Does a charitable educational corporation qualify for a Kansas sales tax exemption on its purchases?

Plain-English summary

A charitable educational corporation — one that raises funds and provides resources to support public and community education statewide — asked whether Kansas sales tax exempts its purchases. The Department said no.

The Department's reasoning was short and important: Kansas grants only certain, specific exemptions, and none of them extends to an organization like this one. Even though such organizations "perform a great deal of services for their communities with the funds that they raise," doing charitable and educational good works does not, by itself, create a sales tax exemption. Because no statutory exemption covers the corporation, it must pay Kansas sales tax on its purchases.

What this means for you

Charitable and educational nonprofits

Being a 501(c)(3), doing charitable work, or supporting education does not automatically exempt your Kansas purchases. Kansas exemptions are entity-specific and statutory — an organization qualifies only if the legislature has named its type (or its specific purchases) in an exemption.

Before claiming exemption

Identify the specific Kansas statute that would exempt your organization or purchase. If you can't point to one that names your type of entity, your purchases are taxable — and claiming an exemption you don't have exposes you to tax, interest, and penalties.

Fundraising doesn't change purchasing tax

The fact that you raise money to fund community programs doesn't exempt what you buy. Tax turns on whether a statutory exemption applies to the purchaser or the item, not on how the organization uses its funds.

Common questions

Q: We're a charitable corporation supporting education. Are our purchases exempt from Kansas sales tax?
A: No. The Department found no Kansas exemption extends to an organization like yours, so your purchases are taxable.

Q: We do a lot of good in our community — doesn't that qualify us?
A: No. Community benefit alone doesn't create an exemption; Kansas exemptions are limited to specific statutory categories.

Q: How would an organization become exempt?
A: Only if a specific Kansas statute exempts that type of entity (or the particular purchases). Absent such a statute, purchases are taxable.

Q: Does this ruling apply to my organization?
A: A Kansas private letter ruling addresses only the requesting taxpayer's facts and cannot be relied on as precedent by others, though it shows how the Department treats charitable educational corporations.

Citations and references

• Kansas sales tax exemptions are statutory and specific — the Department explained that Kansas grants only certain exemptions and none extends to a charitable educational corporation of this kind, so its purchases are taxable. (No specific exemption statute was cited because the Department found none applied.)
• 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-2003-027

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

May 14, 2003

TTTTTTTTTTT
TTTTTTTTTTT
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TTTTTTTTTTT

Dear Mr. TTTTTTT:

We wish to acknowledge receipt of your letter dated March 31, 2003, regarding the application of Kansas Retailers' Sales tax.

Many organizations, such as yours, perform a great deal of services for their communities with the funds that they raise. However, Kansas has only certain exemptions, and there is no exemption that is extended to an organization, such as yours.

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: 05/19/2003 Date Modified: 05/19/2003

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