Form Pub. Ks-1560 - Kansas Business Taxes For Schools & Educational Institutions Page 19
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37utility providers. For K-12 public schools, the school
How to Factor Out the Sales Tax
district usually handles the paperwork needed to obtain
the exemption for each school building in the district.
Your university owns the vending
machines located in its dormitories and
A school district (political subdivision) must pay sales tax on
*
student union. Proceeds are used to fund
electricity, gas, water or heat used to provide a taxable
a scholarship. One month’s collections
product or service to the public unless the use qualifies for
from the pop and video game machines is $4,225.00;
another exemption (such as ingredient/component part).
the tax rate in your city is 6.75%.
VEHICLES/EQUIPMENT
Calculate the sales tax base. Divide the total
receipts by one plus the sales tax rate where
the machines are located.
A school may directly purchase, rent or lease any
type of vehicle or equipment without sales tax, including
$4,225.00 = $3,957.85
cars, heavy machinery, school buses and vans. There
1.0675
is also no sales tax on a school’s rental or lease
payments to the vehicle owner as long as the lease is
Calculate the sales tax collected and included
between the exempt school and the vehicle owner and
in the total take from the machines.
all lease payments are made with school funds.
$3,957.85 X .0675 = $267.15
A school may also purchase any repair and
Check your calculation. The total of steps
maintenance services on its vehicles without tax using
its KDOR-issued Tax-Exempt Entity Exemption
one and two (the sales tax base and the
Certificate. This is a repair of tangible personal property
sales tax) should equal the gross amount
so a Project Exemption Certificate is not required in
removed from the vending machine.
order to purchase the materials tax exempt. However,
$3,957.85 + $267.15 = $4,225.00
when a school or school class is engaged in providing
vehicle repair for a fee, it must charge its customers
If you do not own the vending machine but merely
sales tax on these taxable services. In this capacity the
receive a commission on the sales made from it, the
school has become the retailer of a taxable service,
vending machine owner will report the sales and pay
and must collect sales tax from its customers just like a
the sales tax due. The receipts or commission received
privately-owned automotive repair shop.
by the school as payment for placing the machine on
school property is not subject to any sales tax.
As part of its course work, your Vo-Tech
heavy equipment class makes repairs on
Your school receives 25% of the sales
construction equipment. Customers are
made each month from the vending
charged for parts and labor; the entire
machines on school property owned by a
repair bill is taxable. If the construction equipment is
vending machine company. The owner of
owned by a business, the business pays the sales tax.
the machines paid the Kansas sales tax on the total
If the equipment is owned by a county or other exempt
amount taken from the machines. The 25% commission
entity, it must provide its KDOR-issued tax exempt entity
paid to the school is not subject to sales tax.
exemption certificate for the sale to be exempt.
VOCATIONAL TECHNICAL SCHOOLS AND TRAINING
VENDING MACHINE SALES
As part of the instructional process, a school or
Candy, snacks, school supplies, phone cards and
educational institution may supplement classroom
other items sold from a vending machine are taxable.
instruction with hands-on training. In the process of
Kansas sales tax is due on the total sales made from
providing this type of work experience, a vo-tech may
any coin-operated device that dispenses goods,
provide taxable services or make retail sales to the
amusement (video games) or services (except laundry
general public, such as the vehicle or equipment repair
services). When the vending machine is owned and
service illustrated earlier in this guide.
operated by a school, sales tax is due on the gross
receipts received.
Vo-tech classes may also construct a home, storage
shed or similar structure which is later sold. Even though
Since sales tax is automatically included in the price
the construction is undertaken by the school’s class or
paid for each item sold through a vending machine, you
classes for educational purposes, there are two distinct
will need to factor out the tax amount before reporting
situations involving the construction and sale of this type
the total sales on your tax return. To determine the gross
of property where a school will incur a liability for sales
receipts without the sales tax (sales tax base), divide
tax. This section deals with the tax treatment of the
the total amount collected from the machine by 1 plus
materials and labor when a school builds real property
the state and local sales tax rate that is in effect where
the machine is located (for example, 1.063 if the state
(homes, garages, etc.) and/or tangible personal
and local tax rate is 6.3%).
property (modular homes, furniture, sheds, etc.) for sale.
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