Does a nonprofit organization owe Kansas sales tax on its purchases of medical supplies, durable medical equipment, office supplies, and building repairs?

Plain-English summary

A nonprofit organization (whose activities involve medical supplies and durable medical equipment) asked whether it is exempt from Kansas sales tax on its purchases.

Nonprofit status alone is not enough. The Department gave its standard answer: "Many organizations, such as your [] organization, perform a great deal of services for their communities with the funds that they raise. However, not every non-profit organization enjoys an exemption from Kansas sales tax. Yours does not."

The purchases are taxable. "[Y]our organization also would be obligated to pay sales tax on purchases of medical supplies, the purchase and/or lease of durable medical equipment, office supplies, building repair costs, and etc."

Bottom line: because this organization is not one of the entities Kansas law specifically exempts, it pays sales tax like any other consumer on the supplies, equipment (bought or leased), office goods, and building-repair costs it buys.

What this means for you

Nonprofit status does not create a sales-tax exemption

Kansas exempts only specific listed entities (for example, government units and certain hospitals and schools). A general nonprofit that is not on that list pays sales tax on its purchases.

Medical supplies and equipment are taxable to this buyer

Even medical supplies and durable medical equipment are taxable purchases for this organization — whether it buys or leases the equipment — because the exemption depends on the buyer's status, which this organization does not have. (Kansas has separate, narrow exemptions that turn on how and for whom particular medical items are furnished, but they did not apply to this organization's own purchases here.)

Leases are treated like purchases

The lease of durable medical equipment is taxable the same way an outright purchase is; renting the equipment does not avoid the tax.

Office supplies and building repairs are taxable too

Ordinary operating purchases — office supplies and the cost of building repairs — are also taxable for this organization.

Common questions

Q: Is our nonprofit exempt from Kansas sales tax on what we buy?
A: Not automatically. The Department stated that "not every non-profit organization enjoys an exemption from Kansas sales tax," and this organization does not.

Q: Are medical supplies and durable medical equipment exempt for us?
A: No. The organization must pay sales tax on medical supplies and on the purchase and/or lease of durable medical equipment.

Q: What about office supplies and building repairs?
A: Those are taxable too. The organization pays sales tax on office supplies, building repair costs, and its other taxable purchases.

Citations and references

• K.S.A. 79-3603 — imposes Kansas retailers' sales tax on taxable retail sales; this organization is not within a statutory exemption, so its purchases are taxable.
• K.S.A. 79-3606 — the list of Kansas sales-tax exemptions; a general nonprofit that is not among the enumerated exempt entities does not qualify.
• 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-1999-134

Original ruling text

Private Letter Ruling

Body:

Office of Policy and Research

June 15, 1999

TTTTTTTTTTTT
TTTTTTTTTTTT
TTTTTTTTTTTT
TTTTTTTTTTTT

Dear Ms. TTTTTT:

We wish to acknowledge receipt of your letter dated June 8, 1999, regarding the application of Kansas Retailers’ Sales tax.

Many organizations, such as your TTTTTTTT organization, perform a great deal of services for their communities with the funds that they raise. However, not every non-profit organization enjoys an exemption from Kansas sales tax. Yours does not.

In closing, your organization also would be obligated to pay sales tax on purchases of medical supplies, the purchase and/or lease of durable medical equipment, office supplies, building repair costs, and etc.

This is a private letter ruling pursuant to K.A.R. 92-19-59. It 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 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: 07/06/1999 Date Modified: 10/11/2001

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