Does a private elementary or secondary school qualify for a Kansas sales-tax exemption on its purchases and construction projects?

Plain-English summary

A private school asked whether it qualifies for a Kansas sales-tax exemption. Based on the school's brochure, the Department concluded that it falls within the definition of a "private elementary or secondary school" and qualifies.

Direct purchases — K.S.A. 79-3606(c). This subsection exempts "all sales of tangible personal property or services, including the renting and leasing of tangible personal property, purchased directly by a public or private elementary or secondary school or public or private nonprofit educational institution and used primarily by such school or institution for nonsectarian programs and activities provided or sponsored by such school or institution or in the erection, repair or enlargement of buildings to be used for such purposes." Important limit: "The exemption herein provided shall not apply to erection, construction, repair, enlargement or equipment of buildings used primarily for human habitation."

The holding on direct purchases. "[P]ursuant to K.S.A. 79-3606(c), your school qualifies for exemption from sales tax on direct purchases."

Construction projects — K.S.A. 79-3606(d). The Department added that under K.S.A. 79-3606(d), which covers "all sales of tangible personal property or services purchased by a contractor for the purpose of constructing, equipping, reconstructing, maintaining, repairing, enlarging, furnishing or remodeling facilities," the "school can qualify for exemption on construction projects if a project exemption certificate is first obtained."

Bottom line: the school is exempt. It uses an ordinary exemption certificate for its routine direct purchases, and a project exemption certificate to extend the exemption to a contractor's purchases on a construction or remodeling project — but not for buildings used primarily as living quarters.

What this means for you

Qualifying private schools are exempt on direct purchases

A public or private elementary or secondary school (or a public/private nonprofit educational institution) is exempt on the tangible personal property and services it buys directly, when used primarily for the school's nonsectarian programs and activities. Present an exemption certificate to vendors for those purchases.

Construction is covered through a project exemption certificate

The direct-purchase exemption is not the mechanism for a contractor's materials. To make a construction, equipping, repair, or remodeling project tax-free, the school must obtain a project exemption certificate under K.S.A. 79-3606(d) before the work; the contractor then buys project materials tax-free on the school's behalf.

The "human habitation" limit

The exemption does not apply to the erection, construction, repair, enlargement, or equipping of buildings used primarily for human habitation. Dormitory or residential-type facilities fall outside the exemption even for an otherwise-exempt school.

Two certificates, two purposes

Use an ordinary exemption certificate for routine school purchases; use a project exemption certificate for construction projects. Matching the right certificate to the purchase keeps both the school and its contractors properly exempt.

Common questions

Q: Is a private elementary or secondary school exempt from Kansas sales tax?
A: Yes, if it qualifies. Under K.S.A. 79-3606(c) the school is exempt on direct purchases of property and services used primarily for its nonsectarian programs and activities.

Q: How does the exemption apply to a building project?
A: Through a project exemption certificate under K.S.A. 79-3606(d). Once obtained before the work, the contractor's purchases for constructing, equipping, repairing, or remodeling the school's facilities are exempt.

Q: Are there limits on the exemption?
A: Yes. It does not apply to the erection, construction, repair, enlargement, or equipping of buildings used primarily for human habitation.

Citations and references

• K.S.A. 79-3606(c) — exempts direct purchases of tangible personal property and services (including rentals/leases) by a public or private elementary or secondary school or nonprofit educational institution, used primarily for nonsectarian programs and activities; excludes buildings used primarily for human habitation.
• K.S.A. 79-3606(d) — exempts a contractor's purchases for constructing, equipping, reconstructing, maintaining, repairing, enlarging, furnishing, or remodeling an exempt entity's facilities, accessed through a project exemption certificate.
• 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-1999-132

Original ruling text

Private Letter Ruling

Body:

Office of Policy and Research

June 8, 1999

XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX

Re: Kansas Sales Tax

Dear XXXXX:

Thank you for your correspondence of May 20, 1999. The information you provided was most helpful.

As you may know, the Kansas retailers’ sales tax is imposed by K.S.A. 79-3603. Exemptions from sales tax are found in K.S.A. 79-3606. Subsection (c) of the statute provides an exemption for:

(c) all sales of tangible personal property or services, including the renting and leasing of tangible personal property, purchased directly by a public or private elementary or secondary school or public or private nonprofit educational institution and used primarily by such school or institution for nonsectarian programs and activities provided or sponsored by such school or institution or in the erection, repair or enlargement of buildings to be used for such purposes. The exemption herein provided shall not apply to erection, construction, repair, enlargement or equipment of buildings used primarily for human habitation;

Based on the information contained in the brochure you provided to us, we believe your school falls within the definition of a “private elementary or secondary school”. As a result, pursuant to K.S.A. 79-3606(c), your school qualifies for exemption from sales tax on direct purchases. In addition, pursuant to K.S.A. 79-3606(d) which provides that, “all sales of tangible personal property or services purchased by a contractor for the purpose of constructing, equipping, reconstructing, maintaining, repairing, enlarging, furnishing or remodeling facilities”, your school can qualify for exemption on construction projects if a project exemption certificate is first obtained.

For your convenience, I have enclosed a booklet which provides additional information on the use of exemption certificates (for routine purchases) and project exemption certificates (for construction projects).

This 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 make an accurate determination by the department, this ruling is null and void. This private letter ruling will be revoked in the future by operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or a published revenue ruling, that materially affects this private letter ruling.

I trust this information is of assistance. If I can be of further service, please feel free to contact me.

Sincerely,

Jim Weisgerber
Attorney
Tax Specialist

JW:jw

Enc.: Kansas Exemption Certificates Booklet

Date Composed: 06/22/1999 Date Modified: 10/11/2001

Table 1

Table 2