Are sales of large decorative carved wooden horses (Dala Horses) for a community purpose subject to Kansas sales tax?

Plain-English summary

Someone asked whether selling large decorative carved wooden horses ("Dala Horses") for a community purpose is subject to Kansas sales tax. The Department ruled the sales are taxable.

The item and purpose. "A Dala Horse is typically a carved, gaily colored wooden horse that is associated with Sweden or Scandinavia. Dala Horses have become a central motif of the official logo of the City of Lindsborg. The purchasers intend to display the horses publicly in Lindsborg to encourage community development."

The holding. "Sales of these carved horses are subject to Kansas sales tax." The Department pointed to Kansas Attorney General Opinion 90-17, saying "the reasoning set forth on pages 2 through 4 of the Opinion applies to sales of the Dala Horses."

The Attorney General analogy. That opinion addressed scale models of the statehouse dome sculpture "given by the Kansas Arts Commission to patrons who donated $10,000 or more." Although the models were valued at about $3,000, the Attorney General "opined that these transactions were taxable based on the amount that was donated ($10,000 or more)" and "suggested several alternatives for reducing the tax base to $3,000."

Structure affects the tax base. "The way in which the Dala Horses are sold will dictate whether you can take advantage of any of the AG's suggestions for reducing the tax consequences on your sales."

What this means for you

Community groups selling commemorative items

A good community purpose does not make the sale tax-free. Selling decorative goods like carved horses is a taxable retail sale in Kansas, and you must collect sales tax.

How you structure a donation-plus-item deal matters

When an item is given in exchange for a donation, the Attorney General's analysis suggests the tax can turn on the amount paid — potentially the full donation rather than the item's value. How you document and structure the transaction can affect the tax base.

This rests on an Attorney General opinion

The Department applied the reasoning of AG Opinion 90-17 rather than a specific statute. If you are structuring such sales, read that opinion's suggested approaches and get advice on applying them to your facts.

Common questions

Q: Are sales of decorative carved wooden horses taxable in Kansas?
A: Yes. The Department ruled that sales of the Dala Horses are subject to Kansas sales tax, even though they are sold for a community-development purpose.

Q: Does the community purpose create an exemption?
A: No. The Department treated the sales as taxable retail sales; the community purpose did not exempt them.

Q: Can the tax be reduced?
A: Possibly, depending on how the sale is structured. The Department pointed to Attorney General Opinion 90-17, which suggested alternatives for reducing the tax base in a donation-for-item situation.

Citations and references

• Kansas Attorney General Opinion 90-17 — the Department applied the reasoning on pages 2 through 4 (addressing statehouse-dome scale models given to $10,000-plus donors, taxable based on the amount donated, with suggested ways to reduce the tax base) to conclude that sales of the Dala Horses are taxable. The Department did not cite a specific statute section.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: O-2000-039

Original ruling text

Opinion Letter

Body:

Office of Policy & Research

November 30, 2000

XXXX
XXXX
XXXX

RE: You fax of November 30, 2000

Dear Ms. XXXX:

I have been asked to respond to your fax that we received today. In it, you ask if the sale of large Dala Horses for a community purpose are subject to Kansas sales tax. A Dala Horse is typically a carved, gaily colored wooden horse that is associated with Sweden or Scandinavia. Dala Horses have become a central motif of the official logo of the City of Lindsborg. The purchasers intend to display the horses publicly in Lindsborg to encourage community development.

Sales of these carved horses are subject to Kansas sales tax. I have enclosed a copy of Kansas Attorney General Opinion 90-17. The reasoning set forth on pages 2 through 4 of the Opinion applies to sales of the Dala Horses. The Attorney General Opinion deals with scale-models of the statehouse dome sculpture that were given by the Kansas Arts Commission to patrons who donated $10,000 or more to help pay for the actual dome sculpture. While the scale-models were valued at about $3,000, one was given to each patron who donated $10,000 or more to the fund. The Attorney General opined that these transactions were taxable based on the amount that was donated ($10,000 or more). The Attorney General suggested several alternatives for reducing the tax base to $3,000. I have enclosed a copy of the Opinion for your review.

This means that you are correct that the sale of the Dala Horses are subject to Kansas sales tax. The Attorney General’s Opinion suggests ways that the tax may be reduced for the unique fact situation presented in the Opinion. The way in which the Dala Horses are sold will dictate whether you can take advantage of any of the AG’s suggestions for reducing the tax consequences on your sales. I hope that this answers all of your questions. If not, please call me and we can discuss them.

Sincerely,

Thomas E. Hatten
Attorney/Policy & Research

Enclosure

Date Composed: 12/12/2000 Date Modified: 10/10/2001

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