Ezel / Tax Rulings / KS
KS P-2004-027 Kansas Retailers' Sales Tax 2004-06-24

Was dyed diesel used by a contract earth mover to remove soil and shale overburden and expose quarry rock exempt as consumed in mining?

Short answer: Yes. The contractor used scrapers, bulldozers, and front-end loaders to remove soil and shale overburden and expose the rock ledge in quarries. The Department treated the dyed diesel consumed by that equipment as essential or necessary to the actual mining process and exempt under K.S.A. 79-3606(n) and 79-3602(dd). This contrasts with post-production fuel used to move finished rock to a stockpile or load customers, which another ruling treated as taxable.

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This page answers the general question as of 2004. Ezel answers yours, under current Kansas tax law, with citations.

Currency note: this ruling is from 2004
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Kansas Department of Revenue Private Letter Ruling (issued under K.A.R. 92-19-59). It binds the Department only as to the specific retailer who requested it and the facts stated; taxpayer-identifying details are redacted. It may not be cited or relied upon as precedent by any other person, and it ceases to be valid if a statute, regulation, or interpretation it relied upon changes substantially. Kansas state and local sales and use taxes are administered centrally by the Department, so there is no self-collected home-rule city tax outside its scope. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

Dyed diesel used by earth-moving equipment to remove overburden and expose a quarry's rock ledge was exempt as property consumed in mining.

The contract earth mover operated scrapers, bulldozers, and front-end loaders in Kansas rock quarries. Those machines removed soil and shale above the rock deposit.

K.S.A. 79-3606(n) exempted property consumed in production, processing, mining, and similar activities. K.S.A. 79-3602(dd) required the property to be essential or necessary to the actual process and consumed, depleted, or dissipated within one year.

The Department agreed that diesel burned during overburden removal met those conditions. It was part of exposing the rock ledge for mining, not merely moving finished product after production.

What this means for you

Quarry operators and earth movers

Track fuel used in the actual extraction process separately from fuel used after the product is finished. The stage of the operation controls the exemption.

Fuel vendors and tax teams

Keep contracts, equipment logs, quarry maps, and fuel records showing the diesel was consumed by equipment removing overburden.

Common questions

Q: What equipment used the exempt fuel?
A: Scrapers, bulldozers, and front-end loaders.

Q: What work did they perform?
A: Removing soil and shale overburden to expose the rock ledge.

Q: Why was the fuel exempt?
A: It was essential to and consumed in the actual mining process.

Citations and references

  • K.S.A. 79-3606(n) — property consumed in mining and production
  • K.S.A. 79-3602(dd) — definition of property consumed
  • Kansas Board of Tax Appeals Docket No. 91-44-DT — authority referenced by the request

Source

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

June 24, 2004

XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX

Dear XXXXXXXXXX,

This is a formal response to your letter dated March 10, 2004. In your letter you stated:

We are requesting a private letter ruling for one of our customers, XXXXXXXXXX, a contract earth mover. He operates in rock quarries located in Marion and Dickinson Counties, exposing the rock ledge by removing the soil and shale overburden from the rock ledge. Scrapers, bulldozers and front-end loaders are utilized and all consume dyed diesel fuel.

Pursuant to Docket No. 91-44-DT we feel that our customer should be exempt from sales tax.

You are correct. K.S.A. 79-3606(n) provides for tax exemption which is consumed in the production, manufacture, processing, mining, drilling, refining or compounding of tangible personal property for ultimate sale at retail within or without the state of Kansas. "Property which is consumed" includes tangible personal property which is essential or necessary to and which is used in the actual process of and consumed, depleted or dissipated within one year in the production, manufacture, processing, mining, drilling, refining or compounding of tangible personal property, which is not reusable for such purpose. K.S.A. 79-3602(dd). Thus, the diesel fuel consumed by your customer would be exempt from Kansas retailer’s sales tax.

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 to you, please contact me at your earliest convenience at (785) 296-5330.

Sincerely,

Mark Ciardullo
Tax Specialist

Date Composed: 06/28/2004 Date Modified: 06/29/2004

Table 1

Ruling Number: P-2004-027

Table 2

Tax Type: Kansas Retailers' Sales Tax
Brief Description: Contract earth mover; rock quarries.
Keywords:
Approval Date: 06/24/2004

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