Form Pub. Ks-1525 - Kansas Sales & Use Tax For Contractors Subcontracotrs & Repairmen Page 5
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49contractor is a taxable retail sale. See page 6 for a
retailer exempt from sales tax is with a Project Exemption
discussion on materials purchased outside of Kansas
Certificate see Project Exemption Certificates.
for use within Kansas.
TOOLS
Contractors cannot use a Kansas Resale Exemption
Certificate or a Contractor-Retailer Exemption Certificate,
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Form ST-28W (herein) to purchase their materials
ENERAL
ULE
OOLS
UPPLIES ARE
AXABLE
without tax. As a contractor, you are by definition the
Contractors, subcontractors, and repairmen are the
final consumer of the materials, and not a retailer of
final consumers of all the tools used to perform their
them. The sales tax is due at the time of purchase even
services. You must therefore pay sales or use tax when
when the materials are used on a project in another state.
buying your tools — there is no exception or exemption
to this rule. Following is a representative, but not
A contractor in Olathe, Kansas will pay
exclusive list, of taxable tools:
sales tax on building materials purchased
from a supplier in Kansas City, Kansas,
Drills, drill bits
Pliers, socket sets
even though they will be installed at a
Hammers, nail guns
Screwdrivers, wrenches
home or office in Independence, Missouri.
Paint brushes and rollers
Steel tapes, T squares
Planes, saws, sanders
Tool belts, tool boxes
Contractors-retailers
sand paper, caulking, chalk
skid loaders, generators
Contractor-retailers may purchase their inventory
Contractor-retailers may purchase tools exempt from
exempt from sales tax using the Contractor-Retailer
sales tax if the items are part of their resale inventory.
Exemption Certificate. The contractor-retailer will then
However, like their material purchases, when the tools
collect sales tax when these items are sold at retail.
are removed from inventory they are TAXABLE. The
contractor-retailer will either collect sales tax when the
A lumberyard buys lumber, paint, and
tools are sold to the general public or to other
fixtures directly from a manufacturer using
contractors, or will report and pay sales tax on the cost
a Kansas Resale Exemption Certificate.
of tools removed from inventory and used by the
The lumber yard will collect sales tax when
contractor-retailer or its employees.
these items are sold to contractors or the general public.
Lease/Rental
When a contractor-retailer removes materials from
his inventory to use on a contract job, the contractor-
Specialized or expensive tools are often leased or
retailer becomes the final consumer, and must accrue
rented rather than purchased. Contractors and
sale tax on the cost of the materials. The Kansas sales
contractor-retailers must pay sales tax on the lease or
tax cannot be avoided by retailing the materials to an
rental of any tools. Only tools leased or rented for an
out-of-state location when the contractor-retailer is
exempt project using a Project Exemption Certificate
acting as a contractor (i.e., providing and installing
(see page 14) are exempt from tax.
materials for another).
A contractor-retailer located in Kansas City,
MACHINERY AND EQUIPMENT
Kansas removes materials from inventory
to install for a customer located in Raytown,
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Missouri. The contractor-retailer must
ENERAL
ULE
ACHINERY
QUIPMENT ARE
AXABLE
accrue Kansas retailers’ sales tax on the cost of the items
Purchases
to him at the Kansas City, Kansas sales tax rate.
Like tools, machinery and equipment purchased by
Accruing sales tax is done by reporting and paying
contractors are subject to sales tax. Contractors and
sales tax on the contractor-retailer’s own sales tax return.
contractor-retailers alike must pay sales or use tax when
The tax rate will be the state and local rate in effect at
buying construction or office equipment. Examples
the inventory location. The tax is due at the time the
include:
materials are removed from inventory, even though
they may be used in a project outside of Kansas.
Air compressors
Copiers, fax machines
An illustrated example of how to report and pay sales
Backhoes and caterpillars
Generators
tax on personal or contract use of inventory is included
Calculators and computers
Shop vacs
in this guide - see Reporting and Paying Sales Tax.
Cellular telephones
Vehicles
Lease/Rental
All materials and parts purchased by contractors
and contractor-retailers for use in original
General Rule: When construction tools and
construction, remodeling, or repair projects are
equipment are leased or rented for a project, the lease
TAXABLE. The ONLY way materials may be purchased
or rental is taxable. However, tools and equipment may
by a contractor or removed from inventory by a contractor-
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