Are repair and installation labor services taxable in Kansas, including when performed for farmers?

Plain-English summary

The Department addressed how Kansas sales tax applies to repair and installation labor, including work done for farmers. The short version: repairing tangible personal property is taxable, installation labor is taxable except in original construction, and — apart from the farm machinery exemption — farmers generally pay tax on labor services too. The Department noted the reply "is an informational letter only and not a private letter ruling pursuant to K.A.R. 92-19-59."

The Department cited three provisions:

• Repair/service labor — taxable (K.S.A. 79-3606(q)). The statute taxes "the gross receipts received for the service of repairing, servicing, altering or maintaining tangible personal property" that is not held for sale, whether or not property is transferred, and even where the item is fastened to or built into real property. So "if you service a lawnmower for a farmer or a business owner, you would be obligated to collect the appropriate Kansas sales tax(es), whether you provide repair parts or not," and the taxable base "would include the repair parts, if provided, service charges and any invoiced amounts for labor."
• Installation labor — taxable, except original construction (K.S.A. 79-3603(p)). The statute taxes the gross receipts for installing or applying tangible personal property, whether or not it becomes part of real estate. But "[n]o tax ... is imposed under this section when the service of applying or installing tangible personal property is in connection with the original construction of a barn." Even then, "[t]he materials and supplies that are purchased for use in the barn construction or reconstruction or in any other type of construction would be subject to the appropriate Kansas sales/use tax(es)."
• Farmers pay tax on most labor. "Aside from the farm machinery and equipment sales tax exemption, farmers and ranchers must usually pay sales tax on labor services purchased for use in farming and ranching operations." Labor to repair tangible personal property that is not exempt under K.S.A. 79-3606(t) "would be subject to sales tax in the state of Kansas."

What this means for you

Repair and service businesses

Repairing, servicing, altering, or maintaining tangible personal property (for example, fixing a lawnmower) is a taxable service. Charge tax on the whole job — parts, service charges, and labor — regardless of whether you supply parts.

Installers

Installation labor is taxable unless it is part of the original construction of a building or facility (here, a barn). Even for exempt original construction, the materials and supplies you buy for the job remain taxable to you.

Farmers and ranchers

The farm machinery and equipment exemption is narrow. Outside of it, you generally owe sales tax on labor services for your farming and ranching operations, including repair labor on property that isn't exempt under K.S.A. 79-3606(t).

Common questions

Q: Is repairing a lawnmower taxable in Kansas?
A: Yes. Under K.S.A. 79-3606(q), the repair service is taxable whether or not parts are provided, and the taxable base includes parts, service charges, and labor.

Q: Is installation labor ever exempt?
A: Yes — when it is in connection with the original construction of a building or facility (such as a barn). But the materials and supplies used in that construction are still taxable.

Q: Do farmers pay sales tax on labor services?
A: Usually yes. Apart from the farm machinery and equipment exemption, farmers and ranchers generally pay tax on labor services, including repair labor on non-exempt property.

Citations and references

• K.S.A. 79-3606(q) — imposes sales tax on the service of repairing, servicing, altering, or maintaining tangible personal property not held for sale, including property fastened to or built into real property.
• K.S.A. 79-3603(p) — imposes sales tax on installing or applying tangible personal property, except when done in connection with the original construction of a building or facility (here, a barn); construction materials and supplies remain taxable.
• K.S.A. 79-3606(t) — the exemption referenced for farm machinery and equipment; labor to repair tangible personal property not exempt under it is subject to sales tax.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: O-1998-15

Original ruling text

Opinion Letter

Body:

Office of Policy & Research

October 16, 1998

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Dear Mr. TTTTTTT:

We wish to acknowledge receipt of your letter dated October 9, 1998, regarding the application of Kansas Retailers’ Sales tax.

This is an informational letter only and not a private letter ruling pursuant to K.A.R. 92-19-59.

K.S.A. 79-3606(q) imposes a sales tax upon: “the gross receipts received for the service of repairing, servicing, altering or maintaining tangible personal property. . . which when such services are rendered is not being held for sale in the regular course of business, and whether or not any tangible personal property is transferred in connection therewith. The tax imposed by this subsection shall be applicable to the services of repairing, servicing, altering, or maintaining an item of tangible personal property which has been and is fastened to, connected with or built into real property.”

Please be advised that if you service a lawnmower for a farmer or a business owner, you would be obligated to collect the appropriate Kansas sales tax(es), whether you provide repair parts or not. The taxable base, would include the repair parts, if provided, service charges and any invoiced amounts for labor that was rendered to repair the lawnmower.

K.S.A. 79-3603(p) imposes a sales tax upon the gross receipts received for installing or applying tangible personal property whether or not the tangible personal property when installed or applied remains tangible personal property or becomes part of real estate. No tax, however is imposed under this section when the service of applying or installing tangible personal property is in connection with the original construction of a barn. The materials and supplies that are purchased for use in the barn construction or reconstruction or in any other type of construction would be subject to the appropriate Kansas sales/use tax(es).

Aside from the farm machinery and equipment sales tax exemption, farmers and ranchers must usually pay sales tax on labor services purchased for use in farming and ranching operations. Thus, labor services rendered to repair tangible personal property that is not exempt pursuant to K.S.A. 79-3606(t), would be subject to sales tax in the state of Kansas. If I may be of further assistance, please contact me at your earliest convenience at (785) 296-7776.

Sincerely yours,

Thomas P. Browne, Jr.
Tax Specialist

TPB

Enc

Date Composed: 10/29/1998 Date Modified: 10/10/2001

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