Are a business's purchases of bills of lading and packing slips subject to Kansas sales tax?

Plain-English summary

A business asked whether its purchases of bills of lading and packing slips are subject to Kansas sales tax. The Department's answer: yes, they are taxable.

The general rule for business forms. Purchases by retailers and manufacturers of sales tickets, cash-register receipt paper, invoice forms, bills of lading forms, and other forms used in receipting, billing, and invoicing are taxable. These are consumables the business buys and uses to run its operations, so tax applies when the business buys them.

Why the ingredient/component-part exemption doesn't help. Kansas exempts, as ingredient or component parts, things like containers, shipping cases, packing materials, and other items necessary for shipping items being sold at retail (because they travel with and become part of the delivered product). But that exemption does not extend to items the retailer uses to bill consumers, or that a wholesaler uses to bill retailers buying goods for resale. The key distinction the Department drew: billing/tracking forms are not part of the containers or packing for the goods — they are used by the retailer or wholesaler to bill and track their sales. Because they serve the seller's recordkeeping rather than becoming part of the product shipped to the customer, they fall outside the packing-materials exemption and are taxable.

What this means for you

Retailers, wholesalers, and manufacturers

Treat your purchases of billing and recordkeeping forms — invoices, receipts, sales tickets, bills of lading, packing slips — as taxable. Pay Kansas sales tax (or accrue use tax) when you buy them; they are business consumables, not exempt packing materials.

Know where the packing-materials exemption stops

The ingredient/component-part exemption is for materials that accompany and become part of the shipped product (containers, shipping cases, packing). A packing slip may travel in the box, but the Department treats these forms as billing/tracking documents used by the seller — not exempt packing — so they don't qualify.

The test is function, not location

Even a form placed inside a shipment (a packing slip) is taxable if its function is to bill or track the sale. Ask whether the item becomes part of what the customer buys (potentially exempt) or is used to document/bill the sale (taxable).

Common questions

Q: Are bills of lading and packing slips subject to Kansas sales tax?
A: Yes. The Department advised that these forms, along with sales tickets, receipt paper, and invoice forms, are taxable when purchased by a retailer or manufacturer.

Q: Doesn't the packing-materials exemption cover packing slips?
A: No. The ingredient/component-part exemption covers containers, shipping cases, and packing materials that ship with the goods — not forms used to bill consumers or bill retailers buying for resale.

Q: Why are these forms treated differently from packing materials?
A: Because they are used by the retailer or wholesaler to bill and track their sales, not as part of the containers or packing for the goods being sold.

Q: What about invoices and sales receipts?
A: Those are likewise taxable — purchases of forms used in receipting, billing, and invoicing are taxable.

Citations and references

• The determination applies the Kansas ingredient or component part exemption (for containers, shipping cases, and packing materials that accompany goods sold at retail) and holds it does not extend to billing/tracking forms; the letter states the rule without citing a specific subsection.
• K.A.R. 92-19-59 — the regulation authorizing Kansas private letter rulings.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2002-055

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

June 25, 2002

XXXX
XXXX
XXXX

RE: Your inquiry regarding bills of lading

Dear XXXX:

Thank you for your recent inquiry. You ask if bills of lading and packing slips are subject to Kansas sales tax. Please be advised that they are subject to Kansas sales tax. Generally, purchases by retailers and manufacturers for sales tickets, cash register receipt paper, invoice forms, and bills of lading forms , and other forms used in receipting, billing, and invoicing items are taxable. While the ingredient and component part exemption exempts thing like containers, shipping cases, packing materials and other things that are necessary for shipping items being sold at retail, this exemption does not extend to items that the retailer uses to bill consumers or that wholesales use to bill retailers who are buying things for resale. These forms are not part of the containers or packing materials for item being produced or sold, but are being used by the retailer or wholesaler to bill and track their sales.

I hope that I have answered all of your questions. If you need to discuss anything further, please call me at 785-296-3081. 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,

Thomas E. Hatten
Attorney/Policy & Research

Date Composed: 06/25/2002 Date Modified: 06/25/2002

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