Is a fuel surcharge added to a customer's bill subject to Kansas sales tax?

Plain-English summary

A business asked whether a fuel surcharge on its billing is subject to Kansas sales tax. The Department said yes — the surcharge is part of the taxable total invoice.

The imposition and the tax base. The letter quoted the retail-sales imposition — printed in the ruling as "K.S.A. 79-3606(a)" — that "a sales tax [applies] 'upon the gross receipts received from the sale of tangible personal property at retail within this state.'" (That quoted retail-sales imposition is codified at K.S.A. 79-3603(a); the ruling prints the section number as 79-3606(a), reproduced here as written.) "Gross receipts" is "the total selling price . . . from sales at retail," and K.S.A. 79-3602(g) defines "selling price" as "the total cost to the consumer exclusive of discounts allowed and credited, but including freight and transportation charges from the retailer to the consumer."

The holding. "[I]t would be appropriate for the retailer to collect and remit Kansas sales tax on the total invoice amount, which would include, but not limited to, fuel surcharges." Because the surcharge is part of the total the customer pays — and a fuel surcharge is a transportation-type cost of getting the goods to the buyer — it falls inside the taxable selling price.

Bottom line: a fuel surcharge is not a tax-free add-on. Tax the whole invoice, surcharge included.

What this means for you

Businesses that add fuel surcharges

Include the fuel surcharge in the amount you tax. Like other delivery and transportation charges, it is part of the selling price and gross receipts under K.S.A. 79-3602(g), so Kansas sales tax applies to the total invoice, not just the base price of the goods.

Labeling doesn't change the result

Whether you call it a "fuel surcharge," "delivery fee," or "transportation charge," a charge from the retailer to the consumer that is part of the total cost of the sale is taxable. The tax follows the substance of the charge.

Consistent with Kansas's broader delivery-charge rule

Kansas repeatedly treats freight, delivery, and surcharge line items as part of the taxable selling price. Build them into your taxable base by default unless a specific exemption applies.

Common questions

Q: Is a fuel surcharge taxable in Kansas?
A: Yes. The Department ruled the retailer collects Kansas sales tax on the total invoice, including fuel surcharges, because they are part of the taxable selling price.

Q: Why is the surcharge taxed with the goods?
A: "Selling price" under K.S.A. 79-3602(g) is the total cost to the consumer, including freight and transportation charges from the retailer to the consumer — a fuel surcharge is that kind of charge.

Q: The ruling cites "79-3606(a)" — is that the imposition statute?
A: The ruling quotes the standard retail-sales imposition but prints the number as 79-3606(a); that imposition on retail sales is codified at K.S.A. 79-3603(a). The taxable result is unaffected by the citation slip.

Citations and references

• K.S.A. 79-3606(a) — cited in the ruling for the imposition of sales tax "upon the gross receipts received from the sale of tangible personal property at retail within this state." That quoted retail-sales imposition is codified at K.S.A. 79-3603(a); the ruling prints the section number as 79-3606(a), reproduced here as written.
• K.S.A. 79-3602(g) — defines "selling price" as the total cost to the consumer, including freight and transportation charges from the retailer to the consumer; the basis for taxing the fuel surcharge as part of the total invoice.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2000-013

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

March 29, 2000

TTTTTTTTTTT
TTTTTTTTTTT
TTTTTTTTTTT

Dear Ms. TTTTTT:

We wish to acknowledge receipt of your e-mail dated March 28, 2000, regarding the application of Kansas Retailers’ Sales tax.

K.S.A. 79-3606(a) imposes a sales tax: "upon the gross receipts received from the sale of tangible personal property at retail within this state."

"Gross receipts" means the total selling price or the amount received as defined in the Kansas Retailers' Sales Tax Act, in money, credits, property or other consideration valued in money from sales at retail within this state.

K.S.A. 79-3602(g) defines the "selling price" to be: "the total cost to the consumer exclusive of discounts allowed and credited, but including freight and transportation charges from the retailer to the consumer."

Please be advised that it would be appropriate for the retailer to collect and remit Kansas sales tax on the total invoice amount, which would include, but not limited to, fuel surcharges.

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: 04/11/2000 Date Modified: 10/11/2001

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