Must a company selling fund-raising items to groups that resell them charge Kansas sales tax?

Plain-English summary

A company that sells fund-raising items to groups that resell them to consumers asked about its Kansas sales tax duties. The Department explained that the company generally must collect sales tax unless the buyer issues a resale exemption certificate — with special rules for schools, parent-teacher associations, and individual school clubs.

The Department covered three situations:

• The general resale rule. "[A]ny organization may purchase items intended for resale by issuing a resale exemption certificate." That is the same certificate businesses use to buy inventory tax-free for resale. But to issue one, "the organization must be registered as a retailer in Kansas and must provide their Kansas retailers' sales tax registration number when issuing a resale certificate."
• Schools and nonprofit educational institutions. Kansas law exempts direct purchases by "a public or private elementary or secondary school or public or private nonprofit educational institution and used primarily by such school or institution for nonsectarian programs and activities provided or sponsored by such school or institution," regardless of the school's intent to consume or resell the item (K.S.A. 79-3606(c)).
• Parent-teacher associations. Kansas law also exempts "all sales of tangible personal property and services purchased by a parent-teacher association or organization, and all sales of tangible personal property by or on behalf of such association or organization" (K.S.A. 79-3606(yy)).

But the Department drew a sharp line at the level below the school: "Regarding Individual school clubs, teams, bands, etc. within the school, Kansas law provides no exemption for such entities. Therefore, your company would be required to collect sales tax, unless a resale exemption is issued by the purchaser."

What this means for you

Fund-raising suppliers

Collect Kansas sales tax on your sales unless the buyer gives you a valid resale exemption certificate (with its Kansas retailers' sales tax registration number) or the buyer is an outright-exempt entity like a qualifying school or a parent-teacher association.

Schools and nonprofit educational institutions

Your direct purchases used primarily for the school's nonsectarian programs are exempt under K.S.A. 79-3606(c), whether you plan to use or resell the items.

Parent-teacher associations

Both your purchases and the sales made by or on behalf of your association are exempt under K.S.A. 79-3606(yy).

Individual school clubs, teams, and bands

These do not have their own exemption. A supplier must charge them tax unless they provide a resale exemption certificate — which requires them to be registered Kansas retailers.

Common questions

Q: Does a fund-raising supplier always charge Kansas sales tax?
A: No. It charges tax unless the buyer issues a resale exemption certificate or is an outright-exempt entity such as a qualifying school or a parent-teacher association.

Q: Are school purchases exempt even if the school resells the items?
A: Yes. Under K.S.A. 79-3606(c), direct purchases by a qualifying school used primarily for its nonsectarian programs are exempt regardless of intent to consume or resell.

Q: Is a school band or club exempt?
A: No. Individual school clubs, teams, and bands have no exemption, so the supplier must collect tax unless they issue a resale exemption certificate.

Citations and references

• K.S.A. 79-3606(c) — exempts direct purchases by a public or private elementary/secondary school or nonprofit educational institution used primarily for the school's nonsectarian programs, regardless of intent to consume or resell.
• K.S.A. 79-3606(yy) — exempts purchases by a parent-teacher association or organization and sales made by or on behalf of such an association.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: O-1999-07

Original ruling text

Opinion Letter

Body:

Office of Policy & Research

March 2, 1999

XXXXXXXXXXXXX
XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX

Dear XXXXXXXXXX:

The purpose of this letter is to respond to your letter received by this office on November 13, 1998. Your company is engaged in the business of selling fund raising items to entities that in turn resell the item to a consumer.

Generally, any organization may purchase items intended for resale by issuing a resale exemption certificate. This is the same certificate that businesses use to purchase items without tax, that the business intends to sell to an end user or consumer. For an organization to issue such a certificate the organization must be registered as a retailer in Kansas and must provide their Kansas retailers’ sales tax registration number when issuing a resale certificate.

Kansas law exempts direct purchases by a “public or private elementary or secondary school or public or private nonprofit educational institution and used primarily by such school or
institution for nonsectarian programs and activities provided or sponsored by such school or institution,” regardless the schools intent to consume or resell the item. K.S.A. 79-3606(c).

Kansas law also exempts “all sales of tangible personal property and services purchased by a parent-teacher association or organization, and all sales of tangible personal property by or on behalf of such association or organization.” K.S.A. 79-3606(yy).

Regarding Individual school clubs, teams, bands, etc. within the school, Kansas law provides no exemption for such entities. Therefore, your company would be required to collect sales tax, unless a resale exemption is issued by the purchaser.

Sincerely,

Mark D. Ciardullo
Tax Specialist

Date Composed: 03/23/1999 Date Modified: 10/10/2001

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