebound, and food sold by a nonprofit 501(c)(3)
organization under a food distribution program that sells the
food below cost in exchange for community service and all
sales of food products by or on behalf of any such contractor
or organization for any such purpose.
Integrated production machinery and equipment.
Materials purchased by a community action group to repair
or weatherize low-income housing.
Medical supplies and durable medical equipment purchased
by a nonprofit skilled nursing home, including oxygen delivery
and kidney dialysis equipment and enteral feeding systems.
Public health educational materials purchased by a nonprofit
corporation for free distribution to the public.
Railroad parts, materials, and services for railroad rolling
stock used in interstate or foreign commerce.

•	 agriculture or aquaculture
•	 the production of food for human consumption;
•	 the production of animal, dairy, poultry, or aquatic plant
and animal products, fiber, or fur;
•	 the production of offspring for the above purposes.

Animals that are not used for agricultural purposes (i.e.,
pets, show horses, etc.) are taxable.
Agricultural Soil Erosion Prevention
Seeds, tree seedlings, chemicals, and services purchased
and used for the purpose of producing plants to prevent soil
erosion on land devoted to agricultural use are exempt from
sales tax.

7

Propane for Agricultural Use
Propane used for an agricultural purpose is exempt
from sales tax. Examples include propane to power farm

implements or to provide heat for brooder or farrowing houses.
Propane used for a recreational purpose, such as RVs and
barbecue grills, is taxable.

similar combustible fuels are generally subject to the Kansas
Motor Fuel tax (herein). However, these fuels are subject to
sales tax when the motor fuel tax does not apply, such as
dyed diesel fuel for non-highway purposes. Other fuels such
as aviation fuel, jet fuel, kerosene, and propane are subject
to sales or use tax unless their use or purpose qualifies for
an exemption. For example, propane for agricultural use is
exempt, but propane for an RV is taxed.

Consumed in Production (ST-28C)
Items that are essential and are depleted or dissipated
within one year may be purchased without tax when they are
consumed in the:
•	 production, manufacture, processing, mining, drilling,
refining or compounding of tangible personal property,
•	 treatment of by-products or wastes of any the above
processes,
•	 providing of taxable services,
•	 irrigation of crops,
•	 storage or processing of grain.

Isolated or Occasional Sales
Sales tax is NOT collected when tangible personal property
or taxable services are sold at an “isolated or occasional” sale.
Isolated or occasional sales are as follows.
1)	 Infrequent sales of a nonrecurring nature made by a
person not engaged in the business of selling tangible
personal property. To qualify, the seller shall not;
a.	 hold more than two selling events of a day’s duration
in a 12 month period;
b.	 conduct a planned annual selling event; or
c.	hold itself out as being engaged in the business of
selling property or services of the type being sold.

Examples include utilities to power manufacturing
machinery, or fertilizers and insecticides used in the production
of food.
Ingredient or Component Part (ST-28D)
Items that become a part of a finished product to be sold to
the final consumer are exempt as an ingredient or component
part. Some examples include, but are not limited to:

Sales that usually meet this criteria are estate sales, farm
sales, garage sales, and some auctions:

•	 oil paints, watercolors, and canvas used to produce a piece
of artwork for resale;
•	 paper and ink for publishing newspapers and magazines;
•	 containers, labels, shipping cases, twine, and wrapping
paper which are not returned to the manufacturer;
•	 paper bags, drinking straws, and paper plates used in
food sales; and
•	 feed for commercial livestock.

2)	 Any religious organization making one nonrecurring sale
of tangible personal property in a twelve month period.
The religious organization may acquire (purchase)
tangible personal property for the purpose of selling
at the fund raising event without paying sales tax on
its purchase or collect sale sales tax when sold at the
nonrecurring one day event.
3)	 Any sale by a bank, savings and loan institution, credit
union or any finance company licensed under the
provisions of the Kansas uniform consumer credit code, of
tangible personal property which has been repossessed
by any such entity.
4)	 Sale of business assets in conjunction with the sale
or termination of a business (other than the sale of the
business’s inventory, motor vehicles or trailers) if the
sale is made in a complete and bona fide liquidation of
a business of the seller.
a.	 The term “business” shall mean a separate place of
business subject to registration under the Kansas
retailers’ sales tax act.
b.	 The term “a complete and bona fide liquidation” shall
mean the sale of all assets of the business conducted
over a period of not more than 30 days beginning on
the date of the first sale of assets, or as approved by
the director of taxation.
5)	 Auctions.
a.	 Take place at a location OTHER THAN one that is
regularly used to conduct auctions.
b.	 The goods being auctioned shall not have been
purchased for resale.
c.	 The goods being auctioned shall not have been
consigned for sale by more than one party in addition
to the principal seller at the auction.
d.	 If some of the goods being auctioned satisfy the above
requirements but others goods do not, the sale of
every item at the auction shall be subject to sales tax.
EXAMPLE: A Kansas resident has an estate sale before
moving into a retirement home. The agent will not charge
tax at the estate sale since it is an isolated sale of property
that is owned by one household.

As a general rule, if the item leaves with the product and
is not returned for reuse by the manufacturer or retailer, it is
an ingredient part.
The “ingredient and component part” and “consumed in
production” exemptions apply to many business types. More
information on these exemptions can be found in Pub. KS-1520,
available on our website.
NOTE: Contractors are considered to be the final consumers
of their materials and therefore may not use the consumed
in production or ingredient or part exemption to purchase
job materials.

Resale Exemption (ST-28A)
When buying your inventory from a wholesaler or another
retailer, you will use a ST-28A Resale Exemption Certificate, or
the PR-78SSTA Streamlined Sales and Use Tax Agreement
Certificate of Exemption (Kansas).
A resale exemption certificate has two requirements: 1)
the items purchased must be for resale in the usual course of
the buyer’s business; and 2) the buyer must have a Kansas
sales tax account number, except in drop shipment situations.

OTHER SPECIAL SITUATIONS

Exempt Construction Projects
Materials and labor services sold to a buyer holding a special
Project Exemption Certificate issued by the Department of
Revenue or its authorized agent are exempt from tax. Most
of the exempt buyers listed on pages 6 and 7 qualify to obtain
a project exemption for most projects. A project exemption
may also be issued to a business that qualifies for economic
development incentives.
Fuels
Gasoline, diesel fuels, gasohol, alcohol fuels and other

8

EXAMPLE: An auctioneer conducts an auction of the
inventory and fixtures of a clothing store. Sale of the inventory
is subject to sales tax because the owner was engaged in
the retail clothing business. The sale of the fixtures is not

Blanket Exemption Certificates
If you make recurring exempt sales of the same type to
the same purchaser, it is not necessary to have an exemption
certificate for each transaction. You may accept a blanket
exemption certificate to cover future sales. ST-28A and ST-28M
on pages 28 and 29 may be used as a blanket certificate.
IMPORTANT: When you use a blanket exemption certificate

subject to tax as an isolated sale of property on which tax has
already been paid. Exception: The isolated or occasional
sale of a motor vehicle or trailer is taxable — see page 4.

Mobile or Manufactured Homes
When a new mobile or manufactured home is sold, only
60% of the total selling price is subject to sales tax [K.S.A.
79-3606(ff)]. In this situation, trade-in allowances (described
on page 14) are not allowed in determining the sales tax base.
The rate of tax charged on these home sales is determined
by the retailer’s location (see page 11).
The sale of a used mobile or manufactured home (other than
the original retail sale) is exempt under K.S.A. 79-3606(bb).

for your regular exempt customers, ask them to verify or
renew this document every year. Renewing yearly will help
guarantee that the exempt customer’s information (i.e., exact
business name and location, tax account number, etc.)
remains accurate and up-to-date.
CAUTION: When you use blanket exemption certificates,
you should segregate any taxable purchases from that vendor
and pay for them separately. Each buyer signs the exemption
certificate acknowledging responsibility for payment of the tax if:

KANSAS EXEMPTION
CERTIFICATES

“...the tangible personal property or service is used other
than as stated ... or for any other purpose that is not exempt
from sales or compensating tax...”

USING EXEMPTION CERTIFICATES

Exemption certificates are an important part of sales and
use tax record keeping, but are often found lacking by our
auditors. The information in this section will help you properly
complete and accept exemption certificates. Pub. KS-1520,
Kansas Exemption Certificates, is also a helpful resource.
This publication contains all the exemption certificates
currently in use and provides detailed information about each
exemption. The publication is available on our website.
Before accepting any certificate, carefully read the
exemption statement and the accompanying explanation
and instructions. Most certificates contain a restatement of
the Kansas law (K.S.A. – Kansas Statutes Annotated), or
regulation (K.A.R. – Kansas Administrative Regulations)
authorizing the exemption. If your customer or the purchase
does not fit the definition in the certificate or the exempt
examples given, the sale is probably not exempt.
The Kansas Exempt Entity Identification Number and
Certificate are designed to help retailers and exempt
customers complete the certificate process, not to replace it.
See NOTICE 04-10 on our website.

Record Keeping
Keep all sales tax records, including exemption certificates
and copies of tax exemption cards (Kansas or diplomatic), for
your current year of business and at least three prior years.
Penalties for Misuse
A buyer who issues an exemption certificate in order to
unlawfully avoid payment of the tax for business or personal
gain is guilty of a misdemeanor, and upon conviction may be
fined up to $1,000 or imprisoned for up to a year, or both. When
a buyer is found to have used a ST-28A Resale Exemption
Certificate to avoid payment of the tax, the director may also
increase any penalty due on the tax by $250 or 10 times the
tax due, whichever is greater, for each transaction where the
misuse of a Resale Exemption Certificate occurred.

REGISTRATION AND TAX
NUMBERS
WHO MUST REGISTER

Completing an Exemption Certificate
Follow these three rules when completing any exemption
certificate.
1)	 Print or type all information, except for the authorized
signature. The information on the certificate must be
legible both to you and to our auditors. Do not print a
signature on paper forms, although it is often helpful to
print or type the name below the signature. (A signature
is not required on an electronic exemption certificate.)
2)	 Fill in all the blanks. A certificate is complete only when
all the information is provided. If there is a blank on the
form, it must be filled in. Addresses must include the
street or PO Box, city, state, and zip code.
When the certificate requires a tax registration number, be
sure your customer provides it. An exemption certificate
is not complete unless the customer supplies the proper
registration number(s). A seller may lawfully require a
copy of the buyer’s sales tax certificate of registration as
a condition of honoring the ST-28A Resale Exemption
Certificate. [K.A.R. 92-19-25b]
3)	 Give specific descriptions. Be as precise as possible
when describing the property or services purchased.
You may use an itemized list, refer to an itemized invoice
number, or at the very least provide a general description
of the items. When describing a business activity, include
the principal product(s) sold or manufactured.

If you sell goods, admissions, or provide taxable services you
must be registered with the Department of Revenue to collect
sales tax from your customers on behalf of the state and, where
applicable, the city and/or county. This requirement applies
whether your business is a sole proprietorship, partnership,
corporation, or any other organizational type, including
nonprofit, religious, governmental or educational groups.
If you are making retail sales or providing taxable services
in Kansas, you must register and collect the tax. Out-of-state
retailers that maintain a physical presence in Kansas must
register. Retailers from other states selling goods in Kansas
at temporary locations (i.e., craft or trade shows, fairs, etc.) or
non-resident contractors performing labor services in Kansas,
must also obtain a permanent registration number.

HOW TO REGISTER

9

To apply for a tax number or to register for Kansas Retailers’
Sales Tax, visit ksrevenue.gov and sign in to the KDOR
Customer Service Center. After you complete the application
you will receive a confirmation number for your registration
and account number(s). For complete instructions about the
application process, obtain Pub. KS-1216, Business Tax
Application, from our website.

If you prefer, you may apply in person – KDOR provides
same-day registration service. An owner, partner, or a principal
officer (president, vice-president, or secretary-treasurer) may
bring the completed application to our assistance center. We
will process the application, assign a registration number, and
issue a Certificate of Registration if you have no outstanding
tax liability.
Another option is to mail or fax your completed business tax
application to our office 3-4 weeks prior to making retail sales.
This will ensure that your tax account number and registration
certificate are issued before your first tax payment is due.

1	
2	

3

004–123456789F–01

Tax Type: Each tax type administered by the Department
of Revenue has been assigned a number. The “004” is the
number assigned to Retailers’ Sales Tax and appears on
your registration certificate.

Account Number = EIN (Employer Identification
Number): The number is your federal EIN, followed by
If you are not required to have an EIN, the Department of
Revenue will create an account number for you. These
account numbers begin with a “K” (or an “A” if registering
online with the Kansas Business Center) followed by eight
numbers and the “F.”

Numerical Suffix: The two-digit code at the end of the

A common misconception is that your sales tax number is
also a “tax-exempt” number. You must complete an exemption
certificate when buying your inventory or claiming another
exemption. Although your sales tax number is required on
exemption certificates used to purchase inventory and other
exempt items, the primary purpose of this number is to identify
your business for collecting and reporting the sales tax.
Be sure to write your tax account number on all correspondence
sent to the Department of Revenue.

Filing Frequency: How often you are required to file your

Kansas sales tax returns. Your filing frequency is determined
by the amount of sales tax collected in a year using the chart
on page 15.

All retail sales of goods and enumerated 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 exemption certificate.
Follow this rule to avoid the expense of having to pay sales
tax on items you sold without charging the tax or obtaining a
completed exemption certificate.

COLLECTING TAX FROM YOUR CUSTOMERS

www.ksrevenue.gov

RETAILERS’ SALES TAX REGISTRATION CERTIFICATE

3
4

or anticipated starting date as indicated on your business
tax application.

Kansas retailers are responsible for collecting the full
amount of sales tax due on each sale to the final user or
consumer. Kansas retailers should follow this cardinal rule:

After a tax account number has been assigned, a sales
tax registration certificate is issued to you. When you receive
it, check it for accuracy and report any corrections to the
Department of Revenue immediately. The following is a sample
sales tax registration certificate.

1

Inception Date: Date retail sales began at this location

THE CARDINAL RULE

YOUR REGISTRATION CERTIFICATE

NAME OF BUSINESS	
123 SW MARKET STREET	
ANYTOWN, KS 66661-1001	

“K” or “A” number assigned by the Kansas Department of
Revenue to record your account information. This number
is partially “masked” to safeguard your EIN from public view.

RETAILER
RESPONSIBILITIES

number is for Department of Revenue use. Generally it
is “01” and denotes either the number of locations or the
number of registrations under this EIN, “K”, or “A” number.

KANSAS DEPARTMENT OF REVENUE	
Division of Taxation

Tax Account Number: The tax-type and your EIN or

location for this registration number. If you do not have a
fixed business location, your mailing address is used.

How to Display and Use Your Certificate
Your registration certificate must be displayed in a
“conspicuous location” in your business to let your customers
know you are duly registered to collect and remit the taxes
you are charging them. Many businesses place it in a display
case or frame near their cash register. If you are registered
for more than one tax, display them together. You must have
a registration certificate at all times. If it is lost or destroyed,
request a duplicate from the Department of Revenue.
If you do not have a permanent fixed business location,
carry your registration certificate with you. Many retailers
traveling from site to site laminate their certificate to protect
it during travel. Your certificate should be available at each
temporary sales location to present should a local or state
official request proof of registration.
You may copy the certificate. Many suppliers will request
a copy of your registration to verify your sales tax number on
an exemption certificate.

the letter “F.” The nine-digit EIN is issued by the Internal
Revenue Service to identify employers and businesses.

3	

2	

4	

Once your application is processed, your business is
assigned a sales tax account number. Your sales tax account
number has three distinct parts:

2

Business Name and Address: Name and physical

3	

SALES TAX ACCOUNT NUMBERS

1

1	

2

Tax Account Number: 004-XXXXX6789F-01
Inception Date: 01/12/2023
Filing Frequency: Monthly

This Registration Certificate is valid until canceled and is not transferable.

10

There are two acceptable ways to collect sales tax from
your 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 as shown in the examples that follow. 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 or when it is not
practical to add the tax at the point of sale, such as vending
machine sales and sales of concessions where a large volume
of sales must be made quickly.
CAUTION: When sales tax is included in the price, you

For a sale to be exempt, an exemption certificate must be
furnished or completed by the buyer, and kept by the seller with
other sales tax records. Do not send exemption certificates to
the Department of Revenue; they are an integral part of your
sales tax records subject to inspection by the Department
of Revenue. When the seller timely obtains an accurately
completed exemption certificate from the buyer and keeps
it on file as part of their records, the seller is relieved from
collecting the tax due on that sale.
You should obtain an exemption certificate before billing the
customer or delivering the property. Retailers are responsible
for obtaining a completed exemption certificate even though
the purchaser may strike the tax from the bill or claim to be
exempt only after receiving the merchandise. If you are unable
to get a completed exemption certificate from a customer, the
sale is considered taxable and you will be liable for the tax. In
an audit situation, you have 120 days from date of notice to
secure a completed exemption certificate from a customer.
[K.S.A. 79-3609]
Additional information about completing Kansas exemption
certificates is on page 9. For more details about how to
properly use exemption certificates as a buyer or seller, and
exemption certificates currently in use, obtain Pub. KS-1520.
DO NOT accept a copy of a customer’s sales tax registration
certificate instead of an exemption certificate. The registration
certificate shows the buyer is a retailer — it does not certify
the purchase is exempt from tax.

MUST compute the total sales without tax before reporting it
as “Gross Sales” when you file. See page 17, Line 1 – Gross
Sales/Receipts.
IMPORTANT: It is illegal for a retailer to advertise to the
public or any consumer –directly or indirectly that the sales/
use tax or any part of the tax will be paid or absorbed by
the retailer; sales/use tax is not a part of the price to the
consumer; or, all or part of the sales/use tax will be refunded
when it is added to the price [K.S.A. 79-3605].
NOTE: Amounts collected as sales tax must be remitted
to the state. If too much tax is collected, it must either be
refunded to the customer or remitted to the state.

SALES TAX RECORDS

It is most important to keep neat, thorough, and adequate
records of all aspects of your business operation. Keeping
good records will enable you to accurately complete your sales
and use tax returns, your business and personal income tax
returns, and determine the overall profitability of your business.
There is no prescribed format for sales tax records. They
may be maintained on a computer or kept in a notebook.
However, the content of your sales tax records is prescribed by
law. 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]
Whether maintained electronically or on paper, your
sales tax records must contain the following documents and
information. [K.A.R. 92-19-4b]

LOCAL SALES TAX APPLICATION ON
DESTINATION BASED SOURCING

Kansas participates in the Streamlined Sales Tax Project
(SSTP). One area of uniformity among the states is in
“sourcing” – that is, which local sales tax rate is due.
General Destination-Based Sourcing Rules
Kansas is a destination-based sourcing state. Under the
sourcing rules, the rate of sales tax due on instate sales will
be the combined state and local sales tax rate in effect where
the customer takes delivery/possession of the purchased
item(s). The seller collects 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.
If the shipping address is not known to the seller, then it
is the sales tax rate in effect at the purchaser’s address as
maintained by the seller in the normal course of business. If
the seller’s records do not contain an address for the buyer,
then the seller should source the sale to the address of the
buyer shown on the buyer’s payment instrument. If there is
no address on the payment instrument for the buyer, then the
sale would be sourced to the seller’s location.
EXAMPLE: A customer enters Joe’s Hardware in Pittsburg,

1)	 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;
2)	 all deductions allowed by law and claimed when you filed
(See Part II — Deductions on page 16);
3)	 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);
4)	all exemption certificates; and
5)	 a true and complete inventory taken yearly.

You must keep these records for the current year of
business and at least three prior years. Some records, such
as the purchase price of equipment and fixtures, must be kept
longer for federal tax purposes. Your sales tax records must
be available for, and are subject to, inspection by the Director
of Taxation or authorized representative (auditor) at all times
during normal business hours.

EXEMPTION CERTIFICATES

An exemption certificate is a document that shows why
sales tax was not charged on an otherwise taxable sale of
goods or services. It allows you to purchase your inventory,
ingredient parts, and certain consumables without tax, and
authorizes you to sell taxable items to exempt customers
without collecting tax. Most of the exemptions discussed on
pages 6 through 9 require an exemption certificate.

11

Kansas, makes a purchase and takes possession of the item
at the store. The combined rate of sales tax due is the rate in
effect at Pittsburg, Kansas.
EXAMPLE: A customer enters Joe’s Hardware in Pittsburg,
Kansas, buys an item and asks the retailer to deliver it to him in
Columbus, Kansas. Joe’s Hardware will charge the combined
rate in effect at Columbus, Kansas (where the customer took
delivery).

Gifts/Delivery to Another Address or Location
When the product is not received by the purchaser at
the seller’s location and the purchaser has given the seller
instructions to ship or deliver the product to a donee of the
purchaser, then the sale is sourced to the donee’s address
furnished by the purchaser.
EXAMPLE: A Russell, Kansas resident buys a computer from

EXAMPLE: A St. Francis resident enters into a one-year
lease as lessee of computer equipment and rental payments
are due monthly. The lessor’s business location is in Goodland.
The consumer picks up the computer equipment from the
lessor’s business in Goodland. This equipment will be located
at the consumer’s residence in St. Francis during the term
of the lease. Because the lessee first took possession of
the computer equipment at the lessor’s business premises
(Goodland), the first lease payment is subject to the sales
tax rate in effect at Goodland. However, subsequent lease
payments will be sourced to the consumer’s location of
St. Francis. In contrast, if the lessor shipped the computer
equipment to the consumer’s location, the first lease payment
(as well as the subsequent lease payments) would have been
sourced to the consumer’s location in St. Francis.

a Wichita business as a gift for a student attending college and
requests that the business ship it to the student’s address in
Hays. The student is the purchaser’s donee, so the local sales
tax applicable at the donee’s address in Hays, applies.

Receipt by Shipping Company on Behalf of Buyer
Receipt by a shipping company on behalf of a purchaser
is not considered received for purposes of the sourcing rules.
EXAMPLE: A Hutchinson, Kansas law firm orders office

Sourcing for Transportation Equipment
In general, transportation equipment means equipment
used to carry persons or property in interstate commerce,
such as aircraft (including containers attached thereto),
buses, trucks, railcars and railroad locomotives. The general
destination-based sourcing rules apply to the retail sale, lease
or rental of transportation equipment.

supplies from an office supply company in Overland Park
and requests the company deliver its order to Jones Shipping
Co., which the law firm has retained to deliver the order to its
Hutchinson office. In this situation, receipt by Jones Shipping
Co. is not considered receipt by the purchaser for purposes of
applying the sourcing rules. Since the buyer did not receive
the order at the seller’s location and the seller did not ship
or deliver the order to the buyer or to a third party, the sale
should be sourced to the address of the buyer shown on the
seller’s business records.

Sourcing for Electricity, Gas, Water or Heat
The utilities of electricity, gas, water and heat are taxed at
the local (and state) rate in effect at the customer’s location.
Under the sourcing rules, these utilities are taxed based on
the customer’s location. Residential and agricultural use of
the utilities (except water) are subject only to local tax – the
state sales tax of 6.50% does not apply to utilities used for a
residential or agricultural purpose. Water for residential and
agricultural use is exempt from both state and local sales tax.

Sourcing of Services
Destination-based sourcing rules applies to all retail sales
of taxable services, as well as all sales of tangible personal
property. This means that the sale of a taxable service is
sourced or taxed based on the location where the purchaser
of the services makes first use of those services (often the
same location where services are performed).
EXAMPLE: A rural Jefferson County resident brings his

Telecommunications Sourcing Rules
Telecommunications service has its own sourcing
rules. These rules are consistent with the federal Mobile
Telecommunications Sourcing Act. This means that
telecommunications sales are generally sourced to the
customer’s billing address.

car to a mechanic in Topeka for repairs. The car repairs
are performed at the mechanic’s shop in Topeka, and the
consumer picks the car up at the shop location. The mechanic
will collect the sales tax rate in effect in Topeka on the repair
charges. If the mechanic had performed the repairs at the
consumer’s residence, then he would collect the sales tax
rate in