Form Pub. Ks-1527 - Kansas Business Tax For Political Subdivisons (Page 4 of 42) in pdf

A city is buying new chairs. Chairs used in

exempt arm of government. If you make repeated

city offices are exempt from sales tax, but

exempt purchases of the same type from the same

the chairs for the city’s gas utility

vendor, it is not necessary to furnish an exemption

department are taxable.

certificate for each transaction. You may instead furnish

one exemption certificate to cover future exempt

purchases.

POLITICAL SUBDIVISION EXEMPTION CERTIFICATES

EXEMPTION CERTIFICATES EFFECTIVE 1/1/2005

An exemption certificate is a document furnished by

the buyer and kept by the retailer to show why an

Since January 1, 2005, Kansas law has required that

otherwise taxable sale is exempt. Retailers must keep

all sales tax exempt entities (to include political

exemption certificates in their records for at least three

subdivisions of the state of Kansas) obtain and utilize

years as proof as to why they did not collect Kansas

only exemption certificates issued by KDOR. Important

retailers’ sales tax. Additional information about

information regarding exemption certificates issued by

exemption certificate usage is on page 21.

KDOR are in NOTICE 04-10 that follows. See also the

“Sample” Tax-Exempt Entity Exemption Certificate on

Political subdivisions must provide their vendors with

page 6.

an exemption certificate when making purchases as an

NOTICE 04-10

Department to Issue Identification Numbers to Exempt Entities

The Kansas Department of Revenue wishes to thank retailers for their time and effort expended as our partners in collecting

state and local sales tax and documenting the exempt status of sales made to the various statutorily exempt entities. Recognizing

that the scope and number of these exemptions often creates misunderstandings and additional paperwork for retailers, and as

a result of new legislation, the department is changing how many exempt entities will claim their exemption effective January 1,

2005. We believe the changes to be made will simplify the handling of exemption requests for you and your employees and also

assist in deterring abuses. To quickly and easily document the exempt status of sales to exempt entities, the department will

assign a unique Tax Exempt Identification Number and issue a special Tax Exemption Certificate containing this number to

known Kansas exempt entities.

This new procedure is in accordance with the provisions of Sections 16 and 21 of 2004 House Bill 2375 that will become

effective January 1, 2005. This legislation requires entities and organizations exempt from sales tax under K.S.A. 79-3606

(listed on page 2 of this notice) to provide an identification number issued to the entity by the Department of Revenue on an

exemption certificate in addition to its name and address. Beginning in November 2004, the department will begin issuing to all

Kansas-based tax-exempt entities an exemption certificate that will assign a unique tax-exempt number to each entity. Beginning

January 1, 2005, this new certificate must be presented to the retailers for the purchase to be tax-exempt; blank certificates

from these Kansas-based entities will no longer be acceptable for purchases made after January 1, 2005. If you have tax

exempt entities making purchases in December using exemption certificates that do not include its new exemption number,

please suggest that they contact the department so they will have their new certificate by the effective date.

The new numbered exemption certificate will clearly state the exempt entity’s name, its Tax Exempt Identification Number,

the types of sales that are exempt and the types of payment that can be accepted to receive the tax exemption. Unless

otherwise stated on the certificate, only direct purchases (billed directly to the entity and paid with the entity’s check or

voucher) are exempt. Purchases by employees with their personal funds are TAXABLE. Each entity’s numbered certificate

will replace the individual certificates currently used by the exempt organizations listed on page 2 of this notice (Nonprofit

Museum, Religious Organization, PTA/PTO, etc.).

On or after January 1, 2005, the only change to the retailer’s process for documenting exempt sales to these entities will be

to keep a copy of the numbered, entity-specific exemption certificate in your sales tax records, just as you do with the current

types of exemption certificates.

The purpose of this new procedure is to control fraudulent tax-exempt purchases and to assist retailers, your sales people

and cashiers in identifying exempt entities and easily determining whether a claim for exemption is valid, based on the exempt

entity’s status. After January 1, 2005, if one of the entities listed on page 2 requests an exemption and they do not present the

department-issued certificate containing a Tax-Exempt Identification Number or have it already on file with you, you must deny

the request. The department asks that you advise the purchaser to contact the department for guidance.

Form Pub. Ks-1527 - Kansas Business Tax For Political Subdivisons Page 4

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