Were a Kansas painting contractor's labor charges for decorative painting, faux finishes, and murals on residential interiors subject to sales tax?

Plain-English summary

The contractor's labor charges for interior residential decorative painting, faux finishes, and murals were exempt as original-construction labor.

K.S.A. 79-3603(p) generally taxed services that apply or install tangible personal property. But labor performed in “original construction” was exempt.

The ruling described original construction as including:

• initial construction of a new building;
• adding an entire room or floor;
• completing an unfinished portion of a building; and
• replacing, remodeling, restoring, renovating, or reconstructing a residence.

Because all of the contractor's work was on residential interiors, the Department treated the labor as exempt original construction. The contractor separately stated that sales tax was paid on the materials.

What this means for you

Residential painting contractors

Separate labor from materials and document that the project is residential work within the original-construction categories described by the ruling.

Decorative and mural painters

The exemption was not limited to ordinary wall paint. On these facts it included decorative painting, faux finishing, and murals performed on residential interiors.

Commercial projects

This ruling rested on the statement that all work was performed on residences. Commercial painting requires a separate analysis and should not be assumed exempt from this PLR.

Common questions

Q: Was the painting labor taxable?
A: No, under the stated residential facts.

Q: What types of work were covered?
A: Interior decorative painting, faux finishing, and murals.

Q: Were the materials exempt?
A: The ruling says the contractor paid sales tax on materials; it addressed the labor-charge exemption.

Q: Why was the labor exempt?
A: The Department treated residential replacement, remodeling, restoration, renovation, or reconstruction as original construction.

Citations and references

• K.S.A. 79-3603(p) — installation services and original-construction labor

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2004-044

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

July 29, 2004

XXXX
XXXX
XXXX

Re: Your Private Letter Ruling Request

Dear XXXX:

You indicate that your business is a sole proprietorship and you are a painting contractor. Your work involves of interior residential painting consisting of decorative painting, faux finishing and murals. Sales tax is paid on your materials. You have asked whether your labor charges for this work are subject to sales tax.

Under K.S.A. 79-3603(p), the service of applying or installing tangible personal property is subject to sales tax. However, labor for “original construction” work is exempt from sales tax. “Original construction” would include initial construction of a new building, addition of an entire room or floor to an existing building, completion of an unfinished portion of an existing building, or replacement, remodeling, restoration, renovation or reconstruction of a residence. Since you indicate that all of your painting work is done on interiors of residences, the labor charges for this work would be exempt from sales tax as “original construction” labor.

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 by operation of law without further department action if there is a change in the controlling statutes, administrative regulations, revenue rulings or case law that materially effects this determination.

Very truly yours,

Richard L. Cram

Date Composed: 07/30/2004 Date Modified: 07/30/2004

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