Is machinery and equipment sold or leased to an over-the-air radio or television station exempt from Kansas sales tax?

Plain-English summary

The question was whether machinery and equipment sold or leased to an over-the-air radio or television station is subject to Kansas sales tax.

A broadcast-equipment exemption took effect July 1, 1998. The Department explained that "on or after July 1, 1998, all sales and or leases of machinery and equipment sold or leased to over-the-air, free access radio or television stations, which is used directly and primarily for the purpose of producing a broadcast signal or is such that the failure of the machinery or equipment to operate would cause broadcasting to cease, would be exempt from Kansas state and local sales tax(es)."

Both purchases and leases qualify. The exemption reaches machinery and equipment whether it is sold or leased to the station, and it "shall include, but not be limited to, that required by rules and regulations of the federal communications commission." The Department cited K.S.A. 79-3606(zz) and enclosed Revenue Notice 98-04, "Sales Taxation of Broadcasters and Subscriber Radio and Television Services."

Bottom line: equipment that an over-the-air, free-access radio or TV station uses directly and primarily to put out its broadcast signal (or whose failure would take it off the air) is exempt from Kansas sales tax when acquired on or after July 1, 1998.

What this means for you

The exemption is tied to the equipment's role in broadcasting

The test is functional: the machinery or equipment must be used directly and primarily to produce a broadcast signal, or be equipment whose failure to operate would cause broadcasting to cease. Ordinary office or back-office property that does not meet that description is not covered by this exemption.

It applies to over-the-air, free-access stations

The statute is written for over-the-air, free-access radio or television stations. That framing is what distinguishes broadcast equipment (covered) from equipment used in other, non-broadcast lines of business a company might also run.

Leases count, not just purchases

Because the exemption covers "all sales and or leases," a station that leases qualifying broadcast equipment gets the same treatment as one that buys it. A lessor renting such equipment to a qualifying station can treat the lease as exempt.

Keep documentation and check Notice 98-04

The Department pointed to Revenue Notice 98-04 for the broader rules on taxing broadcasters and subscriber services. Sellers and lessors should keep an exemption certificate from the station and confirm the equipment fits the statutory description.

Common questions

Q: Does the exemption apply to leased equipment as well as purchased equipment?
A: Yes. K.S.A. 79-3606(zz) exempts "all sales and or leases" of qualifying machinery and equipment to an over-the-air, free-access radio or television station.

Q: What equipment qualifies?
A: Machinery and equipment used directly and primarily to produce a broadcast signal, or equipment whose failure to operate would cause broadcasting to cease — including, but not limited to, equipment required by FCC rules and regulations.

Q: When did the exemption take effect?
A: On or after July 1, 1998.

Q: Is every purchase a broadcaster makes exempt?
A: No. The exemption is limited to machinery and equipment meeting the statutory broadcast-signal test; other property is analyzed under the general sales tax rules.

Citations and references

• K.S.A. 79-3606(zz) — exempts, on or after July 1, 1998, all sales and leases of machinery and equipment sold or leased to over-the-air, free-access radio or television stations that is used directly and primarily to produce a broadcast signal or whose failure would cause broadcasting to cease, including FCC-required equipment.
• Revenue Notice 98-04, "Sales Taxation of Broadcasters and Subscriber Radio and Television Services" — Department guidance enclosed with the ruling explaining the taxation of broadcasters and subscriber radio and television services.
• K.A.R. 92-19-59 — the regulation authorizing private letter rulings; this ruling was issued under it and binds the Department only as to the requesting taxpayer.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1998-224

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

December 29, 1998

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Dear TTTTTTTTTT:

We wish to acknowledge receipt of your letter dated December 17, 1998, regarding the application of Kansas Retailers’ Sales tax.

Please be advised that on or after July 1, 1998, all sales and or leases of machinery and equipment sold or leased to over-the-air, free access radio or television stations, which is used directly and primarily for the purpose of producing a broadcast signal or is such that the failure of the machinery or equipment to operate would cause broadcasting to cease, would be exempt from Kansas state and local sales tax(es). Machinery and equipment shall include, but not be limited to, that required by rules and regulations of the federal communications commission. See K.S.A. 79-3606(zz).

For your convenience, I have enclosed Revenue Notice 98-04, which is entitled, “Sales Taxation of Broadcasters and Subscriber Radio and Television Services”.

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

Enc

Date Composed: 01/15/1999 Date Modified: 10/10/2001

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