Form Pub Ks-1520 - Kansas Exemption Certificates Page 13
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49The resale, retailer/contractor, tire excise, and dry
collected from the consumer and then sent by the retailer
cleaning exemption certificates must also show a Kansas
to KDOR. Unless otherwise noted, a sales tax exemption
exempts the sale from the state, city, county and special
tax registration number for that tax type. Exemption
taxing district sales taxes. A list of all the combined
certificates for nonprofit organizations require the
state and local tax rates, Sales Tax Jurisdiction Code
exempt entity’s tax identification number.
Booklet (Pub. KS-1700) can be found on our web site.
A resale exemption certificate was accepted
that does not show a Kansas sales tax
OUT OF STATE SALES
registration number.
A resale exemption certificate that is missing the
Kansas sales tax law applies only within the
purchaser’s Kansas registration number is incomplete
boundaries of Kansas. When goods or merchandise
and, therefore, not acceptable. Furthermore, a retailer
are shipped or delivered outside of Kansas (and not
returned to a point in Kansas), Kansas sales tax is not
cannot accept an exemption certificate from a purchaser
due. Out-of-state delivery may be made by the seller, a
who does not provide a Kansas sales tax registration
common carrier, or through the mail.
number except when the out-of-state purchaser for
resale is having the item drop shipped to a customer in
Since these sales are a deduction on your sales tax
Kansas. Wholesalers and out-of-state retailers should
return like an exempt sale, your books and records must
use the Multi-Jurisdiction Exemption Certificate
show the merchandise was delivered outside Kansas.
(ST-28M) or Form PR-78SSTA, when buying their resale
Acceptable proof of an out-of-state sale is a:
inventory in Kansas.
Tax-free sales are made to a buyer that
• Waybill or bill of lading, showing delivery to another
provides only a Kansas sales tax number.
state,
• Post office, insurance, or registry receipt,
A retailer cannot exempt a sale from tax simply
• Trip sheet signed by the seller’s delivery agent,
because the customer provides a Kansas sales tax
showing the address and signature of the person
number or a copy of a certificate of registration. A
outside Kansas who received the merchandise.
completed resale exemption certificate (or Form
PR-78SSTA) must also be obtained. (See page 4,
When goods or merchandise are delivered to a buyer
“Resale Exemption Certificate Requirements”).
in Kansas, Kansas sales tax is due even though the
buyer may later transport the property out of Kansas.
A retailer fails to remit sales tax to the state
See page 4 for a discussion of drop shipments.
because the customer crossed the tax off the
bill without providing a completed exemption
NOTE: If you have established a physical presence or “nexus” in
certificate.
another state, you may be required to register for that state’s sales
or use tax. See What is Nexus? herein.
A retailer is still responsible for obtaining an exemption
certificate even when the customer refuses to pay the
COMPENSATING USE TAXES
tax. In the absence of a completed exemption certificate,
the sale is taxable, and the sales tax is due.
Sales tax exemption certificates may also be used to
claim exemption from compensating use tax.
Failure of contractors to pay tax on materials
Compensating use tax applies to purchases of goods
used in a project for an exempt entity (such
from businesses in other states. The purpose of use
as a school, nonprofit hospital, religious
tax is to protect Kansas businesses from unfair
organization, the federal government) that did not
competition from businesses in other states that may
obtain a PEC.
not charge tax. The use tax rate is the same as the
state and local sales tax rate in effect where the item is
A contractor is responsible for paying the sales tax
used, stored or consumed. There are two types of use
on all materials used in performing labor services, unless
tax: Consumers’ Compensating Use Tax and Retailers’
working under a PEC issued by KDOR or its authorized
Compensating Use Tax.
agents (see pages 10-11). When the exempt entity has
not obtained a project exemption number, materials
Consumers’ Compensating Use Tax
purchased or furnished by its contractor(s) are taxable.
Consumers’ Compensating Use Tax is due when
LOCAL SALES TAX
goods or merchandise are purchased outside Kansas
for use, storage, or consumption (not resale) in Kansas,
and a sales tax equal to the state and local sales tax
Each Kansas county or city has the authority to levy
rate in effect where the item is used, stored or
a local sales tax. When levied, a local sales tax rate is
consumed, has not been paid. The tax applies whether
added to the statewide sales tax. The resulting total is
13
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