Form Pub. Ks-1525 - Kansas Sales & Use Tax For Contractors Subcontracotrs & Repairmen Page 22
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49register any contract or contracts must, before entering
into the performance of such contract or contracts,
execute and file with the Director of Taxation a good and
CONTRACTOR RESPONSIBILITIES
valid bond from a surety company authorized to do
business in Kansas or with sufficient sureties to be
approved by the Director of Taxation. The bond must be
filed with the Director of Taxation before beginning any
WHO MUST REGISTER?
Kansas contract.
The amount of the surety bond is determined by the
Contractors, subcontractors, and repairmen who
size and type of contract. As a general rule, the bond
perform taxable labor services in Kansas must obtain a
must be 8% of the total contract amount or $1,000,
Kansas sales tax number to report and remit the sales
whichever is greater. However, if the project is a tax-
tax collected on taxable labor services from their
exempt project (see page 13), the amount of the bond
customers. All contractor-retailers must be registered to
is 4% of the contract amount or $1,000, whichever is
collect sales tax from their retail customers on the sale
greater. A copy of the Project Exemption Certificate must
of tangible personal property as well as the tax on their
accompany a 4% bond.
taxable labor services.
IMPORTANT: Contractors or subcontractors
A surety bond filed with the Director of Taxation may
that perform only original construction or
cover more than one contract, provided the other
residential labor services (as defined herein), are NOT
contract(s) are started in the same calendar year and
required to register to collect sales tax. Their labor
the bond was submitted as a blanket bond. If necessary,
services are not subject to sales tax so no tax number is
the Director of Taxation may require the amount of a
needed to report and remit sales tax on them. They must,
blanket bond be increased to cover all Kansas tax
however, pay sales or use tax on all the materials and
liabilities.
supplies when buying them from the supplier(s).
When the nonresident contractor or subcontractor
General contractors should be sure that all of the
has fully performed all contracts registered during the
subcontractors on a job are properly registered in
current calendar year and has paid all applicable taxes,
Kansas. Nonresident contractors and subcontractors
the surety bond will be released by the Director of
working in Kansas have special registration and bonding
Taxation. To expedite the release of the bond, the
requirements.
contractor should request release forms 60 days before
the expected completion date. Appropriate forms will be
mailed for the bond release.
NONRESIDENT CONTRACTOR OBLIGATIONS
Noncompliance Penalties
The Nonresident Contractors Act was passed to help
insure payment of all Kansas taxes by nonresident
Every nonresident contractor or subcontractor who
contractors and nonresident subcontractors working in
is not registered and bonded before construction begins
Kansas. Contractor includes any individual, partnership,
is denied the right to perform construction services in
firm, corporation, or other association of persons
Kansas. The denial, by way of an injunction proceeding,
engaged in the business of construction, alteration,
will remain in effect until the contract is registered with
repairing, or dismantling of real or personal property.
the Director of Taxation, and the required bond is
executed and filed.
Nonresident contractors and nonresident sub-
contractors must register with the Director of Taxation
Any nonresident contractor or subcontractor failing
for each contract performed in Kansas when the total
to register or comply with this act is also not entitled to
contract price or compensation received is more than
recover, by way of Kansas courts, payment for
$10,000. This registration requirement is waived if the
performance of the contract. Failure to register and post
nonresident contractor/subcontractor is a foreign
the required bond is a misdemeanor offense, and upon
corporation authorized to do business in Kansas by the
conviction a nonresident contractor or subcontractor
Kansas Secretary of State.
may be fined not less than $100 nor more than $5,000.
To register, a nonresident contractor or subcontractor
must complete the appropriate section of the Kansas
Other Kansas Tax Obligations
Business Tax Application (CR-16), Nonresident
In addition to registering each contract and posting
Contractor Registration, and post any required bond.
the required bond with the Director of Taxation,
This is in addition to the Kansas sales and withholding
nonresident contractors working in Kansas are usually
tax registrations required when working in Kansas; see
liable for Kansas sales, withholding and income tax
Other Kansas Tax Obligations.
(either corporate or individual), administered by KDOR.
Nonresident Contractor’s Bond
Nonresident contractors should register for these taxes
on Form CR-16 at the same time they are registering
As indicated in the Business Tax Application, every
their contracts in Kansas and posting the required bond
nonresident contractor or subcontractor required to
on that form. (See also How to Register.)
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