Form Pub. Ks-1525 - Kansas Sales & Use Tax For Contractors Subcontracotrs & Repairmen Page 21
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49CONTRACTOR DECISION MATRIX
To assist contractors in determining the tax treatment of their labor services and materials for a particular job, KDOR
has developed this decision matrix. By answering the questions about the type of contract in the order presented you
will easily be able to determine the sales tax treatment of the materials and labor services.
1) Is this project being performed for a public water supplier paying the Clean Drinking Water Fee?
‰
Yes.
Since January 1, 2002, public water suppliers paying this fee are exempt from paying sales tax
on all property or services purchased directly or indirectly by them to construct, operate or
maintain the water district. Water suppliers paying the fee must furnish you with a copy of their
Clean Drinking Water Fee Exemption Letter issued by KDOR. The public water supplier will
also provide you with the exemption certificate, Form ST-28EE, for the indirect purchases
(materials, subcontractor labor) made by you on their behalf. Kansas political subdivisions
paying the Clean Drinking Water Fee may use a Project Exemption Certificate in lieu of Form
ST-28EE.
‰
No.
Go to Question 2.
2) Is this a project covered by a Project Exemption Certificate?
‰
Yes. All parts of the project are exempt – materials and labor, including the materials and/or labor
provided by all subcontractors. The customer will provide the general contractor with a copy of
the numbered project exemption certificate, who will in turn provide to all the other contractors
on the project. Each will then give a copy to their vendors to validate the exemption from sales
tax on materials and/or labor provided for the project.
‰
No.
Go to Question 3.
3) Is this project being performed for an exempt entity that has a By Or On Behalf Of exemption
certificate?
‰
Yes. Materials/parts are exempt. The By Or On Behalf Of exemption certificate allows contractors to
purchase materials exempt from sales tax similar to a Project Exemption Certificate. Labor is
exempt.
‰
No.
Go to Question 4.
4) Is this project being performed for an exempt entity that has a Tax-Exempt Entity Exempt Certificate?
‰
Yes
Materials/parts are taxable. Labor is exempt as a direct purchase. The exempt entity must
provide a completed exemption certificate. (Exempt entities must have a project exemption in
order for the materials to be exempt.)
‰
No.
Go to Question 5.
5) Is this project residential? Labor services performed on residential property are exempt.
‰
Yes. Materials/parts are taxable. Labor is exempt.
‰
No.
Go to Question 6.
6) Is this project original construction? (As defined in this publication.)
‰
Yes. Materials/parts are taxable. Labor is exempt.
‰
No.
Go to Question 7.
7) Does this project qualify for the Integrated Production Machinery & Equipment or Warehouse
Machinery & Equipment exemption? The sale, installation, repair, and maintenance (parts, accessories
and labor services) of certain machinery and equipment used in a Kansas plant, facility, warehouse or
distribution center is exempt from sales tax. See KDOR’s Notice 00-08 and Exemption Certificate Forms
ST-201 and ST-203.
‰
Yes. Materials/parts exempt. Labor is exempt.
‰
No.
Materials, parts, and labor are taxable.
If the answers to Questions 1 through 7 are No, the project is in the general category of commercial remodel work.
On these jobs, both the materials and labor services by all contractors performing work on the project are subject to the
Kansas Retailers’ Sales Tax.
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