Is cable television installation subject to Kansas sales tax when done at a residence versus at a commercial building?

Plain-English summary

A cable/telecom provider asked whether cable television installation is subject to Kansas sales tax. The Department's answer turns on where the work is done: exempt at a residence, taxable at a commercial building (unless original construction).

The residential-services exemption. "1998 Senate Bill No. 493 exempts certain construction services that were formerly subject to Kansas sales tax. Effective July 1, 1998, services performed to install or apply tangible personal property are exempt from sales tax when the services involve the original construction, reconstruction, restoration, remodeling, renovation, repair or replacement of a residence." The imposition statute, K.S.A. 79-3603(p), taxes installation/application labor but carves out this residential work.

Land improvements around a home count too. The Department construes K.S.A. 79-3603(p)(4) "as exempting the land improvements that immediately surround a residence," so the residential exemption is "generally . . . coextensive with the exemption for the original construction of the residence." A land improvement qualifies if tangible personal property "has been erected upon or affixed to the land" and it is "immediately near and . . . principally serve[s] the residence." (Thus a yard fence is exempt, but a fence to corral pleasure horses, or barns and machine sheds for farm equipment, are not.) Listed examples include sidewalks, driveways, patios, fences, sodding, tree planting, utility pipes and wires, septic tanks, swimming pools, and tool sheds; repair of steps, stairs, ramps, porches, and decks is exempt whether treated as part of the residence or as a nearby land improvement.

The holding on cable installation. "[S]ervices performed at a residence, which include, but are not limited to, cable television installation[,] would not be subject to sales tax in the state of Kansas. However, if the cable television installation services[] are performed in a commercial building, the gross receipts . . . would be subject to the appropriate Kansas sales tax(es), unless the installation services are rendered in connection with the original construction of a building."

Bottom line: cable TV installation at a home (and its surrounding land improvements) is exempt; the same work at a commercial building is taxable unless it is part of the building's original construction.

What this means for you

Cable and telecom installers

Installation at a customer's residence is exempt from Kansas sales tax, including work on the land improvements immediately serving the home. Installation at a commercial building is taxable — collect Kansas sales tax on those gross receipts — unless the job is part of the original construction of the building.

The residence vs. commercial line is the key

Track where each job is performed. Residential installs, remodels, repairs, and the surrounding qualifying land improvements are exempt under the 1998 SB 493 framework; the same physical task at a business is a taxable installation service unless it is original construction.

"Land improvement" has limits

The improvement must be immediately near and principally serve the residence. A yard fence qualifies; a horse-corral fence, barns, and machine sheds do not. Apply the "principally serves the residence" test before treating surrounding work as exempt.

Common questions

Q: Is residential cable TV installation taxable in Kansas?
A: No. The Department ruled cable television installation at a residence is exempt under the 1998 residential-services exemption (K.S.A. 79-3603(p)/(p)(4)).

Q: What about installation at a business?
A: Cable installation at a commercial building is taxable under K.S.A. 79-3603(p), unless it is done in connection with the original construction of the building.

Q: Are the areas around the home covered?
A: Yes, if they are land improvements immediately near and principally serving the residence — sidewalks, driveways, fences, and the like — but not farm structures or a horse-corral fence.

Citations and references

• K.S.A. 79-3603(p) — imposes Kansas sales tax on the service of installing or applying tangible personal property, but exempts installation done in connection with the original construction of a building or facility and the original construction, reconstruction, restoration, remodeling, renovation, repair, or replacement of a residence (as expanded by 1998 Senate Bill 493). The basis for taxing commercial cable installation and exempting residential installation.
• K.S.A. 79-3603(p)(4) — the residence provision the Department construes to exempt the land improvements that immediately surround and principally serve a residence, making the residential exemption coextensive with the original-construction exemption.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2000-009

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

March 13, 2000

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RE: TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT

Dear Mr. TTTTTTTTi:

We wish to acknowledge receipt of your letter dated March 1, 2000, regarding the application of Kansas Retailers’ Sales tax.

1998 Senate Bill No. 493 exempts certain construction services that were formerly subject to Kansas sales tax. Effective July 1, 1998, services performed to install or apply tangible personal property are exempt from sales tax when the services involve the original construction, reconstruction, restoration, remodeling, renovation, repair or replacement of a residence.

K.S.A. 79-3603(p) imposes a sales tax upon: “the gross receipts received for the service of installing or applying tangible personal property which when installed or applied is not being held for sale in the regular course of business, and whether or not such tangible personal property when installed or applied remains tangible personal property or becomes a part of real estate, except that no tax shall be imposed upon the service of installing or applying tangible personal property in connection with the original construction of a building or facility, the original construction, reconstruction, restoration, remodeling, renovation, repair or replacement of a residence or the construction, reconstruction, restoration, replacement, remodeling, restoration, renovation or reconstruction, restoration, replacement or repair of a bridge or highway. . .”

The department has determined that it will construe and administer K.S.A. 79-3603(p)(4) as exempting the land improvements that immediately surround a residence. This means the exemption for residential repair and remodeling services generally will be coextensive with the exemption for the original construction of the residence.

The test for whether something is a “land improvement” shall be whether tangible personal property has been erected upon or affixed to the land. To qualify as residential, the land improvement must be immediately near and must principally serve the residence. This means that repairs to a yard fence are exempt but that repairs to a fence designed to corral pleasure horses are not. Barns and machine sheds for farm equipment shall not be considered to be land improvement that principally serve the residence.

Land improvements shall include, but not be limited to, sidewalks, driveways, patios, fences, sodding, tree planting, utility pipes and wires, septic tanks, swimming pools, and tool sheds. Repair services to structures such as steps, stairs, access ramps, porches, and decks shall be exempt whether they are considered to be part of the residence because they are attached to it, or a land improvement because they are immediately nearby.

Please be advised that services performed at a residence, which include, but are not limited to, cable television installation would not be subject to sales tax in the state of Kansas. However, if the cable television installation services, are performed in a commercial building, the gross receipts received from the respective service would be subject to the appropriate Kansas sales tax(es), unless the installation services are rendered in connection with the original construction of a building.

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: 03/28/2000 Date Modified: 10/11/2001

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