Is a taxable service performed in Kansas exempt if the customer is in another state and the contract was signed out of state?

Plain-English summary

A business asked whether a taxable service performed in Kansas would be exempt if the purchaser is located in another state and the contract for the services was executed in another state.

The Department's answer was a flat no. Kansas retailers' sales tax applies to taxable services performed in Kansas. The situs (location) of the purchaser and the situs of the contract's acceptance or execution are irrelevant. In other words, an out-of-state customer or an out-of-state signing does not move a Kansas-performed taxable service outside the reach of Kansas sales tax.

What this means for you

If you perform taxable services in Kansas, the place of performance — not paperwork or customer address — drives the tax.

• Performance location controls. A taxable service physically performed in Kansas is subject to Kansas sales tax.
• Customer's home state doesn't exempt it. Selling to an out-of-state purchaser does not make a Kansas-performed taxable service exempt.
• Where you sign doesn't matter. Executing or accepting the contract in another state has no effect on the taxability of a service performed in Kansas.
• First ask whether the service is taxable at all. This ruling assumes the service is a taxable one; Kansas taxes only enumerated services, so confirm the service type before collecting. (Compare P-1999-24's mirror image in rulings holding that services performed outside Kansas are not Kansas-taxable.)

Common questions

Is a service taxable in Kansas if my customer is in another state?
Yes, if the taxable service is performed in Kansas. The purchaser's out-of-state location does not exempt it.

Does signing the contract out of state change anything?
No. The Department said the situs of the contract's acceptance or execution is irrelevant to whether a Kansas-performed taxable service is taxed.

What actually determines taxability here?
Where the taxable service is performed. A taxable service performed in Kansas is subject to Kansas retailers' sales tax.

What if the service is performed outside Kansas?
This ruling addresses services performed in Kansas. Services performed outside Kansas raise a different question; the location of performance is the key fact the Department focused on.

Citations and references

• Kansas Retailers' Sales Tax Act (taxable services) — Kansas retailers' sales tax applies to taxable services performed in Kansas; the situs of the purchaser and the situs of the contract's acceptance or execution are irrelevant to that result.

Source

• Original ruling (DOCX): https://www.ksrevenue.gov/pildocs/rulings/P-1999-24.docx
• Kansas Policy Information Library: https://www.ksrevenue.gov/prpil.html

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

February 26, 1999

XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX
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Dear XXXXXXXXXXX:

I have been asked to respond to your letter of February 9, 1999. In it, you ask if a taxable service that is performed in Kansas would be exempt if the purchaser is located in another state and the contract for services is executed in another state.

No, Kansas retailers’ sales tax applies to taxable services performed in Kansas. The situs of the purchaser and situs of the contact acceptance or contract execution are irrelevant.

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

Date Composed: 03/01/1999 Date Modified: 10/11/2001

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