How did the Notice 10-03 worksheet calculate the ST-36 deduction for July 2010 sales taxed at the old 5.3% state rate?

Plain-English summary

This addendum gives a worked Form ST-36 example for a retailer with July 2010 sales taxed at both the old 5.3% and new 6.3% state rates. ABC Building Supplier reported $38,150 of gross building-material sales across Topeka, Lawrence, Hays, and Hutchinson, including sales covered by Department-issued construction rate-increase certificates.

All gross sales were reported under the proper taxing-jurisdiction codes. For each jurisdiction containing old-rate sales, ABC selected the factor matching the combined rate before and after July 1, 2010. The Topeka calculation was 0.1117 times $8,500, producing $949.45; the Hays calculation was 0.1170 times $2,300, producing $269.10.

Those amounts went in the corresponding Part III non-utility deduction lines. Their $1,218.55 total also went on Part II, Line N, as other allowable deductions.

What this means for you

The example demonstrates Notice 10-03's mechanics: report all gross sales, calculate the old-rate adjustment separately by jurisdiction, and carry the total deduction to Part II. The factor depends on both the old and new combined rates for that location.

Common questions

Q: Why did some July construction-material sales retain the old rate?
A: The buyers presented Department-issued certificates for binding construction contracts entered into before May 1, 2010.

Q: Did the deduction reduce gross sales?
A: No. Gross sales stayed in the jurisdiction totals; the adjustment was claimed as a deduction.

Citations and references

• Kansas Notice 10-03
• Form ST-36
• Department old-rate/new-rate factor table

Subject

ST-36 Sample Worksheet for Mixed 2010 Sales-Tax Rates

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 10-03add

Original ruling text

Mark Parkinson, Governor
Joan Wagnon, Secretary

                                             www.ksrevenue.org

                       NOTICE 10-03
                        Addendum

                              Sample Worksheet for
                        Reporting Sales under Old and New
                          Sales Tax Rates on same return

This example explains how a retailer electronically filing the ST-36 monthly return should report
sales under multiple taxing jurisdictions for the month of July 2010 that include both sales subject
to the 5.3% state rate (plus applicable local taxes), and sales subject to the 6.3% state rate (plus
applicable local taxes).

During the month of July 2010, ABC Building Supplier (ABC), located in Topeka, made total
gross sales of building materials of $38,150 to various contractors, delivered to various locations,
as described below. ABC made $12,350 in gross sales of building materials, which were picked
up by the contractors at the Topeka location. $8,500 of that $12,350 in gross sales of building
materials were to a contractor who had presented ABC with a Department-issued exemption
certificate exempting those sales from the state rate increase, because the contractor had entered
into a binding construction contract prior to May 1, 2010. ABC made gross sales of $4,000 for
building materials sold to a contractor and delivered by ABC to the construction site located at
Lawrence. ABC made $6,300 in gross sales of building materials to contractors for construction
projects located in Hays and delivered the materials to those locations. For $2,300 of those gross
sales of building materials delivered to the Hays location, the contractor presented ABC with a
Department-issued exemption certificate from the state rate increase, because the contractor had
entered into a binding construction contract prior to May 1, 2010. ABC made $15,500 of gross
sales of building materials to a contractor for a project in Hutchinson and delivered those
materials to the Hutchinson construction site.

For the gross sales of $8,500 of building materials picked up at Topeka and purchased by a
contractor presenting the exemption certificate from the state rate increase, the 5.3% state rate,
plus applicable local sales taxes in effect for Topeka-Shawnee County as of July 1, 2010 of
2.95%, for a total of 7.95%, would apply. For the gross sales of $2,300 of building materials
delivered to the Hays location and purchased by a contractor presenting the exemption certificate
from the state rate increase, the 5.3% state rate, plus applicable local sales taxes in effect as of
July 1, 2010 of 2.25%, for a total of 7.55%, would apply. For the other sales made by ABC
during July, the 6.3% state rate (plus the applicable local sales taxes in effect at the delivery
location as of July 1, 2010) would apply. For building materials picked up in Topeka, the
combined rate would be the new 6.3% state rate, plus 2.65% in local sales taxes, for a total
combined rate of 8.95%. For building materials delivered to Lawrence, the combined rate would
be the new 6.3% state rate, plus 2.55%, for a total combined rate of 8.85%. For building
materials delivered to Hays, the combined rate would be the new 6.3% state rate, plus 2.55%, for
a total combined rate of 8.55%. For building materials delivered to Hutchinson, the combined
rate would be the new 6.3% state rate, plus 1.75% in local sales, for a total combined rate on
8.05%.

To complete the July 2010 ST-36 return, ABC should enter its gross sales reported under each
taxing jurisdiction code in the “Gross Sales” column in Part III of the ST-36 return. The “Gross
Sales” column should include sales that were invoiced to customers at the 5.3% state rate as well
as sales that were invoiced at the 6.3% state rate. The gross sales of building materials picked up

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at the Topeka location, $12,350, would be reported under the Topeka-Shawnee County taxing
jurisdiction code under the “Gross Sales” column in Part III of the ST-36. The gross sales of
building materials delivered to Lawrence, $4,000, would be reported under the Lawrence-
Douglas County taxing jurisdiction code under “Gross Sales” column in Part III of the ST-36.
The gross sales of building materials delivered to Hays, $6,300, would be reported under the
Hays-Ellis County taxing jurisdiction code. The gross sales of building materials delivered to
Hutchinson, $15,500, would be reported under the Hutchinson-Reno County taxing jurisdiction
code.

To determine the deduction allowed because of the rate increase, ABC will total the sales receipts
being reported that were invoiced at the 5.3% state rate for each Taxing Jurisdiction Code under
which sales receipts are being reported. The sum of the 5.3% state rate sales for a taxing
jurisdiction should be multiplied by the Factor that is appropriate for that taxing jurisdiction from
the Factor Table, below.

To find the appropriate Factor for each taxing jurisdiction, ABC must determine the combined
sales tax rate in place for the Taxing Jurisdiction Code immediately before July 1, 2010 and the
combined sales tax rate in place for the same Code on July 1, 2010. The decimal amount that
follows the two combined rates in the Factor Table is the appropriate Factor for the Taxing
Jurisdiction Code in question. This must be done for each Taxing Jurisdiction Code where gross
sales reported under that Taxing Jurisdiction Code include both sales to which the state rate
increase does not apply and sales to which the state rate increase does apply.

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                              Old Rate/New Rate Æ Factor
                                                              7.65/8.65% Æ 0.1156
        5.3/6.3% Æ 0.1587                                     7.65/9.25%* Æ 0.1730
        5.8/6.8% Æ 0.1471                                     7.775/8.775% Æ 0.1140
        6.05/7.05% Æ 0.1418                                   7.8/8.8% Æ 0.1136
        6.3/7.3% Æ 0.1370                                     7.8/9.3%* Æ 0.1613
        6.3/7.8%* Æ 0.19231
                                                              7.8/9.8%* Æ 0.2041
        6.3/8.3%* Æ 0.2410                                    7.85/8.85% Æ 0.1130
        6.45/7.45% Æ 0.1342                                   7.9/8.9% Æ 0.1124
        6.525/7.525% Æ 0.1329                                 7.9/9.9%* Æ 0.2020
        6.55/7.55% Æ 0.1325                                   7.925/8.925% Æ 0.1120
        6.7/7.7% Æ 0.1299
                                                              7.95/8.95% Æ 0.1117
        6.8/7.8% Æ 0.1282                                     8.025/9.025% Æ 0.1108
        6.8/8.3%* Æ 0.1807                                    8.05/9.05% Æ 0.1105
        6.8/9.8%* Æ 0.3061                                    8.15/9.15% Æ 0.1093
        6.95/7.95% Æ 0.1258                                   8.15/9.525%* Æ 0.1444
        7.0/8.0% Æ 0.1250
                                                              8.275/9.275% Æ 0.1078
        7.05/8.05% Æ 0.1242                                   8.3/9.3% Æ 0.1075
        7.15/8.15% Æ 0.1227                                   8.525/9.525% Æ 0.1050
        7.2/8.2% Æ 0.1220                                     8.55/9.55% Æ 0.1047
        7.3/8.3% Æ 0.1205                                     8.55/9.925%* Æ 0.1385
        7.3/8.8%* Æ 0.1705                                    8.55/10.55%* Æ 0.1900

        7.3/9.3%* Æ 0.2151                                    8.65/9.65% Æ 0.1036
        7.45/8.45% Æ 0.1183                                   8.775/9.775% Æ 0.1023
        7.525/8.525% Æ 0.1173                                 8.8/9.8% Æ 0.1020
        7.55/8.55% Æ 0.1170                                   8.85/9.85% Æ 0.1015
        7.55/8.8%* Æ 0.1420
        7.55/8.925%* Æ 0.15406                                8.9/9.9% Æ 0.1010
        7.55/10.5%* Æ 0.2801                                  8.925/9.925% Æ 0.1008
        7.6/8.6%* Æ 0.1163                                    9.05/10.05% Æ 0.0995
        7.6/9.25%* Æ 0.1784                                   9.3/10.3%Æ 0.0971
        7.6/9.6%* Æ 0.2083                                    9.55/10.55% Æ 0.0948

In the example above, ABC made a total of $12,350 in gross sales of building materials that were
picked up by contractors in Topeka during July 2010, and $8,500 of those sales were to a
contractor presenting an exemption certificate from the state rate increase. The combined sales
tax rate for Topeka in effect before the July 1, 2010 state rate increase was 7.95%, and the
combined sales tax rate for that same location after the state rate increase is 8.95%. The factor to
be used and the computation of the deduction applicable to the gross sales reported on the ST-36
for the Topeka-Shawnee County taxing jurisdiction code is computed as shown below. Also,
ABC made a total of $6,000 in gross sales of building materials that were delivered to Hays and
$2,300 of those sales were to a contractor presenting an exemption certificate from the state rate
increase. The combined sales tax rate for Hays in effect before the July 1, 2010 state rate increase
was 7.55%, and the combined sales tax rate for that same location after the state rate increase is
8.55%. The factor to be used and the computation of the deduction applicable to the gross sales
reported on the ST-36 for the Hays-Ellis County taxing jurisdiction code is computed as shown
below:

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Example: Old Rate/New Rate ´ Factor x Sales = Deduction
Topeka-Shawnee 7.95/8.95% ´ 0.1117 x $8,500 = $949.45
Hays-Ellis 7.55/8.55% ´ 0.1170 x $2,300 = $269.10

The result of this multiplication should be entered in Part III of the ST-36 on the Line in Column
labeled "Part II Deductions (Non-Utility)" that corresponds to the Taxing Jurisdiction identified
for that Line in the first Column labeled "Taxing Jurisdictions."

The amount of the total deductions being reported in the Column "Part II Deductions (Non-
Utility)" in Part III to adjust for the 5.3% state rate sales must also be entered on Part II on Line
N, "Other allowable deductions." The total amount for “Other allowable deductions” on Line N
of Part II for this example would be $949.45 + $269.10 = $1218.55.

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This completes the adjustments that need to be made on the electronically filed ST-36 monthly
return to report sales at the 5.3% state rate (plus applicable local taxes) and sales subject to the
6.3% state rate (plus applicable local taxes), as shown in this example.