Form Pub Ks-1520 - Kansas Exemption Certificates Page 10
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49• restoration, reconstruction, or replacement of a
building, facility or utility structure damaged or
SPECIAL SITUATIONS
destroyed by fire, flood, tornado, lightning,
explosion, windstorm, ice loading and attendant
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winds, terrorism or earthquake
,
• completion of any unfinished portion of an
existing building or facility, or
CONTRACTORS
• construction, reconstruction, restoration,
replacement, or repair of a bridge or highway.
A contractor, subcontractor, or repairman (hereafter
referred to as “contractor”) is any person who agrees to
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A facility is a mill, plant, or refinery; oil, gas, or water well;
furnish and install parts or materials, or performs the labor
feedlot; and a transmission and distribution line owned by a
service of installing the parts or materials for a specified
REA or municipality.
price. Contractors are considered to be the final user or
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A residence includes all types of dwellings where individuals
consumer of their materials and must, therefore, pay
customarily live — homes, apartments, nursing homes, etc.
sales tax on them when purchased from their vendors.
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A utility structure shall mean transmission and distribution
lines owned by an independent transmission company or
A retailer/contractor is a contractor who maintains an
cooperative, the Kansas electric transmission authority or
inventory of materials. Examples of retailer/contractors
natural gas or electric public utility. A windstorm shall mean
are building, electrical, and plumbing supply houses that
straight line winds of at least 80 miles per hour as determined
not only sell to the final consumer but also perform
by a recognized meteorological reporting agency or
construction or installation work.
organization.
When a subcontractor is performing taxable labor
This distinction between a contractor and a retailer/
services for a general contractor, the subcontractor
contractor only determines when sales tax is paid on
must charge sales tax to the general contractor. A
materials. Materials are always taxable unless purchased
contractor may NOT use a Resale Exemption Certificate
with a Project Exemption Certificate (PEC).
to purchase the labor services of another contractor
without tax.
A contractor must pay sales tax on all supplies and
materials when buying them from the supplier. If the
supplier is an out-of-state retailer, a contractor will pay
PROJECT EXEMPTION CERTIFICATES (PECs)
Consumers’ Compensating Use Tax on the supplies and
materials (see Compensating Use Taxes herein).
A Project Exemption Certificate (PEC) is a numbered
Contractors cannot use a Resale Exemption Certificate
document issued only by KDOR or its authorized agent
to buy their materials and supplies without sales tax.
(See Agent Status herein ).
A retailer/contractor must either collect sales tax
As the name implies, a PEC exempts the entire
when the merchandise is sold at retail or self-accrue the
project — materials and labor — from sales tax. Two
tax due when materials are removed from its tax-exempt
types of projects may receive a project exemption.
resale inventory for a contract job (see Paying Tax on
Projects for entities who are exempt, and certain
Personal Use of Inventory herein). Retailer/Contractors
economic development projects.
will use the Contractor-Retailer Exemption Certificate
(ST-28W) to purchase their inventory. Form
The following exempt entities qualify to use Form
PR-78SSTA may also be used.
PR-76 to request a PEC or apply on-line for most
Labor Services
construction, remodel, or repair projects:
The services of installing, applying, servicing,
• Kansas political subdivisions
repairing, altering, or maintaining tangible personal
• Nonprofit hospitals
property are subject to sales tax. This includes work
• Nonprofit schools & educational institutions
performed on tangible personal property that, once
• Nonprofit zoos
installed or applied, becomes a part of real property.
• Primary care clinics and health centers
However, the labor services of “installing” or “applying”
• Religious organizations
are not taxable when performed in connection with the
• U.S. Government and its agencies
“original construction” of a building or facility. “Original
construction” is defined as the:
Form PR-78SSTA may also be used, however, the
purchaser must provide a KDOR issued PEC Number
• first or initial construction of a new building or
on that form.
facility,
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• addition of an entire room or floor to an existing
CAUTION: The state of Kansas and its agencies
building or facility,
DO NOT qualify for PECs (except state of
Kansas correctional institutions including a
• construction, reconstruction, repair, replacement,
privately constructed correctional institution contracted
remodeling or renovation of a residence,
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