Is a homeowners association exempt from Kansas sales tax on its purchases?

Plain-English summary

A homeowners association asked whether it is exempt from Kansas sales tax.

Some nonprofits were newly exempted in 1998 — but not all. The Department explained that Governor Bill Graves signed Senate Bill 493 into law, effective July 1, 1998, and that it "contained several sales tax exemptions to deserving organizations, including non-profit zoos and parent-teacher organizations."

A homeowners association is not among them. "Many organizations, such as your home owners association, perform a great deal of services for their communities with the funds that they raise. However, not every non-profit organization enjoys an exemption from Kansas sales tax. Yours does not."

The remedy is legislative. The Department advised that "an exemption for home owners associations, such as yours[,] would require a change to Kansas statutes through legislative action," and suggested the association contact its elected Kansas representative and senator.

Bottom line: a homeowners association is not exempt from Kansas sales tax. Being a nonprofit that serves its community is not enough; only organizations the Legislature has specifically exempted qualify, and homeowners associations are not on that list.

What this means for you

Nonprofit status alone is not an exemption

Kansas grants sales tax exemptions to specific categories of organizations named by the Legislature. A homeowners association — even one doing valuable community work — is not one of them, so it pays sales tax on its purchases.

1998 SB 493 expanded, but did not open, the list

The 1998 law added exemptions for particular organizations such as nonprofit zoos and parent-teacher organizations. It did not create a general exemption for all community nonprofits, and it did not include homeowners associations.

The Department cannot create the exemption

The Department applies the exemptions the Legislature enacts. It told the association that adding an exemption "would require a change to Kansas statutes through legislative action" — not a departmental ruling.

Where to take the request

An association seeking exemption should direct its efforts to its elected state representative and senator, as the Department expressly suggested.

Common questions

Is our homeowners association exempt from Kansas sales tax?
No. The Department ruled that a homeowners association is not exempt; it must pay Kansas sales tax on its purchases.

Didn't the 1998 law add new nonprofit exemptions?
Yes, Senate Bill 493 added exemptions for certain organizations such as nonprofit zoos and parent-teacher organizations — but not homeowners associations.

Why isn't a community-serving nonprofit automatically exempt?
Because Kansas exempts only the specific organizations the Legislature has named. Doing community work or being a nonprofit does not, by itself, confer an exemption.

How could a homeowners association become exempt?
Only through a statutory change. The Department suggested contacting your elected Kansas representative and senator to pursue legislation.

Citations and references

• 1998 Senate Bill 493 — signed by Governor Bill Graves, effective July 1, 1998; added sales tax exemptions for certain organizations (e.g., nonprofit zoos and parent-teacher organizations) but not homeowners associations. The ruling references the bill without citing a codified statute number.
• K.A.R. 92-19-59 — authorizes Kansas private letter rulings; this ruling binds the Department only as to the requesting taxpayer and the facts presented.
• Issued October 12, 1998 by Thomas P. Browne, Jr., Tax Specialist, Office of Policy & Research, Kansas Department of Revenue.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1998-171

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

October 12, 1998

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Dear Ms. TTTTTTTT:

We wish to acknowledge receipt of your letter dated September 28, 1998, regarding the application of Kansas Retailers’ Sales tax.

Governor Bill Graves signed Senate Bill 493 into law, which became effective July 1, 1998. It contained several sales tax exemptions to deserving organizations, including non-profit zoos and parent-teacher organizations.

Many organizations, such as your home owners association, perform a great deal of services for their communities with the funds that they raise. However, not every non-profit organization enjoys an exemption from Kansas sales tax. Yours does not.

An exemption for home owners associations, such as yours would require a change to Kansas statutes through legislative action. Therefore, you may also wish to contact your elected Kansas representative and senator.

This is a private letter ruling pursuant to K.A.R. 92-19-59. It is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to an accurate determination by the department, this ruling is null and void. This ruling will be revoked in the future by the operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or published revenue ruling, that materially effects this private letter ruling. 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

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

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