Form Pub. Ks-1527 - Kansas Business Tax For Political Subdivisons Page 3
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42county’s name, and payment for that vehicle is made
by a county check, warrant, or voucher.
INTRODUCTION
Direct purchases DO NOT include reimbursements.
Items or services purchased by a political subdivision’s
employee or agent with their personal funds are taxable,
even when the individual is on official business, and/or
POLITICAL SUBDIVISION DEFINED
is reimbursed the expense by the political subdivision.
A Kansas political subdivision is any Kansas
A city employee needs materials for an
municipality, agency or subdivision authorized to levy a
upcoming city project, and buys them
tax, or certify a levy of tax, on tangible property and
using her credit card or cash. This
other entities enumerated in Kansas law. Political
purchase is taxable, even though the
subdivisions in Kansas include:
employee is later reimbursed by the city, and the
materials become city property.
• Airport authorities
A county employee traveling on official
• Cities and municipalities
business charges his hotel bill to a
• Community-based mental health centers
personal credit card and is later
• Counties
reimbursed this expense by the county.
• County hospital districts
The employee will pay all applicable sales taxes on the
• Drainage districts
hotel bill because it is not a direct purchase between
• Groundwater management districts
the county and the hotel room retailer.
• Housing authorities
• Metropolitan transit authorities
Political Subdivision Credit Cards
• Port authorities
• Public building commissions
Some Kansas political subdivisions have issued
• Rural water supply districts
credit cards to their employees in order for employee
• School districts
purchases to qualify for exemption as a direct purchase.
• Townships
Although the credit card may have the authorized
employee’s name on it, purchases are billed by the credit
WHAT PURCHASES ARE EXEMPT?
card company directly to the exempt entity and are paid
for by the exempt entity’s funds. These purchases are
also exempt.
Kansas law K.S.A. 79-3606(b) grants a sales tax
exemption to Kansas* political subdivisions on the
A county commissioner travels to another
purchase, lease, or rental of tangible personal property
Kansas city on official business, and pays
(goods and merchandise), and the purchase of taxable
for lodging, gas, and meals with a county–
services. However, the purchase must be a direct
issued credit card. These purchases are
purchase and used exclusively for political
exempt direct purchases because they are billed directly
subdivision purposes and not used or proposed
to the county.
to be used in the business of furnishing gas, water,
electricity, or heat, or in any other taxable business.
CAUTION: Should the employee buy an item
These conditions may be summarized into two tests
or service with the exempt entity’s credit card
— the direct purchase test and the usage test. Political
that will be used by its gas or electric utility
subdivisions that apply these two tests to each
department, or is not exclusively for political subdivision
individual purchase will avoid costly errors of sales
purposes, the political subdivision is responsible for
or use tax omission.
payment of the sales tax.
* Political subdivisions of other states are not exempt from
Kansas Retailers’ Sales Tax.
WHAT USES ARE EXEMPT?
What is a Direct Purchase?
To be exempt, the items or services purchased must
be used exclusively in your non-taxable role as a political
To qualify as a direct purchase, the invoice must be
subdivision. If the purchase will be used (even if partially)
made out to the political subdivision and payment must
in your taxable role as a provider of gas, electricity or
be made with political subdivision funds. If either of these
heat, then the purchase is taxable. The same rule applies
conditions is not met, the sale is taxable.
to public water providers that are not paying the Clean
Drinking Water Fee (see Utility Department Projects,
A county may make a direct purchase of
page 9). Items or services purchased from the same
a new sheriff’s vehicle exempt from sales
vendor may be either exempt or taxable, depending on
tax. The vehicle invoice is made out to
the county, the vehicle is titled in the
their use. See also Taxable Usage Test on page 10.
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