Does a company that delivers and sets up appliances for a retailer collect Kansas sales tax, or does the retailer?

Plain-English summary

A company that handles appliance delivery for a retailer asked how Kansas sales tax applies. The Department quoted the statute imposing tax on "the service of installing or applying tangible personal property," then looked at what this company actually does: it merely delivers, uncrates, sets up, and test-runs appliances for the retailer in Kansas. On those facts, the Department said the company is providing a non-taxable service.

The Department added that because the retailer charges the customer for this service at the time the appliances are purchased, the delivery company is not liable to collect Kansas sales tax on the amount it bills the retailer. The appropriate Kansas sales tax is collected from the customer and remitted to Kansas by the retailer.

What this means for you

If you provide delivery and set-up for a retailer's products (rather than selling the products yourself), this ruling shows how the tax responsibility falls on the seller, not on you.

• Delivery/uncrating/set-up/test-run was treated as a non-taxable service on these facts.
• You don't collect tax from the retailer you serve. Because the retailer bills the customer for the delivery/set-up as part of the purchase, you (the delivery company) don't collect Kansas sales tax on your charge to the retailer.
• The retailer collects and remits. The customer pays the appropriate Kansas sales tax to the retailer, who remits it to the state.
• Facts control. The result depends on what you actually do. Charges the retailer bills the customer in connection with the sale of the appliances are part of the retailer's taxable transaction.

Common questions

Is appliance delivery and set-up taxable in Kansas?
The Department found that merely delivering, uncrating, setting up, and test-running appliances for a retailer is a non-taxable service.

Who collects the sales tax the customer pays?
The retailer. It charges the customer for the delivery/set-up at the time of purchase and remits the Kansas sales tax.

Does the delivery company charge the retailer sales tax on its fee?
No. On these facts the delivery company is not liable to collect Kansas sales tax on the amount it bills the retailer.

Would installing appliances into real property change things?
Possibly. The ruling addresses delivery and set-up as described; installation/application services can be taxable in other contexts, so confirm your specific facts.

Citations and references

• The ruling quotes the Kansas statute imposing tax on the service of installing or applying tangible personal property, then concludes the delivery/set-up service described is non-taxable and that the retailer (not the delivery company) collects and remits the tax the customer owes.

Source

• Original ruling (DOCX): https://www.ksrevenue.gov/pildocs/rulings/P-1998-23.docx
• Kansas Policy Information Library: https://www.ksrevenue.gov/prpil.html

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

January 7, 1998

TTTTTTTTTTT
TTTTTTTTTTT
TTTTTTTTTTT
TTTTTTTTTTT

Dear Mr. TTTTT:

We wish to acknowledge receipt of your letter dated December 2, 1997, regarding the application of Kansas Retailers’ Sales tax.

K.S.A. 79-3606(p) imposes a sales tax upon: “the gross receipts received for the service of installing or applying tangible personal property. . .”

It is the understanding of this department that your company merely delivers, uncrates, sets up and test runs appliances for TTTTTTTTT. In the state of Kansas. Hence, your company is providing a non-taxable service.

Please be advised that it is the opinion of this office that inasmuch as TTTTTTTT. charges the customer for this service at the time of purchase of said appliances, your company would not be liable for collecting Kansas sales tax(es) on the amount charged to TTTTTTTTTT. The appropriate Kansas sales tax(es) would be collected from the customer and remitted to the state of Kansas by TTTTTTTTTTTT.

If I may be of further assistance, please contact me at your earliest convenience at (913) 296-7776.

Sincerely yours,

Thomas P. Browne, Jr.
Tax Specialist

TPB

Date Composed: 03/04/1998 Date Modified: 10/10/2001

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