Is a sale of protective safety leggings to a meat-packing company exempt under Kansas's integrated plant (manufacturing) exemption?

Plain-English summary

A seller asked whether its sale of safety leggings to a meat-packing company is exempt under the integrated machinery and equipment (integrated plant) exemption, K.S.A. 79-3606(kk). The leggings slip over employees' work boots and fasten under the knees with Velcro to keep their boots and legs dry.

The Department said yes, the sale is exempt. While K.S.A. 79-3606(kk)(5)(J) makes ordinary employee apparel taxable, it contains an exception for "safety and protective apparel that is purchased by an employer and furnished gratuitously to employees who are involved in production or research activities." Because the packing company (which uses scalding water in its operations) buys the leggings and provides them free to production employees for protection, the leggings fall within that exception. The seller may honor the integrated plant exemption certificate the packing company provides.

The Department also declined to publish a list of qualifying items, explaining that Kansas taxes and exempts things conceptually (e.g., "farm production equipment") rather than by itemized list, and pointed the seller to Notice 00-08, which explains the integrated plant exemption in plainer terms. When in doubt about a particular sale, the seller should contact the Department.

What this means for you

Sellers of safety and protective gear

Protective apparel an employer buys and gives free to its production or research employees can qualify for the integrated plant exemption. Accept a properly completed integrated plant exemption certificate for such sales.

Manufacturers and processors

Ordinary employee clothing is taxable, but safety and protective apparel you purchase and furnish gratuitously to production/research employees is exempt under the (kk)(5)(J) exception.

Common questions

Q: Isn't all employee apparel taxable?
A: Ordinary apparel is, but K.S.A. 79-3606(kk)(5)(J) excepts safety and protective apparel the employer buys and gives free to production or research employees.

Q: Can the seller rely on the customer's exemption certificate?
A: Yes. The Department said the seller may honor the integrated plant exemption certificate the packing company gave it for the safety leggings.

Citations and references

• K.S.A. 79-3606(kk) — the integrated machinery and equipment (integrated plant) exemption.
• K.S.A. 79-3606(kk)(5)(J) — provides that "employee apparel" is not exempt, "except safety and protective apparel that is purchased by an employer and furnished gratuitously to employees who are involved in production or research activities"; the Department applied this exception to the safety leggings. The Department referenced Notice 00-08 for a plainer explanation of the exemption.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2006-016

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

December 15, 2006

XXXXX
XXXXX
XXXXX

RE: Your letter dated November 7, 2006

Dear XXXXX:

Thank you for your letter. In it, you ask if you sale of safety leggings to a meat packing company is exempt under the Integrated Machinery and Equipment Exemption, K.S.A. 2005 Supp. 79-3606(kk). The leggings slip over the employees' work boots and are fastened under the knees with Velcro to help keep their boots and legs dry.

K.S.A. 2005 Supp. 79-3606(kk)(5)(J) provides that sales of employee apparel are taxable. However, it contains an exception for safety and protective apparel that the manufacturer buys and gives free of charge to employees who are engaged in research or production activities. This provision reads:

(5) "Machinery and equipment used as an integral or essential part of an integrated production operation" shall not include: . . .
(J) employee apparel, except safety and protective apparel that is purchased by an employer and furnished gratuitously to employees who are involved in production or research activities.

Tyson uses scalding water in some of its operations. Accordingly, you may honor the integrated plant exemption certificate that the packing company gave you for the safety leggings.

You also ask for a list of items that qualify for this exemption. The department has not attempted to draft such a list. The Kansas sales tax act generally taxes and exempts things on a conceptual basis, e.g. the law exempts farm production equipment rather than exempting a list that includes tractors, combines, grain dryers, etc. This means that if you are uncertain about whether you should collect tax on one of your sales, you should contact the department for clarification. I have enclosed a copy of Notice 00-08. This notice discusses the statutory integrated plant exemption in simpler terms than the statute.

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. Please let me know if you have additional questions.

Sincerely,

Thomas E. Hatten
Attorney/Policy & Research

Enclosure

Date Composed: 12/18/2006 Date Modified: 12/18/2006

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