Are fencing materials and services to repair wildfire-damaged agricultural fences exempt from Kansas sales tax?

Plain-English summary

Kansas Notice 17-01 explains a sales tax exemption for fencing materials and services used to rebuild farm and ranch fences destroyed by wildfire, created by House Bill 2387 (2017), which amended K.S.A. 79-3606d.

The exemption. All sales of tangible personal property and services purchased during calendar years 2017 and 2018 that are necessary to reconstruct, repair, or replace any fence damaged or destroyed by wildfires occurring during calendar years 2016 and 2017 -- where the fence's purpose is to enclose land devoted to agricultural use -- are exempt from Kansas retailers' sales tax. Sales tax paid on or after January 1, 2017 on qualifying purchases is refunded.

Two ways to get the benefit. The preferred method is to obtain an exemption certificate before buying, using form PR-70FEN (Request for Exemption Certificate for Fencing Materials and Services); once approved, the Department issues a Fencing Exemption Certificate and cover letter describing the qualifying materials and leases. If a purchase was already made and tax paid, the exemption can instead be claimed as a refund on form ST-3 (Application for Sales Tax Refund of Fencing Materials and/or Services).

Practical points. Refunds are made only for sales tax paid to a Kansas retailer. Allow at least 5 days to process an exemption-certificate request and at least 45 days for a refund claim. The legislation is effective March 23, 2017, and this notice replaces Notice 16-04.

What this means for you

Farmers and ranchers rebuilding fences

• Fencing materials and services bought in 2017 or 2018 to repair fences that wildfires damaged in 2016-2017 (enclosing agricultural land) are exempt from Kansas sales tax.
• Get a PR-70FEN exemption certificate to buy tax-free, or claim a refund on form ST-3 if you already paid tax.

Contractors doing the fencing work

• Obtain the project's exemption certificate and give its number to your suppliers so purchases are invoiced tax-free.

Common questions

What purchases qualify? Fencing materials and services bought in 2017-2018 to reconstruct, repair, or replace agricultural fences damaged or destroyed by 2016-2017 wildfires.

Can I recover tax I already paid? Yes -- tax paid on or after January 1, 2017 is refundable via form ST-3 (Kansas-retailer tax only).

How do I buy tax-free going forward? Request a Fencing Exemption Certificate on form PR-70FEN.

When is it effective? March 23, 2017; the notice replaces Notice 16-04.

Citations and references

• House Bill 2387 (2017) -- amended K.S.A. 79-3606d to exempt qualifying wildfire fencing purchases in 2017-2018 and refund tax paid on or after January 1, 2017.
• Claim methods: form PR-70FEN (exemption certificate) or form ST-3 (refund).
• Effective March 23, 2017; replaces Notice 16-04.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 17-01

Original ruling text

Tax Policy Group Phone: 785-296-3081
915 SW Harrison St FAX: 785-296-7928
Topeka KS 66612-1588 www.ksrevenue.org
Samuel M. Williams, Secretary Department of Revenue Sam Brownback, Governor

                                      NOTICE 17-01

              EXEMPT SALES OF FENCING MATERIALS AND SERVICES
                                    (MARCH 23, 2017)

  During the 2017 Legislative Session House Bill 2387 was passed and signed into law. This

Bill amended K.S.A. 79-3606d to provide for tax exempt sales of fencing materials and services
purchased during calendar years 2017 and 2018 to reconstruct, repair or replace any fence which
was damaged or destroyed by fire during 2016 and 2017, and the purpose for which is to enclose
land devoted to agricultural use. As amended, the language of K.S.A. 79-3606d now reads:

         79-3606d. (a) The following shall be exempt from the tax imposed by the Kansas
  retailers' sales tax act: All sales of tangible personal property and services purchased
  during calendar years 2017 and 2018, necessary to reconstruct, repair or replace any
  fence that was damaged or destroyed by wildfires occurring during calendar years 2016
  and 2017, and the purpose for which is to enclose land devoted to agricultural use.
  Sales tax paid on and after January 1, 2017, upon the gross receipts received from any
  such sale shall be refunded. Each claim for a sales tax refund shall be verified and
  submitted to the director of taxation upon forms furnished by the director and shall be
  accompanied by any additional documentation required by the director. The director
  shall review each claim and shall refund that amount of sales tax paid as determined
  under the provisions of this section. All refunds shall be paid from the sales tax refund
  fund upon warrants of the director of accounts and reports pursuant to vouchers
  approved by the director or the director's designee. Any person reconstructing,
  repairing or replacing such property, or any person who shall contract for the
  reconstruction, repair or replacement of any such property shall obtain from the state
  an exemption certificate for the project involved. The certificate shall be furnished to
  the person or contractor to purchase materials and lease machinery and equipment for
  such project. The person or contractor shall furnish the number of such certificate to
  all suppliers from whom such purchases are made, and such suppliers shall execute
  invoices covering the same bearing the number of such certificate. Upon completion
  of the project the contractor shall furnish to the person that obtained the exemption
  certificate, a sworn statement, on a form provided by the director of taxation, that all
  purchases so made were entitled to exemption under this subsection.
         (b) The provisions of this section shall be deemed to be supplemental to the
  Kansas retailers' sales tax act.

 A request for an exemption certificate should be made by submitting form PR-70FEN

(3/2017) Request for Exemption Certificate for Fencing Materials and Services. Visit the
Department's website at: www.ksrevenue.org/wildfires to download the form. Once the request has

been approved, the Department will issue a Fencing Exemption Certificate, along with a cover
letter. Both the Fencing Exemption Certificate and the cover letter will provide additional details
regarding the types of materials and leases that qualify for the exemption.

  Although obtaining an exemption certificate is the preferred method, because it permits

making purchases without paying tax, if a purchase has already been made, and tax paid, the
exemption allowed by the statute can be claimed by submitting form ST-3, Kansas Application for
Sales Tax Refund of Fencing Materials and/or Services. Please be sure to submit all the
information and documents requested on the form at the time you file your claim for refund.
Failing to do so will delay or may even prevent issuance of a refund.

 The effective date of the legislation is March 23, 2017. You should allow at least 5 days for

processing of any request for an exemption certificate.

  You should allow at least 45 days for processing of any refund claim. Please note refunds

will only be made for sales tax paid to a Kansas retailer.

 This Notice replaces Notice 16-04

                                 TAXPAYER ASSISTANCE

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

www.ksrevenue.org. If you have questions about this Notice, please contact:

                              Taxpayer Assistance Center
                             Kansas Department of Revenue
                                   120 SE 10th Ave.
                                  Topeka, KS 66612
                                 Phone: 785-368-8222
                                  Fax: 785-291-3614