Does an out-of-state manufacturer that ships to Kansas customers only by common carrier, with no Kansas employees or property, have nexus to collect Kansas tax?

Plain-English summary

A Texas company that manufactures scented candles had received a Kansas information notice about the duties Kansas law imposes on suppliers of multi-level distributors, and was advised to seek a private letter ruling. Its representative laid out the facts: the company sells only to wholesalers, has no agreement controlling how customers resell, does not advertise, takes orders by phone or fax, fills them in Texas, and ships them to customers "by common carrier (UPS)." Critically, it "does not have any employees in Kansas nor do they have anyone travel to Kansas to obtain customers."

The ruling — no nexus. "It is the opinion of the Department that your client has not established sufficient contact with persons within the State of Kansas to create nexus for Kansas sales/use tax purposes." The Department summed up the test: "the client does not have nexus if they and their agents never enter Kansas to do business, have no property rights in the state and send all their goods to Kansas residents by mail, UPS, or by some other common carrier."

Bottom line: an out-of-state seller whose only connection to Kansas is shipping goods in by common carrier — no in-state people, no in-state property — lacks nexus, and so has no obligation to register for or collect Kansas sales or use tax. (The ruling addresses only whether the supplier has a collection duty; it does not relieve Kansas purchasers of any use-tax responsibility of their own.)

What this means for you

Out-of-state sellers shipping into Kansas

If your only tie to Kansas is delivering goods by common carrier or mail, with no employees or agents entering the state and no property here, this ruling indicates you do not have nexus for Kansas sales/use tax and no duty to collect it. Keep records showing the absence of in-state people and property.

The connections that create nexus are people and property

The Department focused on whether the seller or its agents enter Kansas and whether it holds property rights in the state. Sending in a salesperson, holding inventory, or otherwise establishing a physical presence can change the answer.

This is a pre-Wayfair physical-presence ruling

This 1999 ruling reflects the physical-presence framework of its time. Since then, economic-nexus rules (following the Wayfair decision) have expanded when remote sellers must collect tax based on sales volume alone. Confirm current Kansas remote-seller thresholds before relying on a no-nexus conclusion today.

Common questions

Q: Does shipping goods into Kansas by UPS or mail create nexus?
A: Not by itself. The Department ruled that an out-of-state seller with no in-state employees, agents, or property, whose only contact is shipping by common carrier or mail, has not created Kansas nexus.

Q: What did the Department say the nexus test turns on?
A: Whether the seller or its agents ever enter Kansas to do business and whether it has property rights in the state. A seller lacking both, shipping only by common carrier, has no nexus.

Q: Does no nexus mean no Kansas tax is ever owed on these sales?
A: It means the out-of-state supplier has no duty to collect. It does not address a Kansas purchaser's own potential use-tax obligation. Also, later economic-nexus rules may require collection today.

Citations and references

• The Department did not cite a specific statute; it applied the nexus standard directly, concluding that an out-of-state seller with no Kansas employees, agents, or property, shipping only by common carrier or mail, lacks sufficient contact to create Kansas sales/use tax nexus. Because no statute is quoted in the ruling itself, none is listed above.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1999-261

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

December 9, 1999

XXXXXXXX
XXXXXXXXXXXXX
XXXXXXXXXX

Dear Sirs:

I have been asked to answer your letter that we received earlier this year. Your client had received an information notice dated May 14, 1999. The notice informs multi-level distributors of the duties Kansas law imposes on their supplier.

In your letter you stated:

Our client, XXXXXX received the attached letter from Linda Stumbaugh of the Business Tax Bureau advising them to write for a private letter ruling on the tax issues surrounding their business.

XXXX manufactures scented candles in XXXXXX, Texas. Their customers find out about XXXXXX though retail locations or by word of mouth. They do not advertise. Their customers call or fax orders directly to XXXXXXXXXX. The orders are filled in XXXXXX and shipped by common carrier (UPS) to the customers’ address.

This is not a multi-level marketing company, all sales are made to wholesalers and there is not an agreement or contract between XXXXXX and their customers. XXXXX has no control over how their customers resell the candles.

XXXXXXXX does not have any employees in Kansas nor do they have anyone travel to Kansas to obtain customers. They have not created nexus in Kansas.

It is the opinion of the Department that your client has not established sufficient contact with persons within the State of Kansas to create nexus for Kansas sales/use tax purposes.

In closing, the client does not have nexus if they and their agents never enter Kansas to do business, have no property rights in the state and send all their goods to Kansas residents by mail, UPS, or by some other common carrier.

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 affects this private letter ruling.

Sincerely,

Mark D. Ciardullo
Tax Specialist

cc: Linda Stumbaugh

Date Composed: 12/20/1999 Date Modified: 10/11/2001

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