Form Pub. Ks-1510 - Kansas Sales Tax And Compensating Use Tax Page 28
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42for retailers’ sales and consumers’ use taxes that are
RETAILERS’ COMPENSATING USE TAX
discussed on page 14. The local tax that will apply is
based on the destination of the goods, most generally
identified by the delivery address of the customer, as
The Kansas Retailers’ Compensating Use Tax is
illustrated by the two previous examples.
collected by retailers in other states that sell tangible
personal property to Kansas consumers. Out-of-state
Establishing Nexus in Another State
retailers are required to register and collect the
Retailers’ Compensating Use Tax from their Kansas
If you are a Kansas retailer, and any of the “nexus”
customers if they have established a physical presence
activities in the opposite column describe your business
or “nexus” in Kansas.
in another state, contact that state to register to collect
the sales or use tax from your customers in those states.
What is Nexus?
(For more information on registering in another state,
see Midwest Border States Compact herein.)
Nexus is defined as a “means of connection” or a
“link.” What constitutes nexus varies from situation to
If you do not have a physical presence (nexus) in
situation. However some areas KDOR looks for are:
Kansas, you are not required to collect and remit the
• Business location in Kansas, including an office.
Kansas Retailers’ Compensating Use Tax. Your Kansas
• The presence of sales or service
customers will owe the state and local Consumers’
representatives.
Compensating Use Tax direct to KDOR on purchases
• Operation of mobile stores in Kansas
from your company. However, as a convenience to your
(example: trucks with a driver salesperson).
Kansas customers, it is beneficial to register voluntarily.
• Stocking inventory in a Kansas warehouse or
on consignment.
A Kansas resident orders food products
• Providing tangible personal property for lease
from a California retailer ’s web site.
or rental in Kansas.
Delivery is by common carrier (USPS,
FedEx, UPS, or freight line). Although the
• Delivering merchandise to Kansas customers
California food products retailer may register with KDOR
using company vehicles or contract carriers,
to collect Kansas Retailers’ Compensating Use Tax as
other than interstate common carriers.
a convenience to its Kansas customers, the California
• Providing or contracting for installation,
retailer is not legally required to do so because it does
construction, repair, or other services in
not have a physical presence in Kansas.
Kansas (such as maintenance contracts – a
Retailers’ Sales Tax registration is required).
RECIPROCAL DISCOUNTS
If you are a retailer in another state, and any of the
above describes your business activity (or that of your
agents) in Kansas, you are required to register and
In order to effectively administer and enforce use
collect the appropriate state and local Retailers’ Sales
tax law and collect the use tax due, Kansas law allows
or Compensating Use Tax from your Kansas customers.
the Secretary of Revenue to enter into reciprocal
agreements with other states. KDOR currently has
A Wichita, KS resident orders a personal
agreements with three of its bordering states — Missouri,
computer from a Wisconsin retailer and it
Nebraska and Oklahoma. No service fee will be allowed
is shipped to him from their warehouse in
for Colorado retailers for returns filed on or after July
St. Louis. The Wisconsin retailer also
1, 2009. The reciprocal agreement provides discounts
maintains an outlet in Kansas. This out-of-state retailer
to offset the cost of collecting and reporting another
is required to register with KDOR to collect the state
state’s tax. Retailers in these states that collect the
and local Kansas Retailers’ Use Tax in effect in Wichita.
Kansas Retailers’ Use Tax are eligible to receive a
discount on the tax collected. Likewise, Kansas retailers
A Hays, KS resident orders furniture from
who are registered in these states are allowed the same
a Nebraska retailer. The retailer delivers
discount for collecting that state’s use tax. No discounts
the furniture to her home in Kansas using
are allowed on late returns, and late charges are added
its own delivery truck. This Nebraska
to the full amount of the tax due.
retailer is required to register with KDOR to collect the
state and local Kansas Retailers’ Use tax in effect for
The Kansas discounts currently in effect are: Missouri
the city of Hays, since the delivery of the furniture into
at 3%; Nebraska at 3%; and Oklahoma at 1% with their
Kansas with a company vehicle has established nexus.
total discount limited to $2,500.
Application of Local Use Tax
REPORTING AND PAYING RETAILERS’ USE TAX
Local use tax applies to all sales of tangible personal
Out-of-state retailers that sell tangible personal
property that are subject to the retailers’ compensating
property to Kansas consumers must register with KDOR
use tax, according to the same “sourcing rules” used
28
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