Form Pub. Ks-1527 - Kansas Business Tax For Political Subdivisons Page 8
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42construction. For the materials to be exempt from sales
Agent Status had to complete a spreadsheet
tax, the county must either purchase the materials
recording issued PECs. These reports were then
directly, or furnish a PEC to its contractors.
submitted to KDOR. These recordkeeping duties
have been eliminated by the on-line procedure
outlined above. Political subdivisions will want to
PROJECT EXEMPTION CERTIFICATES (PEC)
keep a copy of all PECs in their records for at
least five (5) years.
A PEC is a numbered document issued only by KDOR
or its authorized agent. A PEC exempts the entire project
Paper Method. If you prefer to obtain a project
— materials and labor — from sales tax. To avoid the
exemption through the paper process, complete a
additional cost of sales tax on project materials and on
Request for Project Exemption Certificate (PR-76). Try
the materials and labor services furnished by
to apply at least 2 weeks in advance of the project; it
subcontractors, political subdivisions should have a
will assure that you have received the certificate prior
project exemption certificate for every construction,
to the purchase of any project materials or labor.
remodel, or repair project.
CAUTION: PECs are dated and are not
Qualifications
retroactive. All materials and taxable labor
services purchased or performed by contractors
To qualify for a project exemption, the project must
prior to the effective date of the PEC are taxable.
be totally financed by funds of a political subdivision.
However, if you fail to secure a PEC in time for your
These are defined as:
contractor(s) to use the exemption for all or part of their
project purchases, you may apply to KDOR for
• general tax revenues,
permission to seek a refund of the sales taxes paid to
• the proceeds of any bonds, and
your contractors’ suppliers that would have been exempt
• gifts* or grants-in-aid.
had a project exemption been in effect. This refund
process is outlined in K.A.R. 92-19-66e(n)(1). Submit
Gifts do not include funds used to construct, equip, reconstruct,
*
such requests for refunds to KDOR on Form ST-21PEC
repair, enlarge, furnish, or remodel facilities that are subsequently
(available on our web site).
leased to the donor.
Project Exemption Steps
IMPORTANT: When a PEC is issued on the
basis of a letter of intent to issue bonds, and
These steps illustrate how a project exemption is used
the bonds are not issued within twelve months, the
by all affected parties.
project exemption will be revoked. Sales tax will be
immediately due on purchases made to that point;
1) Political subdivision applies for a PEC on-line or
future purchases for the project will also be taxable. If a
completes Form PR-76, Request for Project
PEC is issued and it is later found that the project was
Exemption.
not fully financed by political subdivision funds, sales
2) KDOR receives and approves or denies the
tax will be assessed on the portion funded by non-
request.
qualifying funds.
3) If approved, KDOR issues a numbered PEC to
the political subdivision.
Obtaining a Project Exemption
4) The political subdivision furnishes the numbered
On-line–Agent Status. Because political sub-
certificate to the contractors and subcontractors
divisions of the state of Kansas are eligible for Agent
for the job.
Status, they should apply for PECs on-line through the
5) Contractors and subcontractors furnish the
KDOR web site. With this process, the political
numbered certificate to their suppliers.
subdivisions can print the PEC immediately after making
6) Suppliers use the certificate number on all project
application on-line. Just follow these steps:
invoices to verify the sale of materials and/or
labor is exempt.
1) Visit and
7) When the project is complete, contractor(s)
click on Submit PEC Requests. Log into the
furnish a Project Completion Certification to the
Kansas Tax Center.
political subdivision with a copy to KDOR.
2) The first time a political subdivision applies for a
8) Contractor(s) keep all project invoices for five
PEC on-line, they will want to indicate Agent
years.
Status Exemption Certificate and then complete
the PEC application.
CAUTION: A political subdivision cannot issue
3) Once approved for Agent Status, all PEC
certificates for joint projects that involve
requests submitted on-line will be automatically
separate entities. When a project involves two
approved and a PEC may be printed immediately.
or more entities, such as a joint project between a city
and a school district, a separate application for project
4) No recordkeeping by the political subdivision is
exemption must be filed with KDOR.
required. In the past, political subdivisions with
8
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