Form Pub. Ks-1560 - Kansas Business Taxes For Schools & Educational Institutions Page 10
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3785-179 in addition to the exempting statute, K.S.A.
A college agrees to purchase duplexes
79-3603(c).
adjacent to its campus from the contractor
who is currently renovating them. The
college plans to use them as student
General Rules: Capital items purchased for a
housing. Although the college has input into the on-
dormitory are taxable, and maintenance purchases are
going remodel work as the buyer under contract for the
exempt. Furthermore, labor services on the portion of
property, the contractor’s renovation and remodel work
a dormitory where students live are not taxed due to
on the home does not qualify for a project exemption.
the residential component of original construction.
Sales tax applies on the materials but not on the
labor (residential labor is not subject to sales tax).
Taxable capital dormitory purchases include
materials for construction, remodeling or repair due to
Once the duplex remodel is complete and the college
damage; and furnishings, such as beds, bathroom
takes title to the property, the tax treatment of future
fixtures, blinds, desks, furniture, and lamps. Materials
labor and materials purchased for the student housing
used in dormitory projects are always taxable, whether
will follow the same rules as for other college-owned
purchased directly by the university or by its contractors.
dormitories and residence halls discussed on this page.
Sales tax must also be paid on the taxable labor services
Furnishings are taxable; maintenance and residential
performed in the dorm areas that are not residential in
labor services are not taxed.
nature.
Nontaxable dormitory maintenance includes repairs
TAXATION OF SCHOOL
due to normal wear and tear, and elevator or pest control
ACTIVITIES
maintenance contracts. Also not taxed are the labor
services performed in the residential areas of the
building. Residential areas include the dorm room,
bathroom(s) or shower facilities. Common areas such
GENERAL RULES
as hallways, laundry, exercise and dining rooms are not
exclusively residential in nature, and are therefore
Although public or private schools and educational
taxable unless the labor is a direct purchase by the
institutions are exempt from paying sales tax on their
educational institution.
direct purchases of goods or services, they are not
exempt from collecting sales tax when making retail
Over the summer months you are having
sales to the final consumer. Kansas sales tax law
a dormitory remodeled. In addition to
traditionally requires governmental units, nonprofits and
rooms and bath facilities for students, this
other organizations to collect sales tax when they are
residence hall houses a dining room open
competing with private enterprise by making retail sales,
to students only, TV & game room, computer/study area
regardless of how the proceeds of the retail sales are
and laundry facilities. M
- F
T
. You
ATERIALS
ULLY
AXABLE
used. When a school or educational institution, school
must pay sales tax on all the materials purchased for
club or organization (except a PTA/PTO) is selling
this building remodel. L
S
- P
ABOR
E RVICES
A RTIALLY
tangible personal property at retail or furnishing any of
T
. Since the dormitory has areas that are not
AXABLE
the taxable services enumerated in the law, or is
residential in nature, not all of the labor services
providing entertainment to the ultimate user or
performed for the project qualify for exemption as
consumer, it must collect and remit the applicable state
residential construction. Therefore the charges for labor
and local sales tax from its customers. A representative,
services of the general contractor and subcontractors
but not exclusive, list of taxable sales by schools is
must be apportioned between the residential labor (not
contained herein.
taxable) and the nonresidential labor (taxable).
This section explains in greater detail the proper tax
F
S
H
RATERNITY AND
ORORITY
OUSES
treatment of typical school situations and school-related
activities. Much of the discussion is taken from written
As a general rule, fraternity and sorority houses are
KDOR advice in notices and private letter rulings. This
owned or rented by the individual organizations and
written advice is also available to the general public as
are not owned by the school. If students live at the house,
part of the Policy Information Library on our web site. If
the exemption for residential labor services would apply,
you are in doubt about how Kansas sales tax applies to
but all materials would be taxable. There is no other
a specific school situation, contact KDOR for advice.
exemption available to fraternities or sororities for
materials and labor to build or maintain a house.
ACTIVITY FEES
Turnkey Projects
Activity fees separately enumerated for sporting,
Turnkey projects are those projects where the school
cultural, musical, historical, etc. events are taxable. The
or educational institution merely enters into a contractual
separately-stated activity fee constitutes an admission
agreement to buy completed real property from the
to school activities, whether only specific types or all-
contractor. Turnkey projects are not exempt.
inclusive. Fees for use of an athletic, recreational or
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