Kansas State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in Kansas, with full citations and the original source on every page.
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Does a 501(c)(3) organization's Kansas income-tax exemption also exempt its employees' wages from Kansas withholding and individual income tax?
No. Kansas recognized the organization's federal 501(c)(3) determination and treated the organization itself as exempt from Kansas income tax, but that did not exempt employee wages. If federal withho…
Which Ohio, Michigan, and Texas business taxes could a corporation deduct when computing Kansas corporate income tax?
Kansas disallowed taxes imposed on or measured by income, and fees in lieu of income tax, while allowing the other listed business taxes. The Ohio franchise tax's net-worth portion was deductible but …
What Kansas sales-tax and motor-fuel-tax liability does a wholesale fuel supplier have when a licensed distributor or end user defaults on payment?
A sale to another licensed motor-fuel distributor was neither a taxable retail sale nor subject to motor-fuel tax at that stage, so the supplier was not liable if that licensed distributor defaulted. …
Are industrial-design and mechanical-engineering design fees subject to Kansas sales tax when an agency also delivers proofs, prototypes, or finished products?
Design-service fees and proofs of concept were not taxable because Kansas did not enumerate industrial, engineering, graphic, or advertising design as taxable services. But when the agency also sold f…
Is a fee paid to transfer a retired rental vehicle to a Kansas dealer for a potential buyer's inspection included in the taxable vehicle selling price?
Yes, if the customer who paid the transfer fee later buys the vehicle. The fee reimbursed transportation to the licensed Kansas selling dealer or functioned as a delivery charge, and inspection was in…
Are fees for professional continuing-education seminars, webcasts, recorded CD-ROM seminars, and extra course materials subject to Kansas sales tax?
Credited professional continuing-education seminar charges were not taxable, including live telephone or webcast attendance with course materials. A bank could also buy a recorded CD-ROM tax-free when…
What reporting and payment changes applied to Kansas agricultural ethyl alcohol producer incentives under the revised regulations?
Kansas changed the agricultural ethyl alcohol producer incentive from quarterly payments to one annual payment on a July 1-June 30 fiscal-year basis. Revised K.A.R. 92-26-4 clarified that every ethano…
Are an early lease-termination payment and a capital-cost-reduction payment on a replacement vehicle lease subject to Kansas sales tax?
Yes. The $27,000 paid to terminate the first operating lease was the final taxable payment under that lease, and the $26,000 applied to reduce the new lease's capitalized cost was also taxable, as wer…
When did Kansas resume the environmental assurance fee in 2009?
Kansas resumed the Environmental Assurance Fee of $0.01 per gallon on all petroleum products effective March 1, 2009, until further notice. K.S.A. 65-34,117 placed the fee on the manufacturer, importe…
Was Kansas's new retail dealer incentive for renewable fuels and biodiesel funded for fiscal years 2009 and 2010?
The incentive existed, but its fund had received no money. House Bill 2145 created the Kansas retail dealer incentive for renewable fuels and biodiesel effective January 1, 2009. By January 26, 2009, …
When did Kansas resume the $.01-per-gallon petroleum environmental assurance fee in 2009, and who pays it?
Effective March 1, 2009, Kansas resumed the environmental assurance fee of $.01 per gallon on all petroleum products, until further notice. Under K.S.A. 65-34,117 the fee is paid by the manufacturer, …
Did Kansas's Washburn University retirement subtraction cover both the basic plan and supplemental annuity, including funds rolled into the Washburn plan?
Yes. Qualifying benefits received on or after January 1, 2008 from either Washburn University's basic 403(b) retirement plan or its supplemental retirement annuity were eligible for the K.S.A. 79-32,1…
How does Kansas sales tax apply to equipment, replacement parts, and electricity sales for a Kansas wind farm?
Replacement parts and repair services for wind-farm equipment take the same sales-tax treatment as the underlying equipment: if the equipment purchase is exempt under K.S.A. 79-3606(kk), the parts and…
What was Kansas's petroleum-products inspection fee on gasoline and diesel beginning January 1, 2009?
Kansas reduced the petroleum-products inspection fee on gasoline and diesel to $0.0135 per barrel effective January 1, 2009, down from the $0.015 statutory rate stated in K.S.A. 55-426. For this fee, …
Are aircraft deicing services billed to commercial air carriers subject to Kansas sales tax, or exempt?
Taxable. Charges billed to commercial air carriers for aircraft deicing are taxable in Kansas as "application services" under K.S.A. 79-3603(p). None of the three possible exemptions applies: the 2004…
Which Kansas monthly reports changed for cigarettes and roll-your-own tobacco from non-participating manufacturers beginning in December 2008?
Beginning with the December 2008 reporting period, Kansas cigarette wholesalers and tobacco distributors had to use a revised Form CG-30 or new Forms TB-31 and TB-34 when applicable. CG-30 added origi…
How does Kansas sales tax apply to a fire-sprinkler contractor's materials and labor across new construction, remodeling, service, and inspections?
Contractors pay Kansas sales or use tax as consumers on the materials and supplies they buy, and collect sales tax as retailers on taxable labor. All construction labor on residential property is exem…
Is USDA-required protective apparel (and processing machinery) taxable for a meat-cutting business, or exempt as integrated-production safety equipment?
Taxable. A meat cutting and butchering business is treated as a retailer, not an integrated production (manufacturing) operation, so it does not qualify for the integrated-production exception for saf…
Are sales of saddles, bridles, and other horse equipment subject to Kansas sales tax?
It depends on the use. Saddles, bridles, and other horse equipment are exempt from Kansas sales tax when sold for use in the production and care of cattle as part of an agricultural operation — but th…
Is a tour fee subject to Kansas sales tax when the tour is advertised primarily as sightseeing or entertainment?
Yes. When a ride or tour is advertised or otherwise presented primarily as sightseeing or entertainment, K.A.R. 92-19-22a(a)(6) treats the charge as a recreational or entertainment activity rather tha…
Is a dietary supplement subject to Kansas sales tax, or is it exempt?
It depends on how it is sold. A dietary supplement is exempt from Kansas sales tax only if it both meets the statutory definition of a "dietary supplement" and is dispensed pursuant to a prescription …
Are submittal drawings — engineering/CAD drawings similar to blueprints — subject to Kansas sales tax?
Not taxable. Submittal drawings — engineering or CAD drawings that map out a building control system, described as similar to a blueprint — are not subject to Kansas sales tax. The Department does not…
May a parent deduct a transfer to a 529 plan on a joint Kansas return when the money belongs to a minor child and the parent acts only as custodian?
No. The roughly $6,000 in the custodial savings account belonged to the minor child, not the parent. Moving those funds into a 529 plan for which the parent also served as custodian meant the child wa…
Did Kansas treat the revised Texas franchise or margins tax as an income tax for addback and credit-for-taxes-paid purposes?
Yes. The Department concluded that the revised Texas franchise tax was based on income and therefore was in the nature of an income tax. It was an addback modification for Kansas corporate income-tax …
Could an oil-well customer rely on a 1970 Kansas bulletin to stop paying sales tax on well-site inspection and labor services?
No. The 1970 bulletin interpreted a law later held unconstitutional and replaced by the legislature, so K.A.R. 92-19-58 made the old guidance invalid. Current Revenue Ruling 19-2002-2 governed instead…
Were Washburn University retirement-plan benefits exempt from Kansas income tax, and what happened after a rollover to another retirement account?
Direct Washburn University retirement-plan benefits received on or after January 1, 2008 qualified for a subtraction from federal adjusted gross income and were not subject to Kansas income tax, wheth…
May an implement dealer sell a lawnmower tax-free to a dairy farmer who says it will be used only around the farm?
No. The agricultural machinery exemption required exclusive use in agriculture to produce products for resale. Mowing weeds or grass around a farm home, barn, storage building, or other area for fire …
Which Internet-service-provider charges were exempt or taxable in Kansas under the extended Internet Tax Freedom Act moratorium?
Kansas treated Internet access and telecommunications used to provide it, including qualifying DSL, as exempt under the federal moratorium. Home-page, email, messaging, video-clip, and personal-storag…
What happened to Kansas inheritance-tax liability for pre-July 1998 estates that had not filed a return by July 1, 2008?
Kansas inheritance tax ended July 1, 2008, except for matters already pending before the Department. For an estate of a person who died before July 1, 1998, if no inheritance-tax return had been filed…
How does Kansas sales tax apply to a farm special-events business — barn rental, tables and chairs, catering, and horse-drawn carriage rides?
It depends on the charge. Renting the barn (a meeting/reception space) is not taxable, and tables and chairs bundled into that rental at no separate charge are not taxed either — the operator pays tax…
Did a federally funded $40 converter-box coupon reduce the amount subject to Kansas sales tax when the government reimbursed the retailer?
No. The federal $40 coupon did not reduce the taxable selling price because the retailer was reimbursed by the National Telecommunications and Information Administration. Kansas sales tax applied to b…
Are washable fiberglass-reinforced plastic wall panels installed in a food-manufacturing production area exempt as manufacturing equipment?
No. Fiberglass-reinforced plastic panels installed as washable walls in a cookie plant were taxable construction materials that became real property, not machinery or equipment used to transform raw m…
Must an employer collect sales tax on meals it sells to employees in a company cafeteria that is not open to the public?
Not required to collect from employees. Because the company cafeteria is not open to the public, the employer may elect to pay Kansas sales tax on its own food purchases rather than collect sales tax …
Who had to use Kansas's new Form K-4 for state income-tax withholding after January 1, 2008?
Employees hired after January 1, 2008 had to use Kansas Form K-4 instead of relying on the federal W-4 for state withholding. Employees hired before that date did not need a K-4 unless they chose to a…
Does Kansas give credit for sales tax lawfully paid to another state when purchased property is later first used in Kansas?
Yes. Under K.S.A. 79-3704(c), Kansas gives credit for sales tax lawfully paid to the state where the property was purchased. If the combined Kansas state and local use-tax rate at the place of first K…
Were separately stated delivery charges for direct mail subject to Kansas sales or compensating-use tax?
No. Effective July 1, 2007, delivery charges for qualifying direct mail were excluded from Kansas sales and compensating-use tax when separately stated on the invoice or similar billing document. The …
Did a KPERS lump-sum retirement payment and its earnings stay exempt from Kansas income tax after rollover to another qualified account?
Yes. The 2007 amendment to K.S.A. 74-4923 made a KPERS lump-sum retirement payment and its earnings retain their Kansas tax-exempt status after rollover to a qualified retirement account, whether the …
Is a vegetable-oil product (CAP18) injected to remediate groundwater contamination at a manufacturing plant exempt from Kansas sales tax?
Exempt. A manufacturer's purchase of CAP18 — a vegetable-oil product injected into the aquifer to remediate and control trichloroethene (TCE) contamination under its plant — is exempt from Kansas sale…
Are electricity-generating peaking units purchased for a Kansas power plant exempt as manufacturing machinery and equipment?
Exempt. Electricity-generating peaking units purchased for a Kansas power plant qualify for exemption as manufacturing machinery and equipment under K.S.A. 79-3606(kk), because electricity power gener…
What renewable-fuel and biodiesel retail incentives did Kansas enact in 2007, and when could a consumer blend fuel without a manufacturer license?
House Bill 2145 created Kansas retail dealer incentives for renewable fuels and biodiesel beginning January 1, 2009, with quarterly electronic claims and expiration January 1, 2026. Renewable-fuel dea…
Are tarps bought by a farmer or rancher to cover harvested hay exempt from Kansas sales and compensating use tax as farm machinery or equipment?
Yes. The Kansas Department of Revenue concluded that a tarp purchased by a farmer or rancher and used to cover harvested hay qualifies for the farm machinery or equipment exemption from Kansas sales a…
Which fuel-wholesale, tank, testing, retrieval, delivery, and travel charges did Kansas treat as taxable sales or services?
Kansas treated tank filtration and maintenance, equipment cleaning, tank repair, most tank installation, tank delivery with a sale, tank leases, product delivery, and travel charges tied to taxable se…
Could a Kansas-registered drop shipper accept a resale certificate from an out-of-state seller that was not registered in Kansas?
Yes, beginning July 1, 2007. A Kansas-registered drop shipper could accept an out-of-state seller's home-state resale certificate or a multijurisdictional certificate even if the seller had no Kansas …
Does converting interior warehouse space with new walls, flooring, and a ceiling qualify as exempt 'original construction' labor in Kansas?
Taxable. Finishing a 50,000-square-foot interior warehouse space with new walls, flooring, and a ceiling to convert it to a different use does not qualify as the 'original construction' of a building,…
Are a church's sales of below-cost food through a grocery relief program exempt from Kansas sales tax?
Taxable. The Kansas exemption for below-cost food sold by a 501(c)(3) organization, K.S.A. 79-3606(bbb), applies only when the food recipient is required to perform community service in exchange for t…
Did Kansas's farm-machinery sales-tax exemption cover ATVs or work-site utility vehicles, and how were interstate sales treated?
ATVs did not qualify for Kansas's farm machinery and equipment exemption, including their parts and repair labor. A defined work-site utility vehicle with a bed or cargo box could qualify — along with…
Does breeding horses for resale qualify for Kansas agricultural sales-tax exemptions, and must the breeder collect tax on horse sales?
Yes, generally. Breeding horses for resale qualifies as agricultural for Kansas sales-tax purposes, so the breeder's purchases of breeding stock and the feed and supplements for that breeding stock ar…
Can a corporation include the gross proceeds from redeeming short-term investment securities in its Kansas apportionment sales factor?
No -- the assessment was upheld. The Department excluded a corporation's gross investment proceeds (the return of principal from redeeming and rolling over short-term treasury securities) from the den…
What Kansas E-85 tax rate applied beginning January 1, 2007, and how did Form MF-35 change for nonhighway-use refunds?
Kansas reduced the motor-vehicle fuel tax on E-85 to $0.17 per gallon effective January 1, 2007 under Senate Bill 544. The Department revised Form MF-35, Claim for Refund of Motor-Vehicle/Special Fuel…
Is a sale of protective safety leggings to a meat-packing company exempt under Kansas's integrated plant (manufacturing) exemption?
Yes. The sale of safety leggings to a meat-packing company is exempt under the integrated machinery and equipment (integrated plant) exemption, K.S.A. 79-3606(kk). Although K.S.A. 79-3606(kk)(5)(J) ta…
What Kansas oil and gas conservation-fee rates took effect December 22, 2006, and how were December reports split?
Effective December 22, 2006, Kansas increased the oil conservation assessment to 91.00 mills per barrel and the gas assessment to 12.90 mills per 1,000 cubic feet (one mcf). December 2006 production t…
Is the sale of a house that the buyer plans to relocate subject to Kansas sales tax?
No. Even though the buyer intends to move the house to another location, the Kansas Department of Revenue treats the building as real property at the time of the sale. Because a sale of real property …
Who had to file and pay Kansas estate tax under the stand-alone law for deaths in 2007 through 2009?
For decedents dying in 2007, 2008, or 2009, Kansas's stand-alone estate-tax law required a return only when the gross estate exceeded $1 million; an estate at or below that threshold was not subject t…
How does Kansas sales and use tax apply to an electric-sign fabricator's sales, set-up, construction, and repair charges?
A custom sign maker is treated as a fabricator and retailer. It buys sign materials for resale and collects Kansas sales (or retailers' use) tax on the full price billed for the sign, including delive…
Could Kansas distributors and retailers recover the tax difference on E-85 inventory held when the rate fell on January 1, 2007?
Yes. When Kansas reduced the E-85 motor-fuel tax from $0.24 to $0.17 per gallon on January 1, 2007, it allowed a $0.07-per-gallon credit or refund for E-85 inventory on hand that day on which the $0.2…
Does a utility-scale Kansas wind farm qualify for the manufacturing machinery and equipment sales-tax exemption?
Yes, for the generating equipment. A utility-scale turbine wind farm qualifies as a manufacturing plant or facility under K.S.A. 79-3606(kk), so the generators, blades, support towers, the power lines…
Must Kansas sales tax be charged when an equipment lessor separately bills a lessee for reimbursement of the lessor's property tax?
Yes. When an equipment lease requires the lessee to reimburse the lessor for property tax the lessor paid, that reimbursement is part of the total lease payment and is subject to Kansas sales tax. K.A…
How did Kansas tax, license, report, and refund biodiesel produced, distributed, or used within the state under revised Notice 06-06?
Kansas treated B100 and biodiesel blends as taxable special fuel. Clear biodiesel and biodiesel placed in a vehicle tank were taxable; indelibly dyed fuel used only off highway was exempt. A first sal…
What Kansas motor-fuel changes in 2006 affected biodiesel incentives, the E-85 tax rate, electronic filing, and storage-tank reimbursements?
Kansas enacted three major motor-fuel changes. Senate Bill 388 created a qualified biodiesel producer incentive of $0.30 per gallon sold, with quarterly claims beginning July 1, 2007. Senate Bill 544 …
Can a document-management company buy scanners and imaging equipment exempt from Kansas sales tax under the manufacturing exemption?
No. A document-management company must pay sales or use tax on the scanners, microfilm and imaging equipment, film, and chemicals it buys. Ongoing document-management is a nontaxable service, so the c…
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These are official tax letter rulings and advisory opinions issued by Kansas's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.