Are labor services on land improvements around a residence — driveways, fences, patios, pools — exempt from Kansas sales tax?

Plain-English summary

The Department explained how the new residential remodeling exemption applies to land improvements around a home. "1998 Senate Bill No. 493 exempts certain construction services … Effective July 1, 1998, services performed to install or apply tangible personal property are exempt from sales tax when the services involve the original construction, reconstruction, restoration, remodeling, renovation, repair or replacement of a residence."

The Department extended that to surrounding land improvements. "The department has determined that it will construe and administer K.S.A. 79-3603(p)(4) as exempting the land improvements that immediately surround a residence. This means the exemption for residential repair and remodeling services generally will be coextensive with the exemption for the original construction of the residence."

The test. "The test for whether something is a 'land improvement' shall be whether tangible personal property has been erected upon or affixed to the land. To qualify as residential, the land improvement must be immediately near and must principally serve the residence." So "repairs to a yard fence are exempt but … repairs to a fence designed to corral pleasure horses are not," and "[b]arns and machine sheds for farm equipment shall not be considered to be [a] land improvement that principally serve[s] the residence."

What counts. "Land improvements shall include, but not be limited to, sidewalks, driveways, patios, fences, sodding, tree planting, utility pipes and wires, septic tanks, swimming pools, and tool sheds." Repair services to "steps, stairs, access ramps, porches, and decks shall be exempt whether they are considered to be part of the residence … or a land improvement." And "the service of cutting or coring concrete at a residence would be exempt."

Bottom line: labor on improvements that are affixed to the land, sit immediately near the home, and principally serve it is exempt like the home itself — but improvements serving a farm or non-residential use are not.

What this means for you

The exemption reaches the yard, not just the house

Land improvements that immediately surround a residence are exempt on the same footing as work on the residence itself, because the Department construes K.S.A. 79-3603(p)(4) to make the two coextensive.

The "principally serves the residence" test controls

An improvement qualifies only if it is affixed to the land, immediately near, and principally serves the home. A yard fence qualifies; a fence to corral pleasure horses, or barns and machine sheds for farm equipment, do not.

A broad list of improvements qualifies

Sidewalks, driveways, patios, fences, sodding, tree planting, utility pipes and wires, septic tanks, swimming pools, and tool sheds are within the exemption, as is repair labor on steps, stairs, access ramps, porches, and decks.

Concrete cutting or coring at a residence is exempt

The Department specifically confirmed that the service of cutting or coring concrete at a residence is exempt from Kansas sales tax.

Common questions

Is labor on a driveway or patio at a home exempt?
Yes. Those are land improvements that principally serve the residence, so the install/apply labor is exempt.

What is the test for a "land improvement"?
Whether tangible personal property has been erected upon or affixed to the land; to be residential it must be immediately near and principally serve the residence.

Is every fence exempt?
No. A yard fence is exempt, but a fence to corral pleasure horses — or barns and machine sheds for farm equipment — does not principally serve the residence and is not exempt.

Is cutting or coring concrete at a residence taxable?
No. The Department confirmed that service is exempt from Kansas sales tax.

Citations and references

• K.S.A. 79-3603(p)(4) — the Department construes and administers this provision to exempt land improvements that immediately surround a residence, making the repair/remodeling exemption coextensive with the exemption for original construction of the residence.
• 1998 Senate Bill No. 493 — effective July 1, 1998, exempts install/apply services for residential construction, remodeling, renovation, and repair.
• 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 August 17, 1998 by Thomas P. Browne, Jr., Tax Specialist, Kansas Department of Revenue.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1998-77

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

August 17, 1998

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RE: TTTTTTTTTTTTTTT

Dear Ms. TTTTT:

We wish to acknowledge receipt of your letter dated July 31, 1998, regarding the application of Kansas Retailers’ Sales tax.

1998 Senate Bill No. 493 exempts certain construction services that were formerly subject to Kansas sales tax. Effective July 1, 1998, services performed to install or apply tangible personal property are exempt from sales tax when the services involve the original construction, reconstruction, restoration, remodeling, renovation, repair or replacement of a residence.

The department has determined that it will construe and administer K.S.A. 79-3603(p)(4) as exempting the land improvements that immediately surround a residence. This means the exemption for residential repair and remodeling services generally will be coextensive with the exemption for the original construction of the residence.

The test for whether something is a “land improvement” shall be whether tangible personal property has been erected upon or affixed to the land. To qualify as residential, the land improvement must be immediately near and must principally serve the residence. This means that repairs to a yard fence are exempt but that repairs to a fence designed to corral pleasure horses are not. Barns and machine sheds for farm equipment shall not be considered to be land improvement that principally serve the residence.

Land improvements shall include, but not be limited to, sidewalks, driveways, patios, fences, sodding, tree planting, utility pipes and wires, septic tanks, swimming pools, and tool sheds. Repair services to structures such as steps, stairs, access ramps, porches, and decks shall be exempt whether they are considered to be part of the residence because they are attached to it, or a land improvement because they are immediately nearby.

In closing, the service of cutting or coring concrete at a residence would be exempt from sales tax in the state of Kansas.

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: 08/31/1998 Date Modified: 10/10/2001

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