When did Kansas relieve sellers or purchasers from sales- or use-tax liability caused by short-notice rate changes or erroneous Department data?

Plain-English summary

Revised Notice 09-03 provided liability relief for short-notice tax-rate changes and for reliance on erroneous Department data.

Sellers after a rate change

When fewer than 30 days separated enactment of a change to the retailers' sales-tax or compensating-use-tax rate from the new rate's effective date, the Department relieved a seller from liability for failing to collect at the new rate if:

1. the seller collected at the immediately preceding effective rate; and
2. the failure to use the new rate did not continue beyond 30 days after enactment.

That relief did not apply if the seller fraudulently failed to collect the new rate or solicited purchasers based on the old rate.

Purchasers relying on Department information

Purchasers received penalty relief when the underpayment resulted from reliance on erroneous Department information about tax rates, boundaries, taxing-jurisdiction assignments, or the Department's taxability matrix. The listed situations covered reliance by a seller or certified service provider, a direct-pay permit holder, the purchaser itself on the taxability matrix, or a purchaser using Department databases.

The notice also provided relief from the underlying state and local sales or use tax and interest in those circumstances. For taxability-matrix errors, that broader relief was limited to erroneous classifications such as taxable versus exempt, included versus excluded from sales price, or included versus excluded from a definition.

The notice defined a penalty as a nonfraudulent, nonwillful, unintentional amount imposed in addition to the correct tax and interest. It was effective on and after January 1, 2009. The document does not provide a separate publication date, so the issued_date field is left blank rather than treating the effective date as the issue date.

What this means for you

Retailers

After a rate change enacted on short notice, document the prior rate collected and the date you switched to the new rate. The seller relief ended 30 days after enactment and did not protect fraud or marketing based on the obsolete rate.

Purchasers, direct-pay permit holders, and certified service providers

Keep evidence of the specific Department database or taxability-matrix information relied on. The notice tied relief to erroneous Department data, and taxability-matrix relief was limited to the listed classification categories.

Common questions

Q: Did every seller get 30 days to continue using the old rate?
A: No. The rule applied when fewer than 30 days separated enactment and the new rate's effective date, and only if the seller used the immediately preceding rate and corrected collection within 30 days after enactment.

Q: Did the relief protect fraudulent undercollection?
A: No. Fraudulent failure to collect the new rate and solicitation based on the old rate were expressly excluded.

Q: Could purchasers receive relief for relying on an incorrect Department taxability matrix?
A: Yes. The notice provided penalty relief and, within its stated classification limits, relief from tax and interest.

Q: Was January 1, 2009 the notice's publication date?
A: The document says only that it was effective on and after January 1, 2009. It does not state a publication date.

Citations and references

• K.S.A. 79-3603 — retailers' sales-tax rate changes.
• K.S.A. 79-3703 — compensating-use-tax rate changes.
• K.S.A. 2008 Supp. 79-3677 — Department taxability matrix.
• K.S.A. 2008 Supp. 79-3668(d) — Department rate, boundary, and taxing-jurisdiction databases.

Subject

Kansas Retailers' Sales or Compensating Use Tax Rate Changes

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 09-03

Original ruling text

KANSAS DEPARTMENT OF REVENUE

                             REVISED NOTICE 09-03

     KANSAS RETAILERS’ SALES OR COMPENSATING USE TAX

  RELIEF FROM LIABILITY FOR CERTAIN SELLERS CONCERNING
                 NOTICE OF RATE CHANGES

   Whenever there is less than thirty (30) days between the date of enactment of any

amendments to K.S.A. 79-3603 and K.S.A. 79-3703 making a change in the retailers’
sales tax or compensating use tax rate and the effective date of such rate change, the
Department shall relieve the seller of liability for failing to collect tax at the new effective
rate if:

 1. the seller collected tax at the immediately preceding effective rate; and
 2. the seller’s failure to collect at the newly effective rate does not extend beyond
    thirty days after the date of enactment of the new rate.

  When it is established that the seller fraudulently failed to collect at the new sales

tax rate or solicits purchasers based on the immediately preceding effective rate the relief
cited above does not apply.

        RELIEF FROM LIABILITY FOR CERTAIN PURCHASERS

A. A purchaser is relieved from liability for penalties for having failed to pay the correct
amount of sales or use tax in the following circumstances:
1. A purchaser’s seller or Certified Service Provider (“CSP”) relied on erroneous
data provided by that Department on tax rates, boundaries, taxing
jurisdiction assignments, or in the taxability matrix completed by that
Department pursuant to K.S.A. 2008 Supp. 79-3677, and amendments
thereto; or
2. A purchaser holding a direct pay permit relied on erroneous data provided by
the Department on tax rates, boundaries, taxing jurisdiction assignments,
or in the taxability matrix completed by the Department pursuant to
K.S.A. 2008 Supp. 79-3677, and amendments thereto.
3. A purchaser relied on erroneous data provided by the Department in the
taxability matrix completed by the Department pursuant to K.S.A. 2008
Supp. 79-3677, and amendments thereto.
4. A purchaser using databases provided by the Department pursuant to
subparagraph (d) of K.S.A. 2008 Supp. 79-3668, and amendments thereto,
relied on erroneous data provided by the Department on tax rates,
boundaries, or taxing jurisdiction assignments.
B. A purchaser is also relieved from liability for state and local sales or use tax and
interest for having failed to pay the correct amount of sales or use tax in the
circumstances described in paragraph A. above, provided that, with respect to

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   reliance on the taxability matrix completed by the Department pursuant to K.S.A.
   2008 Supp. 79-3677, and amendments thereto, such relief is limited to the
   Department’s erroneous classification in the taxability matrix of terms listed in
   the taxability matrix as “taxable” or “exempt,” “included in sales price” or
   “excluded from sales price” or “included in the definition” or “excluded from the
   definition”.

C. For purposes of this Notice, the term “penalty” means an amount imposed for
noncompliance that is not fraudulent, willful, or intentional which is in addition to
the correct amount of sales or use tax and interest.

This notice is effective on and after January 1, 2009.

                              Taxpayer Assistance

 Additional copies of this notice, other forms or publications are available from our

web site, www.ksrevenue.org. If you have questions about this notice, please contact:

                          Taxpayer Assistance Center
                         Kansas Department of Revenue
                         915 SW Harrison St., 1st Floor
                           Topeka, KS 66612-1588
                             Phone: 785-368-8222
                              Fax: 785-291-3614