Form Pub. Ks-1525 - Kansas Sales & Use Tax For Contractors Subcontracotrs & Repairmen Page 6
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49be leased or rented tax exempt when a Project Exemption
Certificate has been issued for the project, and the
equipment will be used only on that exempt project. The
LABOR SERVICES
following items are taxable, even when leased or
rented with a Project Exemption Certificate:
Portable offices, construction trailers, port-a-potties,
G
R
:
ENERAL
ULES
motor vehicles, telephones and storage containers are
R
L
— E
ESIDENTIAL
ABOR
XEMPT
always taxable. See Exempt Projects.
“O
C
” L
— E
RIGINAL
ONSTRUCTION
ABOR
XEMPT
C
“R
” L
— T
.
OMMERCIAL
EMODEL
ABOR
AXABLE
Lease or Rental with an Operator
RESIDENTIAL LABOR SERVICES
The lease or rental of equipment with an operator is
not considered to be a lease/rental of tangible personal
property (taxable), but providing a service. Whether or
Services performed to install or apply tangible personal
not the service is taxable depends on the rules for labor
property are exempt from sales tax when the services
services (see Labor Services). The rental would be
involve the original construction, reconstruction,
taxable if the service being performed by the equipment/
restoration, remodeling, renovation, repair or
operator is a taxable service.
replacement of a residence.
A contractor rents a backhoe to dig a
A residence means only those enclosures within which
trench; the backhoe will be operated by
individuals customarily live. Residences include single-
family homes, duplexes, townhouses, apartments,
the contractor’s employee. This equipment
condominiums. Residences may include mobile and
rental is subject to sales tax. However, if
manufactured homes if they are affixed to real property
the contract calls for the backhoe company to furnish
by water, sewer and electrical connections. A residence
both the equipment and the operator, the tax treatment
may be a primary residence or a secondary residence,
of this rental depends on the service being performed.
such as a summer home. Rooming houses, boarding
If only excavation work is being done, the rental is not
houses, apartment houses, nursing homes, retirement
taxable (the service of excavating is not a taxable
homes, dormitories, or any other enclosure that has been
service, see page 12). If the excavation is part of laying
constructed for use, or has as part of its purpose a place
cable, for example, and the charge for excavation is not
of human habitation, is considered to be residential. A
separately stated, the equipment rental is taxable
residence also includes the land improvements
(installing/laying cable is a taxable service).
immediately surrounding it, such as yards, garages,
sidewalks, driveways that service the residence.
The rental or lease of office equipment, portable
offices, construction trailers, port-a-potties and storage
Residences do not include transient accommodations,
containers is always taxable. These overhead items are
such as hotels, motels, inns, apartment hotels, tourist
not exempt, even when leased or rented for an exempt
courts, resort lodges, mobile and manufactured homes
project - see Exempt Projects.
that are not affixed to real property, motor homes, travel
trailers or other recreational vehicles, and other
NOTE: Port-a-potties (portable toilets) are considered to be
accommodations that are routinely rented for a period
a rental of tangible personal property subject to Kansas
of 28 consecutive days or less. Apartment hotels that are
sales tax.
registered for transient guest tax purposes may not claim
exemption as a residence on individual units that are
When you have questions about the tax treatment of
leased or rented to the public, regardless of how long an
a particular item or service, consult the Policy Information
individual unit may be occupied.
Library on our web site, or request a written ruling from
KDOR – see Written Rulings herein.
A contractor agrees to install a new roof on
an existing single family dwelling in Kansas,
OUT-OF-STATE PURCHASES
supplying the materials and labor. The
contractor will pay sales tax on the materials
at the time of purchase; his labor charge is not taxable.
When Kansas residents (whether retailer, contractor
or individually) buy materials, supplies, tools, or
Taxable Labor Services Performed at a Residence
equipment from a business in another state for use within
Kansas, and do not pay a sales tax equal to or greater
Labor services are not automatically exempt simply
than the sales tax rate in effect at their location, a Kansas
because they are performed at a residential property. The
compensating (use) tax is due. If the out-of-state retailer
following labor services are taxable:
is not registered to collect Kansas compensating use
tax, you must pay Kansas consumers’ compensating tax
1) Labor to install tangible personal property as part
directly to KDOR. See Compensating Use Tax for details
of its retail sale (appliances, draperies, etc.). For
of how you report and pay your Use Tax.
additional information see Repairmen, herein. Also
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