Is an outside vendor's service of cleaning (waterblasting) a storage tank at a manufacturing facility subject to Kansas sales tax?

Plain-English summary

A chemical manufacturing facility asked whether an outside vendor's service of cleaning (bringing in equipment to clean and/or waterblast the inside of a storage tank used for finished product or raw materials) is subject to Kansas sales tax — and, if exempt, which exemption certificate to give the vendor. The Department ruled the cleaning service is not taxable.

The taxing statute — and its limit. K.S.A. 79-3603(q) imposes sales tax on "the gross receipts received for the service of repairing, servicing, altering or maintaining tangible personal property," and it expressly reaches such services on property "fastened to, connected with or built into real property." The question was whether cleaning a tank falls within "servicing" or "maintaining."

Cleaning is not "maintaining." The Department relied on the Kansas Court of Appeals decision in In re Tax Appeal of R & R Janitor Service, 9 Kan. App. 2d 500 (1984), which held that "maintaining" means keeping in repair or replacing and is not synonymous with "cleaning." The court explained that janitorial-type cleaning services — vacuuming, dusting, washing windows, emptying trash — do not constitute "servicing or maintaining an item of tangible personal property" within the meaning of the statute.

Result — exempt, no certificate needed. Applying that reasoning, the Department concluded the gross receipts from cleaning storage tanks are exempt from Kansas sales tax. Because it is a non-taxable service, no exemption certificate is needed.

Bottom line: cleaning (including waterblasting) a storage tank is a nontaxable service in Kansas — it is not "repairing, servicing, altering or maintaining" tangible personal property under 79-3603(q) — so the vendor should not charge tax and no certificate is required.

What this means for you

Businesses buying cleaning services

Cleaning — including industrial tank cleaning and waterblasting — is not a taxable service in Kansas, even when the item cleaned is connected to or built into real property. If a vendor charges sales tax on a pure cleaning service, that tax generally is not due; because the service is nontaxable, no exemption certificate is required.

Cleaning vendors and service providers

If your service is genuinely cleaning (not repairing, servicing, altering, or maintaining), your receipts are not subject to Kansas sales tax under the R & R Janitor Service rule. Be careful, though, if a job also includes taxable repair, servicing, or maintenance — those elements can be taxable, so keep cleaning distinct from taxable work.

Know the cleaning-vs-maintenance line

The exemption turns on the distinction the court drew: "maintaining" = keeping in repair or replacing, which is taxable under 79-3603(q); "cleaning" is neither and is nontaxable. Classify mixed jobs by what is actually being done.

Common questions

Q: Is cleaning or waterblasting a storage tank taxable in Kansas?
A: No. The Department ruled the gross receipts from cleaning storage tanks are exempt; cleaning is not "servicing or maintaining" tangible personal property under 79-3603(q).

Q: Do we need to give the vendor an exemption certificate?
A: No. Because the cleaning service is non-taxable, no exemption certificate is needed.

Q: What's the difference between exempt cleaning and taxable maintenance?
A: Under In re Tax Appeal of R & R Janitor Service, "maintaining" means keeping in repair or replacing (taxable under 79-3603(q)), while "cleaning" is not maintenance and is nontaxable.

Citations and references

• K.S.A. 79-3603(q) — imposes sales tax on the service of repairing, servicing, altering, or maintaining tangible personal property, including property fastened to or built into real property; the statute the Department analyzed and found does not reach cleaning.
• In re Tax Appeal of R & R Janitor Service, 9 Kan. App. 2d 500 (1984) — Kansas Court of Appeals decision holding that "maintaining" means keeping in repair or replacing and is not synonymous with "cleaning"; the basis for treating tank cleaning as nontaxable.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2001-062

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

June 22, 2001

XXXXXXXXXXXXX
XXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXX

Dear XXXXXXXXXX:

The purpose of this letter is to respond to your letter dated May 31, 2001. In it, you ask if the service of cleaning a storage tank is exempt from Kansas retailers’ sales tax.

In your letter you stated:

We would like to request a private letter ruling pertaining to the taxability of cleaning storage tanks in a chemical manufacturing facility.

An outside vendor would bring in equipment to clean and/or waterblast the inside of a storage tank used to hold either finished product or raw materials. If this activity is tax exempt, which exemption certificate should be provided to the vendor?

Please advise the statute that covers the ruling. Thank you very much for your consideration of this matter.

K.S.A. 79-3603(q) imposes a sales tax on, “the gross receipts received for the service of repairing, servicing, altering or maintaining tangible personal property. . . which when such services are rendered is not being held for sale in the regular course of business, and whether or not any tangible personal property is transferred in connection therewith. The tax imposed by this subsection shall be applicable to the services of repairing, servicing, altering or maintaining an item of tangible personal property which has been and is fastened to, connected with or built into real property”

In Re Tax Appeal of R & R Janitor Service, 9 Kan. App. 2d 500, 505 (1984) (“Maintaining” is keeping in repair or replacing, and is not synonymous with "cleaning").

The Court stated in part:

“R & R Janitor Service performed various cleaning services such as vacuuming, dusting, cleaning bathrooms, washing windows, and emptying trash. We find that a requirement in an ordinance of a duty ‘to maintain’ does not impose a duty of keeping siphons clean, since ‘to maintain’ is to ‘keep in repair or replace.’ Janitor work is not maintenance under a statute designating a fund for ‘purchasing, constructing, repairing and maintaining buildings for public school purposes; maintenance meaning holding, keeping or preserving them in their existing state or condition.’ The Nevada court held provisions in a contract for ‘repair and maintenance’ did not require parties to keep alleys clean, but did require keeping the alley's surfaces in their original condition. Cleaning services do not constitute ‘servicing or maintaining an item of tangible personal property which has been fastened to, connected with our built into real property’ within the meaning of that statute.”

It is the opinion of the Kansas Department of Revenue the gross receipts from the service of cleaning storage tanks is exempt from Kansas retailers’ sales tax. Since this is a non-taxable service, no exemption certificate is needed. If your service provider will not exempt his service please have him contact me at 785-296-5330.

This private letter ruling is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to make an accurate determination by the department, this ruling is null and void. This private letter ruling will be revoked in the future by operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or a published revenue ruling, that materially affects this private letter ruling.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

Date Composed: 06/26/2001 Date Modified: 10/11/2001

Table 1

Table 2