Which office design, installation, furniture-moving, and storage charges are subject to Kansas sales tax?

Plain-English summary

A provider of office design, layout, and furniture services listed several charges and asked which are subject to Kansas sales tax. The Department split them: design and certain labor are exempt, but installation services are taxable.

Design/layout services are not taxable. "Design services for the layout of existing or new offices would not be subject to Kansas sales tax(es)." Planning how to lay out an office is a nontaxable service.

Installation services (items 2-7) are taxable. The Department held that "Items 2, 3, 4, 5, 6 & 7 would be subject to Kansas sales tax, pursuant to K.S.A. 79-3603(p)," which taxes the service of installing or applying tangible personal property.

Moving existing furniture is not taxable. "[L]abor services rendered to move existing furniture would not be subject to Kansas sales tax(es)." Rearranging or relocating furniture the customer already owns is not a taxable installation.

Out-of-state labor and storage fees are not taxable. "[L]abor services that are performed out-of-state would not be subject to Kansas sales tax(es)," and "the storage fees would not be subject to sales tax in the state of Kansas."

Project exemption certificates for tax-exempt customers. "Tax exempt entities, such as the federal government may secure a project exemption certificate from the state of Kansas, which will allow the contractor to purchase labor and materials tax exempt for the respective project."

Bottom line: design/layout, furniture-moving labor, out-of-state labor, and storage fees are not taxed; the installation services (items 2-7) are taxable under K.S.A. 79-3603(p) - unless the customer is a tax-exempt entity that furnishes a project exemption certificate.

What this means for you

Office design, layout, and installation providers

Design and layout work is a nontaxable service, as is the labor to move existing furniture, any labor performed out-of-state, and storage fees. But your installation services - installing or applying tangible personal property - are taxable under K.S.A. 79-3603(p). Separate the design and moving charges from the taxable installation charges on your invoices.

Selling to a tax-exempt customer

If your customer is a tax-exempt entity (for example, the federal government), it can obtain a project exemption certificate from Kansas that lets you buy the labor and materials for that project tax-exempt. Get the certificate before the project.

The rule for services turns on installation

The taxable line here is installation of tangible personal property. Services that are pure design, relocation of existing property, out-of-state labor, or storage fall outside that and are not taxed.

Common questions

Q: Are office design and layout services taxable in Kansas?
A: No. The Department ruled that design services for the layout of existing or new offices are not subject to Kansas sales tax.

Q: What about installing the furniture or fixtures?
A: Installation services (the taxpayer's items 2-7) are taxable under K.S.A. 79-3603(p).

Q: Is moving existing furniture or storing it taxable?
A: No. Labor to move existing furniture, out-of-state labor, and storage fees are not subject to Kansas sales tax.

Citations and references

• K.S.A. 79-3603(p) - imposes Kansas sales tax on the service of installing or applying tangible personal property; the Department applied it to make the listed installation services (items 2-7) taxable. By contrast, design/layout services, labor to move existing furniture, out-of-state labor, and storage fees are not taxed, and a tax-exempt customer may furnish a project exemption certificate so the contractor can buy labor and materials for the project tax-exempt.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2001-023

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

February 21, 2001

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Dear Ms. TTTTT:

We wish to acknowledge receipt of your letter dated February 13, 2001, regarding the application of Kansas Retailers’ Sales tax.

Design services for the layout of existing or new offices would not be subject to Kansas sales tax(es).

Items 2, 3, 4, 5, 6 & 7 would be subject to Kansas sales tax, pursuant to K.S.A. 79-3603(p). However, labor services rendered to move existing furniture would not be subject to Kansas sales tax(es).

Tax exempt entities, such as the federal government may secure a project exemption certificate from the state of Kansas, which will allow the contractor to purchase labor and materials tax exempt for the respective project.

In closing, labor services that are performed out-of-state would not be subject to Kansas sales tax(es). Additionally, the storage fees would not be subject to sales tax in the state of Kansas.

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: 04/03/2001 Date Modified: 10/11/2001

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