Form Pub. Ks-1560 - Kansas Business Taxes For Schools & Educational Institutions Page 5
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37associations and foundations that qualify for this
When in doubt ...
exemption will have the word endowment in their title
along with the name of the college or university.
Any organization that questions whether it qualifies
as a school, educational organization or an endowment
Some state universities have established separately
association under the law should consult the Policy
incorporated nonprofit foundations to administer their
Library on our web site, or request a private letter ruling
intercollegiate sports programs. The law exempts
from KDOR. See Written Rulings, herein. This request
purchases by such a foundation and places them on
should be accompanied by copies of the by-laws,
the same footing as intercollegiate sports programs that
corporate charter and other documentation to show that
continue to be run as part of the university. Ticket sales
the entity is nonprofit and meets the criteria of a school
and other sales by such a foundation remain subject to
or an educational institution. Endowment associations
state and local sales tax. See Admissions and Ticket
must also include documentation that the organization
Sales, herein.
is organized to manage trust funds owned by or held for
the benefit of a college or university.
Some state universities have incorporated nonprofit
foundations that engage in research and development
WHAT PURCHASES ARE EXEMPT?
for the benefit of the university. The new law exempts
purchases
by
such
separately
incorporated
The Kansas sales tax law that exempts schools and
foundations.
educational institutions from paying sales tax is found at
79-3606(c). Exempt are:
CAUTION: The definition of nonprofit
endowment associations and foundations is
“all sales of tangible personal property or services,
limited to those entities discussed here.
including the renting and leasing of tangible personal
Groups such as engineering societies, nursing groups,
property, purchased directly by a public or private
medical, law, or honorary fraternities, associations of
elementary or secondary school or public or private
professors, or other college or university associations
nonprofit educational institution and used primarily by
that are not primarily organized to engage in research
such school or institution for nonsectarian programs and
and development for the financial benefit of a university
activities provided or sponsored by such school or
are not considered to be an educational institution.
institution or in the erection, repair or enlargement of
buildings to be used for such purposes. The exemption
NOTE: Unless otherwise indicated, we will use the terms school
herein provided shall not apply to erection, construction,
and educational institution interchangeably throughout this guide,
repair, enlargement or equipment of buildings used
meaning a nonprofit public or private educational entity that meets
primarily for human habitation;”
the qualifications in this section.
The language exempts most, but not all, purchases
Schools that are not exempt
by a school or educational institution. To be exempt,
the purchase meet certain conditions. It must be:
There are two types of schools that do not meet the
definition of a school or educational institution in sales
• a direct purchase, and
tax law, and therefore do not qualify for the sales tax
• used primarily for nonsectarian programs and
exemptions: for-profit schools and home schools.
activities sponsored by the school; or
• used for the building, repair or enlargement of
F
-P
S
OR
ROFIT
CHOOLS
the school’s buildings; and
• not used for housing projects (dormitories).
A school or educational institution that operates as
a for-profit entity is not covered by the exemption
These conditions may be summarized into two tests
granted at K.S.A. 79-3606(c) and cited below. Only
- the direct purchase test and the usage test.
nonprofit institutions are exempt. For-profit schools must
therefore pay sales tax on all of their purchases of
taxable goods or services.
What is a Direct Purchase?
H
S
To qualify as a direct purchase, the invoice must be
OME
CHOOLS
made out to the school and payment must be made
Home schooling is just that, a school in the home.
with school funds. If either of these conditions is not
The fact that educational activities are conducted in a
met, the purchase is taxable.
residence does not make the residence a school for
purposes of the sales tax exemption. Therefore,
A university is buying lab equipment for its
persons operating a home school may not claim
chemistry department. If the equipment is
exemption from sales tax as a school and must pay sales
invoiced to the university and paid for with
tax on their taxable purchases.
university funds, the purchase is exempt.
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