Are sales made by or on behalf of a PTA or PTO exempt from Kansas sales tax, and does the exemption cover services?

Plain-English summary

The Department was asked how Kansas sales tax applies to parent-teacher associations and organizations (PTAs and PTOs). The answer distinguishes selling goods from providing services.

The exemption. "K.S.A. 79-3606(yy) exempts from sales tax: 'all sales of tangible personal property and services purchased by a parent-teacher association or organization, and all sales of tangible personal property by or on behalf of such association or organization.'"

Goods sold for the group are exempt. "[I]f the school children sell wrapping paper, candy bars, etc., on behalf of a parent-teacher association or organization, then the sale of tangible personal property would be exempt from sales tax in the state of Kansas."

Services are not. "However, if a service is rendered to the final user, by or on behalf of a parent-teacher association or organization, the respective organization would be obligated to collect the appropriate Kansas sales tax(es). The reason that the latter transaction would be subject to sales tax in this state, is that the statute exempts only the sale of tangible personal property and not the providing of a taxable service."

Bottom line: the PTA/PTO exemption has two sides. Purchases by the association and sales of goods by or for it are exempt; but a taxable service provided by or on behalf of the group is still taxable, and the group must collect the tax.

What this means for you

Fundraiser goods sold for a PTA/PTO are exempt

When students sell items like wrapping paper or candy bars on behalf of a PTA/PTO, those sales of tangible personal property are exempt under K.S.A. 79-3606(yy).

The group's own purchases are exempt too

The statute also exempts "sales of tangible personal property and services purchased by" the PTA/PTO — the buy side of the exemption.

Taxable services remain taxable

The exemption on the sell side is limited to tangible personal property. If a taxable service is provided to the final user by or on behalf of the group, the organization must collect and remit Kansas sales tax on that service.

Know which side of the line a fundraiser falls on

Selling a physical product for the group is exempt; charging for a taxable service is not. Structure and document fundraisers with that distinction in mind.

Common questions

Are candy-bar and wrapping-paper fundraisers taxable in Kansas?
No. Sales of those goods by or on behalf of a PTA/PTO are exempt sales of tangible personal property under K.S.A. 79-3606(yy).

Does the exemption cover services the group provides?
No. The statute exempts only tangible personal property on the sell side. A taxable service provided by or on behalf of the group is taxable, and the group must collect the tax.

Are the PTA/PTO's own purchases exempt?
Yes. The statute exempts sales of tangible personal property and services purchased by the association or organization.

Who collects the tax when a taxable service is involved?
The PTA/PTO — the ruling says the organization is obligated to collect the appropriate Kansas sales tax on a taxable service rendered by or on behalf of it.

Citations and references

• K.S.A. 79-3606(yy) — exempts sales of tangible personal property and services purchased by a parent-teacher association or organization, and all sales of tangible personal property by or on behalf of such association or organization.
• 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 24, 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-1998-94

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

August 24, 1998

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Dear Ms. TTTTTTT:

We wish to acknowledge receipt of your letter dated July 29, 1998, regarding the application of Kansas Retailers’ Sales tax.

This is a private letter ruling pursuant to K.A.R. 92-19-59.

K.S.A. 79-3606(yy) exempts from sales tax: “all sales of tangible personal property and services purchased by a parent-teacher association or organization, and all sales of tangible personal property by or on behalf of such association or organization.”

Please be advised that if the school children sell wrapping paper, candy bars, etc., on behalf of a parent-teacher association or organization, then the sale of tangible personal property would be exempt from sales tax in the state of Kansas. However, if a service is rendered to the final user, by or on behalf of a parent-teacher association or organization, the respective organization would be obligated to collect the appropriate Kansas sales tax(es). The reason that the latter transaction would be subject to sales tax in this state, is that the statute exempts only the sale of tangible personal property and not the providing of a taxable service.

This response private letter ruling 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 private letter 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: 09/01/1998 Date Modified: 10/11/2001

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