When must an out-of-state remote seller collect Kansas sales and use tax?
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This page answers the general question as of 2021. Ezel answers yours, under current Kansas tax law, with citations.
Plain-English summary
Kansas Notice 21-17 explains the economic-nexus "remote seller" rules enacted by 2021 Senate Bill 50. It supersedes and replaces Notice 19-04 (Sales Tax Requirements for Retailers Doing Business in Kansas); related affiliated-person "click-through" nexus is addressed in Notice 21-23.
The law. Section 14 of Senate Bill 50 amended K.S.A. 79-3702 -- the definitional section of the Kansas compensating use tax act -- to expand the definition of "retailer doing business in this state" in subsection (h)(1). New subparagraph (h)(1)(G) creates a category the Department refers to as a "remote seller": a retailer that does not otherwise have physical presence or the other enumerated Kansas connections but that has more than $100,000 of cumulative gross receipts from sales to Kansas customers, either for the period January 1-June 30, 2021, or during the current or immediately preceding calendar year.
De minimis threshold. "Cumulative gross receipts" for this test includes all sales made to Kansas customers, whether the item is taxable or exempt. Because the provisions were effective July 1, 2021, there is no collection duty for sales before that date, and (for 2021) no look-back to 2020; all 2021 sales count toward reaching the threshold. In the first year a seller meets the threshold, it is not required to collect on the first $100,000 of Kansas sales (though it may voluntarily do so). Once the threshold is met, the seller must collect and remit on all Kansas sales in the following year. If Kansas sales fall below $100,000 in a preceding year, the collection duty ends until sales again exceed $100,000.
When collection starts. A remote seller must begin collecting on sales in excess of the threshold as soon as it crosses $100,000 -- collection responsibility begins with the next transaction after meeting or exceeding the threshold (the notice gives examples showing that the size of that next transaction does not matter).
Registration. A remote seller should register for retailers' compensating use tax no later than 30 days after its calendar-year sales exceed $100,000. It can register directly with the Department or through the Streamlined Sales Tax Registration System; a Streamlined Certified Service Provider may provide tax calculation, remittance, and filing services at no cost. Publication KS-1510 has more on registration and filing frequency.
Sellers registered under Notice 19-04. Many remote sellers registered under the earlier 2019 guidance (which had no threshold). Because Senate Bill 50 added the $100,000 threshold, some of those sellers may no longer be required to collect. Frequent sellers into Kansas are encouraged to stay registered; a seller now below the threshold may cancel its registration with Form CR-108 -- but the notice reminds that the tax is still due and, if the seller does not collect it, the consumer must remit the compensating use tax.
What this means for you
Out-of-state (remote) sellers
- You must collect and remit Kansas sales and compensating use tax once your cumulative gross receipts from Kansas customers exceed $100,000 in the current or preceding calendar year.
- Collection responsibility starts with your next transaction after you cross $100,000, and you should register within 30 days -- directly or via Streamlined Sales Tax.
Sellers already registered under Notice 19-04
- The 2019 guidance had no dollar threshold; under the new $100,000 threshold you may no longer be required to collect.
- You can cancel with Form CR-108 if you are below the threshold, but the tax is still due and shifts to the consumer if you do not collect it -- frequent sellers are encouraged to stay registered.
Kansas consumers
- If a remote seller below the threshold does not collect the tax, you are responsible for remitting Kansas compensating use tax on your purchases.
Common questions
Who is a "remote seller"? An out-of-state retailer with no other Kansas connection whose cumulative gross receipts from Kansas customers exceed $100,000 in the current or immediately preceding calendar year.
Do exempt sales count toward the $100,000? Yes -- cumulative gross receipts include all sales to Kansas customers, whether taxable or exempt.
When did collection begin? July 1, 2021; there is no duty for sales before that date.
Is the first $100,000 taxed? In the first year a seller meets the threshold, it need not collect on the first $100,000, though the sales are not exempt and the seller may collect voluntarily.
How do remote sellers register? Directly with the Department (within 30 days of exceeding $100,000) or through the Streamlined Sales Tax Registration System.
Does this replace earlier guidance? Yes -- Notice 21-17 supersedes and replaces Notice 19-04.
Citations and references
- Senate Bill 50 (2021), Section 14 -- amended K.S.A. 79-3702 to add the remote-seller economic-nexus category and $100,000 threshold.
- K.S.A. 79-3702(h)(1)(G) -- defines a "remote seller" as a retailer with more than $100,000 of cumulative gross receipts from Kansas customers.
- K.S.A. 79-3603 -- enumerated services whose performance can require a retailer's sales tax registration.
- Notice 19-04 -- the 2019 guidance that this notice supersedes and replaces; Notice 21-23 covers the related click-through nexus repeal.
- Form CR-108 and Publication KS-1510 -- account closure and sales/use tax registration and filing details; Streamlined Sales Tax Registration System as a registration alternative.
Source
- Landing page: Kansas Department of Revenue Policy Information Library
- Original document: Notice 21-17
Original ruling text
Policy and Research
109 SW 9th Street Phone: 785-368-8222
PO Box 3506 Fax: 785-296-1279
Topeka KS 66601-3506 www.ksrevenue.org
Mark A. Burghart, Secretary Laura Kelly, Governor
NOTICE 21-17
REMOTE SELLERS
(NOVEMBER 1, 2021)
Application of Notice
This Notice supersedes and replaces Notice 19-04 Sales Tax Requirements for Retailers
Doing Business in Kansas. Additional information regarding "click-through" nexus provisions for
affiliated persons related to sales and use tax collections can be found in Notice 21-23 Click-
Through Nexus Eliminated.
Generally
During the 2021 Legislative Session Senate Bill 50 was passed and signed into law. Section
14 of the Bill amends K.S.A. 79-3702 to expand the definition of "retailer doing business in this
state" and establish a de minimis threshold of $100,000 in gross sales to customers in Kansas for
non-Kansas retailers.
K.S.A. 79-3702 is the definitional section of the Kansas compensating use tax act.
Senate Bill 50 amends the definition of "retailer doing business in this state" found in subsection
(h)(1) to create, in new subparagraph (h)(1)(G), a category of retailer that, for purposes of this
Notice and for purposes of administration, is being referred to as a "remote seller". The amended
language of the statute provides:
(h)(1) "Retailer doing business in this state" or any like term, means: (A) Any
retailer maintaining in this state, permanently, temporarily, directly or indirectly
through a subsidiary, agent or representative, an office, distribution house, sales house,
warehouse or other place of business;
(B) any retailer utilizing an employee, independent contractor, agent,
representative, salesperson, canvasser, solicitor or other person operating in this state
either permanently or temporarily, for the purpose of selling, delivering, installing,
assembling, servicing, repairing, soliciting sales or the taking of orders for tangible
personal property;
(C) any retailer, including a contractor, repair person or other service provider,
who enters this state to perform services that are enumerated in K.S.A. 79-3603, and
amendments thereto, and who is required to secure a retailer's sales tax registration
certificate before performing those services;
(D) any retailer deriving rental receipts from a lease of tangible personal property
situated in this state;
(E) any person regularly maintaining a stock of tangible personal property in this
state for sale in the normal course of business; and
(F) any retailer who has any other contact with this state that would allow this
state to require the retailer to collect and remit tax under the provisions of the
constitution and laws of the United States; and
(G) (i) for any retailer that does not satisfy any of the requirements contained in
subparagraphs (A) through (F), such retailer shall be a retailer doing business in this
state, if:
(a) For the period beginning on January 1, 2021, through June 30, 2021, the
retailer had in excess of $100,000 of cumulative gross receipts from sales by the
retailer to customers in this state; or
(b) during the current or immediately preceding calendar year, the retailer had
in excess of $100,000 of cumulative gross receipts from sales by the retailer to
customers in this state.
(ii) (a) For any retailer who satisfies the provisions of subparagraph (G)(i), such
retailer shall not be required to collect and remit any taxes from sales occurring prior
to July 1, 2021.
(b) For any retailer who satisfies the provisions of subparagraph (G)(i)(b) for
sales in the current calendar year for the first time, such retailer shall be required to
collect and remit the tax on any sales in excess of $100,000 of cumulative gross receipts
from sales in the current calendar year by the retailer to customers in this state.
De Minimis Threshold Measurements
Starting Date
The legislation requires the collection and remittance of sales and compensating use tax by
"remote sellers" beginning July 1, 2021. All calculations required under this new provision of
K.S.A. 79-3702(h)(1)(G) start from this date and apply to all "remote sellers".
De Minimis Threshold
Based on the statutory language of K.S.A. 79-3702(G)(i), an out of state retailer is a "remote
seller" if they have cumulative gross receipts from sales to customers in Kansas in excess of
$100,000 during the current or preceding calendar year. In this context, cumulative gross receipts
includes all sales made by the "remote seller" to customers in Kansas, regardless of whether the
item being sold is subject to, or exempt from, tax.
Because these provisions are effective July 1, 2021, only sales made during calendar year
2021 can be considered for tax year 2021 in determining the amount of cumulative gross receipts
for registration purposes. There is no look-back to calendar year 2020, which would be the
immediately preceding calendar year, because this look-back is prohibited by the fact the
legislation was not effective until July 1, 2021. However, all sales made during 2021 must be
considered in determining when the threshold amount is reached, in accordance with K.S.A. 79-
3702(G)(i)(a) which looks back to the period January 1, 2021, through June 30, 2021.
The statutory language of K.S.A. 79-3702(G)(ii)(a) provides a "remote seller" is not required
to collect and remit any tax from sales made to Kansas customers prior to July 1, 2021. The
language of K.S.A. 79-3702 (G)(ii)(b) provides a "remote seller" is not required to collect and
remit tax on the first $100,000 of sales made by the "remote seller" to customers in Kansas during
the year the "remote seller" is first required to collect and remit tax. This does not mean these
sales are exempt from tax, only that a "remote seller" is not required to collect the tax. A "remote
seller" may collect tax on the first $100,000 of sales per calendar year (on those transaction which
are not exempt from tax) for the benefit of their customers. And a "remote seller" who does not
collect should advise purchasers that they, the purchaser, are responsible for paying any tax due
directly to the state of Kansas.
Calendar Year Sales Below De Minimis Threshold
A "remote seller" that does not meet the $100,000 de minimis threshold is not required to
register, collect, and remit Kansas tax. However, for the benefit of their Kansas customers, they
may voluntarily do so. A "remote seller" who chooses not to voluntarily collect the tax should
consider advising purchasers that they, the purchaser, are responsible for paying tax directly to the
state of Kansas.
Calendar Year Sales Above De Minimis Threshold - Initial Year
The statutory language of K.S.A. 79-3702(h)(1)(G)(i) provides a "remote seller" whose
calendar year sales sourced into Kansas are in excess of $100,000 is not required to collect and
remit tax on the first $100,000 of sales made to customers in Kansas during the first year the
"remote seller" is required to collect and remit tax. This does not mean these sales are exempt
from tax, only that the "remote seller" is not required to collect the tax.
Though not required to collect tax due to the first year de minimis requirement, for the benefit
of their Kansas customers a "remote seller" may voluntarily collect tax on the first $100,000 of
sales during this first year. A "remote seller" who chooses not to voluntarily collect the tax should
consider advising purchasers that they, the purchasers, are responsible for paying tax directly to
the state of Kansas.
Calendar Year Sales Above De Minimis Threshold - Subsequent Year(s)
Once a "remote seller" has made sales to Kansas customers equal to or in excess of the
$100,000 threshold they must collect and remit sales tax on any additional sales to Kansas
customers. The "remote seller" must collect and remit sales tax on all sales made to Kansas
customers in the following year. By way of example, if a "remote seller" has sales to Kansas
customers in excess of $100,000 in Year One, they must collect and remit sales tax on all sales to
Kansas customers in excess of the threshold in Year One, and on all sales made to Kansas
customers during Year Two, regardless of the amount of those sales.
Calendar Year Sales Fall Below De Minimis Threshold - Subsequent Year(s)
The requirement that a "remote seller" collect and remit Kansas tax ends if the amount of
sales to Kansas customers falls below $100,000 in the preceding year. To continue the example,
if a "remote seller" has sales to Kansas customers in excess of $100,000 in Year Three, the "remote
seller" must collect and remit sales tax on all sales to Kansas customers during Year Four. But, if
all sales made to Kansas customers during Year Four total less than $100,000, there is no
requirement to collect and remit tax for sales made in Year Five, or any subsequent year, until
sales made in a given year exceed $100,000. If that occurs, collecting and remitting tax would be
required for all sales to Kansas customers in excess of $100,000 during that year, and for all sales
to Kansas customers during the following year.
Registration
A "remote seller" is required to begin collecting and remitting tax on sales in excess of the
$100,000 threshold as soon as they cross the threshold. In other words, a "remote seller" is
required to register, collect, and remit tax on the next transaction after meeting or exceeding the
threshold.
Because each "remote seller" will meet or exceed the threshold at a different time, each
"remote seller" will establish their own date for when registration, collection, and remittance
requirements begin. It is important to note that, regardless of when registration and remittance of
tax actually occur, responsibility for collecting tax begins with the next transaction after meeting
or exceeding the threshold. By way of example, if a "remote seller's" first transaction is $105,000,
responsibility for collecting tax does not begin until the next transaction, regardless of the amount
of that transaction. If a "remote seller" has multiple transactions within a calendar year that total
$99,950 and then has a $100 transaction, responsibility for collecting tax does not begin until after
the $100 transaction. And if a "remote seller" has multiple transactions within a calendar year that
total $99,950 and then has a $100,000 transaction, responsibility for collecting tax still does not
begin until after the $100,000 transaction.
A "remote seller" should register with the Department for retailers' compensating use tax
not later than thirty (30) days after their sales for the calendar year exceed $100,000. At the time
of registration each "remote seller's" reporting and remittance schedule will be determined, based
on the total amount of tax collected. More information regarding the registration process and filing
frequency is available in our Publication KS-1510 Kansas Sales & Compensating Use Tax, which
is available through the Department's website at: www.ksrevenue.
As an alternative to registering directly with the Department, "remote sellers" may register
through the Streamlined Sales Tax Registration System. Additional information is available
through their website at: https://www.streamlinedsalestax.org/for-businesses/sales-tax-
registration-sstrs.
In addition to the new provisions related to "remote sellers", Sections 1 through 4 of Senate
Bill 50 address marketplace facilitator platforms and requires the collection and remittance of
certain taxes by marketplace facilitators. Section 14 of Senate Bill 50 also amends K.S.A. 79-
3702 to repeal the "click-through" nexus provisions for affiliated persons related to sales and use
tax collections. For additional information in this regard, see Notice 21-14 Marketplace
Facilitators, Products and Notice 21-23 Click-Through Nexus Eliminated, both of which are
available through the Department's website at: www.ksrevenue.org.
Maintaining Registration Made
Under Notice 19-04 Guidance
On August 1, 2019, the Kansas Department of Revenue issued Notice 19-04, Sales Tax
Requirements for Retailers Doing Business in Kansas, which provided guidance to remote sellers
doing business in Kansas. The guidance required remote sellers that were not already registered
with the Kansas Department of Revenue to register and begin collecting and remitting Kansas sales
and/or use tax by October 1, 2019. As a result, many remote sellers registered and began collecting
tax on sales made into Kansas.
With the passage of 2021 Senate Bill No. 50, a de minimis threshold was established for
remote sellers. Because of the threshold, some remote sellers that registered and have been
collecting tax may no longer be required to collect tax on sales made into Kansas.
If you are a frequent seller into Kansas, you are encouraged to remain registered to collect
and remit Kansas tax. Remote sales tax calculation, remittance and tax filing services may be
available to you, at no cost, through a Streamlined Sales Tax Certified Service Provider (CSP.)
For more information about Streamlined Sales Tax and to see if you qualify,
see: www.streamlinedsalestax.org/certified-service-providers/freeservices.
If you are a remote seller who had previously registered with the Department who does not
now meet the de minimis threshold you may choose to cancel your registration. To cancel your
registration, you should complete and submit form CR-108, Notice of Tax Account Closure
(available at the Departments website: https://www.ksrevenue.org/pdf/cr108.pdf ) to the
Department at [email protected]. However, it is important to note that while you may not be
required to register and collect the tax, the tax is still due and must be remitted to the state of
Kansas. If you do not collect and remit the tax it will now be the responsibility of the consumer
to do so.
TAXPAYER ASSISTANCE
Additional copies of this notice, forms or publications are available from our web site,
www.ksrevenue.org. If you have questions about this Notice, please contact:
Taxpayer Assistance Center
Kansas Department of Revenue
Scott Office Building, 1st Floor
120 SE 10th Ave
P. O. Box 3506
Topeka, KS 66601-3506
Phone: 785-368-8222
Fax: 785-291-3614
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