Is a business that advises clients about college, scholarships, financial aid, and occupations subject to Kansas sales tax?

Plain-English summary

A person planning a new business — advising clients about opportunities such as college, scholarships, financial aid, and occupations, and compiling the information into a folder or notebook — asked how the business is treated for sales tax. The Department ruled the service is not taxable.

"The Kansas retailers sales tax is imposed on sales of tangible personal property, certain admissions and participation fees, and certain enumerated services. Enumerated services include repair and application of tangible personal property. It does not include services such as you provide." The Department compared the advising business to the professions: "Your services appear to be little different than that of an attorney providing a will to a client or an accountant providing a financial statement to a client."

Because the service is not taxable, "your sales tax duties are simply to pay sales tax on your taxable purchases."

What this means for you

Advising and consulting businesses

If you sell advice or information — college and career counseling, scholarship and financial-aid research — you generally do not charge Kansas sales tax, because that kind of service is not on the state's list of taxable (enumerated) services.

The folder or notebook doesn't change the answer

Delivering the advice in a physical folder or notebook does not turn the service into a taxable sale of goods; the substance is the advisory service, like a lawyer's will or an accountant's financial statement.

You still pay tax on your own purchases

Your only sales tax obligation is to pay tax on the taxable items you buy to run the business (supplies, equipment, and the like).

Common questions

Q: Do I charge Kansas sales tax for college and career advising?
A: No. That advisory service is not an enumerated taxable service, so it is not subject to Kansas sales tax.

Q: Does putting the advice in a printed folder make it taxable?
A: No. The Department treated the service like an attorney's or accountant's work product — the advice, not the paper, is what you are selling.

Q: What are my sales tax responsibilities then?
A: Only to pay sales tax on your own taxable purchases used in the business.

Citations and references

• The Department did not cite a specific statute number. It relied on the general Kansas rule that the retailers' sales tax reaches sales of tangible personal property, certain admissions and participation fees, and certain enumerated services, and that this advisory service is not among the enumerated taxable services.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: O-2000-021

Original ruling text

Opinion Letter

Body:

Office of Policy & Research

October 2, 2000

XXXX
XXXX
XXXX

RE: Your letter of September 15, 2000

Dear XXXX:

I have been asked to answer your letter that we received last month. You explain that you plan on starting a new business. It will involve advising clients about opportunities such as college, scholarships, financial aid, and occupations. The information will be compiled based on each clients needs and provided to them in a folder or notebook. You ask how this business should be treated for sales tax purposes.

The Kansas retailers sales tax is imposed on sales of tangible personal property, certain admissions and participation fees, and certain enumerated services. Enumerated services include repair and application of tangible personal property. It does not include services such as you provide. Your services appear to be little different than that of an attorney providing a will to a client or an accountant providing a financial statement to a client.

Accordingly, your sales tax duties are simply to pay sales tax on your taxable purchases. These duties are no more than you experience in your non-business endeavors. I hope that this adequately answers your questions. If not, please call me or Linda Bowles.

Sincerely,

Thomas E. Hatten
Attorney/Policy & Research

Date Composed: 10/03/2000 Date Modified: 10/10/2001

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