Is fencing for agricultural land or disaster repair exempt from Kansas sales tax?

Plain-English summary

Kansas Notice 22-01 explains a sales tax exemption for fencing, created by 2022 House Bill 2239 (Section 45), which amended K.S.A. 79-3606d. There are two parts:

1. Disaster-related exemption (retroactive to January 1, 2021). Purchases of tangible personal property and services needed to reconstruct, repair, or replace a fence that was damaged or destroyed by a wildfire, flood, tornado, or other natural disaster are exempt, where the fence encloses land devoted to agricultural use and the affected property is in an area declared a disaster by federal, state, or local government. Sales tax paid on and after January 1, 2021 on such purchases can be refunded.

2. Permanent agricultural exemption (on and after July 1, 2022). All sales of tangible personal property and services necessary to construct, reconstruct, repair, or replace any fence used to enclose land devoted to agricultural use are exempt from Kansas retailers' sales tax.

Qualifying materials include, but are not limited to: barbed wire, T-posts, concrete mix, post caps, T-post clips, screw hooks, nails, staples, gates, electric fence posts, electric insulators, and electric fence chargers.

How to claim it.

• For disaster fencing built on/after January 1, 2021 and before July 1, 2022 where you already paid the tax, file Form ST-3, Kansas Application for Sales Tax Refund of Fencing Materials and/or Services. Refunds are made only for sales tax paid to a Kansas retailer (not, for example, an Oklahoma retailer), and you should allow at least 45 days.
• For purchases going forward (and for disaster fencing not yet purchased), give the retailer Form ST-28F, Agricultural Exemption Certificate. Contractors and repairmen may use the certificate to buy the materials and labor.

Sellers should obtain the exemption certificate at the time of sale (no later than 90 days after) and keep it in their sales tax records for at least three years.

What this means for you

Farmers and ranchers

• Buying materials and services to build or repair a fence that encloses your agricultural land is exempt from Kansas sales tax on and after July 1, 2022 -- give the retailer Form ST-28F.
• If a wildfire, flood, tornado, or other declared disaster damaged your ag fence on or after January 1, 2021 and you already paid sales tax, you can get a refund using Form ST-3 (Kansas-retailer tax only).

Fencing contractors and retailers

• Contractors can use the customer's Form ST-28F to buy qualifying materials and labor exempt.
• Retailers should collect the exemption certificate at the time of sale (within 90 days) and keep it for at least three years.

Common questions

What fencing is exempt? Materials and services to construct, reconstruct, repair, or replace a fence that encloses land devoted to agricultural use -- permanently, on and after July 1, 2022.

What about disaster damage? Fencing damaged by a wildfire, flood, tornado, or other declared disaster on or after January 1, 2021 also qualifies, and tax already paid can be refunded.

Which forms do I use? Form ST-28F (Agricultural Exemption Certificate) at purchase, or Form ST-3 to claim a refund of tax already paid.

Are out-of-state purchases refundable? No -- refunds are only for sales tax paid to a Kansas retailer.

Citations and references

• House Bill 2239 (2022), Section 45 -- amended K.S.A. 79-3606d to create the fencing exemptions.
• K.S.A. 79-3606d -- exempts from Kansas retailers' sales tax the materials and services to build or repair fences enclosing agricultural land (permanent from July 1, 2022) and disaster-damaged agricultural fences (retroactive to January 1, 2021, with refunds).

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 22-01

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.gov
Mark A. Burghart, Secretary Laura Kelly, Governor

                                        NOTICE 22-01

             EXEMPT SALES OF FENCING MATERIALS AND SERVICES

                                        (JULY 1, 2022)

  During the 2022 Legislative Session House Bill 2239 was passed and signed into law.

Section 45 of the Bill amends K.S.A. 79-3606d to provide for an exemption from sales tax on
purchases on and after January 1, 2021 to reconstruct, repair, or replace any fence that was
damaged or destroyed by a wildfire, flood, tornado or other natural disaster and for the purpose to
enclose land devoted to agricultural use. The fence must be located within an area declared to be
a disaster by the federal, state or local government. This section also provides a permanent
exemption from sales on purchases of tangible personal property and services made on or after
July 1, 2022 to construct, reconstruct, repair or replace any fence that is used to enclose land
devoted to agricultural use.

   As amended, K.S.A. 79-3606d provides:

          (a) (1) The following shall be exempt from the tax imposed by the Kansas
   retailers' sales tax act: All sales of tangible personal property and services purchased
   during calendar years 2017 and 2018 on and after January 1, 2021, and purchased
   within two years of the date of the applicable disaster declaration necessary to
   reconstruct, repair or replace any fence that was damaged or destroyed by wildfires
   a wildfire, flood, tornado or other natural disaster occurring during calendar years
   2016 and 2017 on and after January 1, 2021, and the purpose for which is to enclose
   land devoted to agricultural use.
          (2) A taxpayer shall be eligible for the exemption pursuant to this section if the
   affected property containing the damaged or destroyed fencing is located within an
   area declared to be a disaster by the federal, state or local government.
          (3) Sales tax paid on and after January 1, 2017 2021, upon the gross receipts
   received from any such sale shall be refunded. Each claim for a sales tax refund shall
   be verified and submitted to the director of taxation upon forms furnished by the
   director and shall be accompanied by any additional documentation required by the
   director. The director shall review each claim and shall refund that amount of sales
   tax paid as determined under the provisions of this section. All refunds shall be paid
   from the sales tax refund fund upon warrants of the director of accounts and reports
   pursuant to vouchers approved by the director or the director's designee. Any person
   reconstructing, repairing or replacing such property, or any person who shall contract
   for the reconstruction, repair or replacement of any such property shall obtain from
   the state an exemption certificate for the project involved. The certificate shall be
   furnished to the person or contractor to purchase materials and lease machinery and
   equipment for such project. The person or contractor shall furnish the number of such
   certificate to all suppliers from whom such purchases are made, and such suppliers

 shall execute invoices covering the same bearing the number of such certificate. Upon
 completion of the project the contractor shall furnish to the person that obtained the
 exemption certificate, a sworn statement, on a form to be provided by the director of
 taxation, that all purchases so made were entitled to exemption under this subsection.
       (b)(4) As used in this subsection, "wildfire" means a fire that spreads rapidly
 over grassland, woodland or brush creating unwanted and unplanned destruction.
       (b) On and after July 1, 2022, all sales of tangible personal property and
 services necessary to construct, reconstruct, repair or replace any fence that is used
 to enclose land devoted to agricultural use shall be exempt from the tax imposed by
 the Kansas retailers' sales tax act.
       (c) The provisions of this section shall be deemed to be a part of and
 supplemental to the Kansas retailers' sales tax act.

  For fencing destroyed by wildfire, flood, tornado, or other natural disaster on and after

January 1, 2021 and prior to July 1, 2022, in which expenditures have already been made, the
exemption allowed by the statute can be claimed by submitting form ST-3, Kansas Application for
Sales Tax Refund of Fencing Materials and/or Services. Please be sure to submit all
the information and documents requested on the form at the time you file your claim for refund.
Failing to do so will delay or may even prevent issuance of a refund. Please note refunds will
only be made for sales tax paid to a Kansas retailer. Sales tax paid on purchases from a non-
Kansas retailer (for example, a retailer in Oklahoma) will not be refunded. You should allow at
least 45 days for processing of any refund claim.

  For fencing destroyed by wildfire, flood, tornado, or other natural disaster on and after

January 1, 2021 and prior to July 1, 2022, in which expenditures have NOT been made, the
exemption allowed by statute can be claimed by submitting form ST-28F, Agricultural Exemption
Certificate to the retailer from whom the purchases are being made. ST-28F can be found
at https://www.ksrevenue.gov/pdf/st28f.pdf.

 On and after July 1, 2022, all sales of tangible personal property and services necessary to

construct, reconstruct, repair or replace any fence that is used to enclose land devoted to
agricultural land shall be exempt from sales tax. The purchaser must provide form ST-28F,
Agricultural Exemption Certificate to the retailer from whom the purchases are being made.
Contractors and repairmen providing the service to construct, reconstruct, repair or replace any
fence that is used to enclose land devoted to agricultural land may use this certificate to purchase
the materials and labor necessary to construct, reconstruct, repair or replace fencing.

  Fencing materials that qualify for exemption include, but are not limited to: barbed wire; T-

posts; concrete mix; post caps; T-post clips; screw hooks; nails; staples; gates; electric fence posts;
electric insulators, and electric fence chargers.

  Retailers/sellers should obtain the appropriate exemption certificate from the customer at the

time of the sale and no later than 90 days subsequent to the date of sale. An exemption certificate
relieves a seller from collecting sales tax if it has obtained the required identifying information and
the reason for claiming the exemption at the time of purchase. A seller should: 1) verify the

identity of the person or entity presenting the exemption certificate; and 2) maintain the fully
completed exemption certificate in the sales tax records for at least three years.

                                TAXPAYER ASSISTANCE

 Additional copies of this notice, forms or publications are available from our web site,

www.ksrevenue.gov. 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