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Sales Tax Obligations of Sellers in Kansas

April 13, 2006

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Kansas imposes various requirements on sellers doing business in the state. We recommend that you go through the items below to help you with the most frequently asked questions concerning sellers and sales and use tax issues.

Procedure for accepting resale certificates. As a retailer selling tangible personal property or furnishing taxable services you can't assert that a sale is exempt from taxation unless you possess a properly executed exemption certificate provided by your customer claiming the exemption. If you do not have the required exemption certificate you must acquire a certificate within 60 days after receiving notice from the Director that a certificate is required. If the certificate is not acquired within the 60-day period, the sale will be deemed to be taxable.

Procedure for accepting blanket certificates. As a retailer making recurring exempt sales of the same type to the same purchaser you need not secure a separate exemption certificate for each transaction but may accept a blanket exemption certificate covering future sales. If you honor a blanket exemption certificate on a taxable sale, you may be held responsible for the tax if the Director determines that you knew or should have known the sale was not exempt.

Sales and use tax liability for out-of-state mail order and catalogue retailers. Kansas has a statute that specifically taxes out-of-state mail order and catalogue sellers. However, you will be responsible for paying this tax only if you have physical presence within Kansas. To determine if you have physical presence, ask yourself the following:

• Do I have retail facilities, a warehouse, or any office space in Kansas? Maintaining retail or warehouse facilities will give you physical presence. Also, having an office for employees, even for business activities unrelated to mail order sales, will give you physical presence.
• Do my employees or I enter Kansas for purposes of taking and transmitting orders from Kansas? If your employee or independent contractor goes into Kansas to take or transmit orders, your business may have physical presence in Kansas. However, contracting with a common carrier to deliver mail order goods does not constitute physical presence.
• Do my delivery vehicles frequently enter Kansas for purposes of delivering property? Frequent deliveries in Kansas by your trucks will give you physical presence in Kansas.

Sales tax "bracket system." The bracket system may be followed by sellers in computing the 5.3 percent sales tax. The tax is computed on each dollar and/or fraction of a dollar according to the following table:

Absorbing the tax — using a "no sales tax" advertising strategy to drum up business. In Kansas it is against the law to refund or offer to refund all or any part of the amount collected, or to absorb the amount of sales tax required to be added to the sales price and collected from the purchaser. As a seller, it is also against the law for you to advertise directly or indirectly that you will absorb the sales tax that is required to be added to the sales price.

Claiming refund for excess tax payments. In Kansas refund claims must be filed within three years from the date the tax payment was due. Any retailer may make a claim for refund but consumers or users may not claim a refund unless tax was paid directly to the Department of Revenue. Written claims must be supported by proof that the tax was actually paid. If tax was erroneously paid by a consumer or user, a retailer will not be entitled to a refund until it proves that a refund was paid to the consumer or user.

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