Must an out-of-state manufacturer with no property or employees in Kansas file a Kansas corporate income tax return?

Plain-English summary

An out-of-state company that manufactures fixtures asked the Department to "verify [its] Kansas tax obligations."

The facts. The company "makes [ ] fixtures, which we sell FOB [ ], Arizona, to hotels and motels" in Kansas, where "[t]hese fixtures are attached to real property as a capital improvement." The company represented that it has no "physical location in Kansas," "does not own or rent any real or personal property that is located in Kansas," and "does not have or maintain any inventory or employees in Kansas."

The holding. "Based on the facts of this letter, it is the opinion of the Kansas Department of Revenue that the company is not required to file Kansas income tax returns."

Why the facts matter. The sales are made FOB Arizona — meaning the sale is completed out of state — and the company has no physical presence in Kansas: no location, no property (real or personal), no inventory, and no employees in the state. With no such in-state connection, the Department found no Kansas corporate income tax return was required.

A separate, non-tax point. The letter records that the company had been told it "did not need to register with the Secretary of State as a foreign corporation," but the Department indicated it would check the Secretary of State's registration requirements. Secretary of State registration is a separate matter from income tax filing.

Bottom line: an out-of-state manufacturer that sells FOB out of state and has no Kansas location, property, inventory, or employees is not required to file a Kansas corporate income tax return on these facts.

What this means for you

Physical presence still drives the analysis here

On these 1999 facts, the absence of any Kansas location, property, inventory, or employees was decisive. If your business has none of those in-state connections and completes its sales out of state, a Kansas income tax return may not be required — but the answer is fact-specific.

FOB terms and delivery point matter

Selling "FOB [origin]" means the sale is completed out of state. Where and how title and delivery pass can affect whether a state treats you as doing business there. Document your shipping terms.

Registration is not the same as tax filing

Whether you must register with the Secretary of State as a foreign corporation is a different question from whether you owe or must file a tax return. Confirm each separately; being told you need not register does not resolve your tax obligations, and vice versa.

Common questions

Q: Did the company have to file a Kansas corporate income tax return?
A: No. "Based on the facts of this letter," the Department's opinion was "that the company is not required to file Kansas income tax returns."

Q: What facts drove that result?
A: The company sold "FOB [ ], Arizona," and had no Kansas physical location, no real or personal property in Kansas, and no inventory or employees in the state.

Q: Does this ruling settle whether the company must register with the Secretary of State?
A: No. Registration with the Secretary of State is a separate requirement from income tax filing; the letter treats it as its own question.

Citations and references

• The Department reached its conclusion on the facts presented — no physical location, property, inventory, or employees in Kansas, with sales made FOB Arizona — and did not cite a specific Kansas statute in the ruling.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1999-170

Original ruling text

Private Letter Ruling

Body:

Office of Policy and Research

August 2, 1999

XXXXXXXXXXXX
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XXXXXXXXXXXXXX
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Dear XXXXXXXXXXXXX:

I have been asked to respond to your letter received by this office on July 26, 1999. In it, you request a private letter ruling to verify your Kansas tax obligations.

In your letter you stated:

Our company makes XXXXXXXXXXX fixtures, which we sell FOB XXXXXX, Arizona, to hotels and motels in your state. These fixtures are attached to real property as a capital improvement. We do not have a physical location in Kansas.

In registering with your state, we were told we did not need to register with the Secretary of State as a foreign corporation and would not be required to file a corporate tax return.

When we spoke on the phone you indicated that you would call the Secretary of State to comply with their registration requirements.

You indicated that the company does not own or rent any real or personal property that is located in Kansas. The company does not have or maintain any inventory or employees in Kansas.

Based on the facts of this letter, it is the opinion of the Kansas Department of Revenue that the company is not required to file Kansas income tax returns.

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.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC: mdc

Date Composed: 08/04/1999 Date Modified: 10/10/2001

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