Is labor to repair hail damage subject to Kansas sales tax, and does it matter whether the building is a residence?

Plain-English summary

The Department was asked whether labor to repair hail damage is taxable. Its answer turns on two things: the type of casualty, and whether the damaged building is a residence.

The casualty-repair exemption — hail is not on the list. "Kansas law exempts from Kansas retailers' sales tax ('KRST') repair services performed on buildings and facilities to repair damage caused by fire, flood, tornado, lightning, explosion, or earthquake. Materials used or consumed in these repairs are subject to KRST or Kansas compensating tax ('KCT')." Hail is not among those enumerated casualties.

Hail-damage labor on a building is taxable — but residences are different after July 1, 1998. "Services performed to repair hail damage to a building or facility would be subject to KRST. On and after July 1, 1998, for buildings [that] qualify as … residences the services performed to repair the hail damage would be exempt from KRST." The Department "enclosed a notice that explains the exemption for residential remodeling."

Materials are always taxable. "Materials used or consumed for hail repairs are subject to KRST or Kansas compensating tax ('KCT')."

Bottom line: hail-repair labor on a general building or facility is taxable because hail is not one of the exempt casualties; but on or after July 1, 1998, the same labor on a residence is exempt under the residential remodeling exemption. Either way, the materials are taxable.

What this means for you

Hail is not an exempt casualty

The casualty-repair exemption covers repair labor for damage from fire, flood, tornado, lightning, explosion, or earthquake. Hail is not listed, so hail-repair labor on a building or facility is subject to Kansas retailers' sales tax.

Residences get the remodeling exemption after July 1, 1998

If the building qualifies as a residence, hail-damage repair labor performed on or after July 1, 1998 is exempt — not under the casualty rule, but under the residential remodeling exemption that took effect that date.

Materials are taxable regardless

Materials used or consumed in hail repairs are subject to Kansas retailers' sales tax or Kansas compensating (use) tax, whether the building is a residence or not.

Classify the building before deciding the labor charge

Because the labor result differs for a residence versus a general building or facility, correctly identifying the property — and the date of the work — drives the tax treatment.

Common questions

Is labor to repair hail damage taxable in Kansas?
On a building or facility, yes — hail is not one of the exempt casualties, so the repair labor is subject to Kansas retailers' sales tax.

Does it matter if the building is a residence?
Yes. On or after July 1, 1998, hail-damage repair labor on a qualifying residence is exempt under the residential remodeling exemption.

Why isn't hail covered by the casualty exemption?
The casualty-repair exemption lists fire, flood, tornado, lightning, explosion, and earthquake. Hail is not among them.

Are the repair materials exempt?
No. Materials used or consumed for hail repairs are subject to Kansas retailers' sales tax or Kansas compensating tax.

Citations and references

• The ruling states in prose that Kansas exempts repair labor for damage from fire, flood, tornado, lightning, explosion, or earthquake — but not hail — so hail-repair labor on a building or facility is taxable; and that on or after July 1, 1998, hail-repair labor on a residence is exempt under the residential remodeling exemption. Materials remain subject to Kansas retailers' sales tax or Kansas compensating tax. No numbered statute is cited.
• The Department enclosed a notice explaining the residential remodeling exemption.
• 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 21, 1998 by Mark D. Ciardullo, Tax Specialist, Kansas Department of Revenue.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1998-86

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

August 21, 1998

XXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX

Dear XXXXXXXXXXXXXXXXX:

The purpose of this letter is to respond to your letter dated July 30, 1998.

Kansas law exempts from Kansas retailers’ sales tax (“KRST”) repair services performed on buildings and facilities to repair damage caused by fire, flood, tornado, lightning, explosion, or earthquake. Materials used or consumed in these repairs are subject to KRST or Kansas compensating tax (“KCT”).

Services performed to repair hail damage to a building or facility would be subject to KRST. On and after July 1, 1998, for buildings qualify as a residences the services performed to repair the hail damage would be exempt from KRST. Materials used or consumed for hail repairs are subject to KRST or Kansas compensating tax (“KCT”).

I have enclosed a notice that explains the exemption for residential remodeling.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

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

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