Is a motor vehicle sold or leased in Kansas to an out-of-state resident subject to Kansas sales tax?

Plain-English summary

A vehicle seller/lessor asked how Kansas sales tax applies to a motor vehicle sold or leased to an out-of-state resident. The Department ruled the transaction is exempt when the statutory conditions are met.

The nonresident-vehicle exemption. Under K.S.A. 79-3606(k), Kansas exempts "any motor vehicle, semitrailer or pole trailer, as such terms are defined by K.S.A. 8-126 . . . or aircraft sold and delivered in this state to a bona fide resident of another state, which . . . is not to be registered or based in this state and which . . . will not remain in this state more than 10 days."

How it applies here. The Department advised that if a motor vehicle "is sold or leased and delivered in this state to a bona fide resident of another state," and "is not to be registered or based in this state or will not remain in this state more than 10 days," then "the ultimate retail sale or lease of said vehicle would not be subject to any Kansas sales tax(es)."

Bottom line: a Kansas sale or lease to a genuine out-of-state resident is exempt under K.S.A. 79-3606(k) when the vehicle will not be registered or based in Kansas and will not stay in the state more than 10 days.

What this means for you

Dealers and lessors selling to nonresidents

A sale or lease delivered in Kansas to a bona fide resident of another state can be exempt from Kansas sales tax under K.S.A. 79-3606(k) - covering motor vehicles, semitrailers, pole trailers, and aircraft.

The conditions are strict - document them

The exemption depends on the vehicle not being registered or based in Kansas and not remaining in the state more than 10 days. Keep records establishing the buyer's out-of-state residency and that these conditions are met.

"Bona fide resident of another state" matters

The buyer must genuinely be a resident of another state. If the facts do not support that (or the vehicle stays/registers in Kansas), the exemption does not apply.

Common questions

Q: Is a vehicle sold in Kansas to an out-of-state resident taxable?
A: No, if the conditions of K.S.A. 79-3606(k) are met - the buyer is a bona fide nonresident, and the vehicle is not registered or based in Kansas and will not remain there more than 10 days.

Q: Does the exemption cover leases too?
A: Yes. The Department applied it to a vehicle "sold or leased and delivered in this state" to a nonresident.

Q: What types of property qualify?
A: Motor vehicles, semitrailers, pole trailers (as defined by K.S.A. 8-126), and aircraft.

Citations and references

• K.S.A. 79-3606(k) - exempts from Kansas sales tax a motor vehicle, semitrailer, pole trailer (as defined by K.S.A. 8-126), or aircraft sold and delivered in Kansas to a bona fide resident of another state, where the property is not to be registered or based in Kansas and will not remain in the state more than 10 days. The Department applied it to both a sale and a lease meeting these conditions.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2001-031

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

April 3, 2001

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Dear Mr. TTTTTT:

We wish to acknowledge receipt of your letter dated April 3, 2001, regarding the application of Kansas Retailers’ Sales tax.

K.S.A. 79-3606(k) exempts from sales tax: “any motor vehicle, semitrailer or pole trailer, as such terms are defined by K.S.A. 8-126 and amendments thereto, or aircraft sold and delivered in this state to a bona fide resident of another state, which motor vehicle, semitrailer, pole trailer or aircraft is not to be registered or based in this state and which vehicle, semitrailer, pole trailer or aircraft will not remain in this state more than 10 days. . .”

Please be advised if motor vehicle is sold or leased and delivered in this state to a bona fide resident of another state, and the respective motor vehicle is not to be registered or based in this state or will not remain in this state more than 10 days, the ultimate retail sale or lease of said vehicle would not be subject to any Kansas sales tax(es).

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

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