Form Pub. Ks-1540 - Kansas Business Taxes For Hotels Motels & Restaurants Page 11
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42Electricity used to power a refrigerator in
Once the percentage of exempt use has been
calculated, complete Form ST-28B and submit it to your
a sleeping room is exempt from sales tax.
utility provider, along with your workpapers and
Electricity used to power an ice machine
located in a hallway (hotel’s common area)
calculations used to validate the exempt percentage.
The utility provider may forward an exemption request
is subject to sales tax.
to KDOR for review before granting the exemption.
Laundry Utilities
The following is a list of documentation required with
a Form ST-28B for a hotel or motel:
Electricity, gas or water that a hotel purchases for
use in its in-house laundry facility is subject to sales tax.
1) Formulas and computations must be complete and
This rule is based on the typical situation where the hotel
a copy of your worksheet (utility study), including
is using its laundry facility exclusively for its own needs.
the prior years’ occupancy rate, must accompany
your request. Your worksheet must list all taxable
When a hotel does laundry for its guests, the hotel
and non-taxable equipment that pulls energy from
must charge sales tax; and when applicable the Dry
the meter for which you are seeking the exemption.
Cleaning Environmental Surcharge on the fee it charges
for this service (see page 6). In this case, the hotel may
2) Form ST-33 must be completed by the utility provider
where you are claiming the exemption.
purchase the electricity, gas and/or water actually used
to provide this taxable service of laundering articles for
3) If the meter for the utility exemption you are
others exempt from sales tax as consumed in production.
requesting is used for other than your exemption
request, you must also provide all the other uses
XYZ Hotel purchases water and electricity
for that meter.
for use in its laundry. Eighty percent (80%)
4) Include your federal Employer Identification Number
of the water and electricity is used for
(EIN) on your request.
washing the hotel’s own linen. Twenty
percent (20%) is used to wash its customers’ laundry
Keep a copy of all worksheets and calculations used
upon which is charged a fee and sales tax. XYZ is eligible
to determine the percentage of exempt utility usage.
to claim an exemption on 20% of its utilities as consumed
KDOR may ask to see the worksheets when auditing
in production.
the utility exemption or approving a request. It is your
responsibility to notify your utility provider whenever
Amusement Utilities
there is a change in your exempt percentage.
Electricity used to power vending machines that
Obtaining a Refund of Sales Tax
dispense candy, sodas, water, snacks, grooming items,
etc. is subject to sales tax and does not qualify for the
If you discover that you have paid tax on an item or
consumed in production exemption. The Kansas
service that qualifies for an exemption, you may request
Supreme Court has ruled that electricity used to
a refund of the sales tax paid. You should first request
refrigerate items (i.e., sodas, water, juice) does not
a refund or credit from your vendor, providing a
qualify for the consumed in production exemption.
completed exemption certificate to substantiate your
Likewise, electricity used to illuminate, power or dispense
exemption. You may claim a refund for all exempt
items of tangible personal property is also taxable.
purchases made within the last three years or to when
However, electricity consumed in producing a product
the exemption was granted, whichever is later.
or providing a taxable amusement (i.e., coin-operated
video machine) is exempt as consumed in production.
If your vendor refuses to refund the tax or is no
longer in business, you may apply for the refund directly
from KDOR. Complete Form ST-21 (available on our
A hotel has an amusement room which
web site) and include the required documentation. Allow
contains coin-operated video games and
four to six weeks for your request to be processed.
pinball machines (taxable amusements)
and vending machines for sodas and
snacks. The hotel may claim a consumed in production
TRANSIENT
exemption on the electricity used for the video games
and pinball machines, but may not claim the exemption
GUEST TAX
on the electricity used by the soda and snack machines.
Kansas law allows counties to impose a transient
HOW TO CLAIM A UTILITY EXEMPTION
guest tax. The law also allows cities to impose a transient
guest tax if they are located within a county which has
To claim an exemption on its utility use, a hotel must
not already imposed such tax. This rule of law generally
measure the amount of each utility that qualifies for the
prohibits a county and a city within that county from
exemption and express this as a percentage of its total
both imposing a transient guest tax. A list of the Kansas
cities and counties imposing this tax and the rates
utility purchase through that meter. Follow the guidelines
thereof can be found on KDOR’s web site.
in the instructions for Form ST-28B on page 40.
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