What did Kansas require of remote sellers after the Wayfair decision, before the $100,000 threshold?

Plain-English summary

Kansas Notice 19-04 (issued August 1, 2019) provided guidance to remote sellers after the U.S. Supreme Court's decision in South Dakota v. Wayfair, Inc. On June 21, 2018, the Court overturned the physical-presence requirement -- the rule that a remote seller had to have physical presence in a state before the state could require it to collect that state's sales or use tax.

Kansas's requirement (no threshold). Kansas imposes its collection requirements to the fullest extent permitted by law, relying on K.S.A. 79-3702(h)(1)(F), which defines a retailer doing business in the state as one with "any other contact with this state that would allow this state to require the retailer to collect and remit tax under the . . . constitution and laws of the United States." On that basis, Kansas required remote sellers with no physical presence to register and begin collecting and remitting Kansas sales and/or use tax by October 1, 2019 (with no enforcement for sales made before that date). Notably, this notice imposed the requirement without a dollar de minimis threshold.

Registration. Kansas is a full member of the Streamlined Sales and Use Tax Governing Board. Remote sellers can register for all 24 Streamlined member states through the Streamlined Sales Tax Registration System (no fee), or register directly with the Department via its Customer Service Center; Pub. KS-1216 has instructions. Certified Service Providers can handle tax calculation, returns, and remittance -- free to qualifying volunteer sellers.

Sourcing. Since July 1, 2003, Kansas has been a destination-based sourcing state: tax is imposed at the rate of, and paid to, the jurisdiction where the purchaser takes delivery (for remote sellers, usually where items are shipped). See K.S.A. 79-3669 through 79-3673 and Pub. KS-1510.

Marketplace facilitators. At the time, a marketplace facilitator was directed to contact the Department about a voluntary compliance agreement (the notice sets out a definition of "marketplace facilitator" and, via K.S.A. 79-3602(z), "person").

Superseded. This notice was later superseded and replaced by Notice 21-17, which -- reflecting 2021 Senate Bill 50 -- added the $100,000 economic-nexus threshold for remote sellers (and a separate marketplace-facilitator regime in Notices 21-14 and 21-24).

What this means for you

Remote sellers (historical rule)

• Under this 2019 guidance, any remote seller with no physical presence had to register and collect Kansas sales/use tax by October 1, 2019 -- with no dollar threshold.
• This rule has since changed: Notice 21-17 added a $100,000 economic-nexus threshold, so check the current rule before relying on this notice.

Sellers registering

• You can register through the Streamlined Sales Tax Registration System for all member states at once, or directly with the Kansas Department of Revenue.
• Certified Service Providers can calculate, file, and remit the tax -- free for qualifying volunteer sellers.

Marketplace facilitators

• This notice directed facilitators to contact the Department about a voluntary compliance agreement; the marketplace-facilitator collection regime was later set by 2021 Senate Bill 50 (Notices 21-14 and 21-24).

Common questions

What did the Wayfair decision change? It overturned the physical-presence requirement, so a state can require a remote seller with no physical presence to collect its sales or use tax.

What did Kansas require, and by when? Remote sellers had to register and begin collecting and remitting Kansas sales/use tax by October 1, 2019.

Was there a dollar threshold? No -- this 2019 notice imposed the requirement without a de minimis threshold.

How could remote sellers register? Through the Streamlined Sales Tax Registration System (all member states at once) or directly with the Kansas Department of Revenue.

Is this notice still current? No -- it was superseded and replaced by Notice 21-17, which added a $100,000 economic-nexus threshold under 2021 Senate Bill 50.

Citations and references

• South Dakota v. Wayfair, Inc. (U.S. Supreme Court, June 21, 2018) -- overturned the physical-presence requirement for sales/use tax collection.
• K.S.A. 79-3702(h)(1)(F) -- "any other contact" basis Kansas relied on to require remote-seller collection.
• K.S.A. 79-3669 through 79-3673 -- destination-based sourcing rules; K.S.A. 79-3602(z) defines "person."
• Notice 21-17 -- superseded and replaced this notice by adding the $100,000 economic-nexus threshold (2021 Senate Bill 50).

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 19-04

Original ruling text

Tax Policy
109 SW 9th Street Phone: 785-368-8222
PO Box 3506 Fax: 785-296-1279
Topeka KS 66601-3506 www.ksrevenue.org
Mark A. Burghart, Secretary Laura Kelly, Governor

                                        NOTICE 19-04

  SALES TAX REQUIREMENTS FOR RETAILERS DOING BUSINESS IN KANSAS
                                      (AUGUST 1, 2019)

   On June 21, 2018, the United States Supreme Court issued its decision in the case of South

Dakota v. Wayfair, Inc. et al. In its decision, the Court overturned the requirement established by
prior rulings that a remote seller must have a physical presence in a state before that state can
require the remote seller to collect that state's sales or use tax. This Notice is intended to provide
guidance to remote sellers doing business in Kansas.

Remote Seller

  A retailer who sells tangible personal property and/or services into a state where it does not

have physical presence is commonly referred to as a "remote seller".

Requirement to Register and to Collect and Remit Sales Tax

  Kansas imposes its sales and use tax collection requirements to the fullest extent permitted

by law. Specifically, as noted above, K.S.A. 79-3702(h)(1)(F) provides that a retailer doing
business in this state means:

         (F) any retailer who has any other contact with this state that would allow this
   state to require the retailer to collect and remit tax under the provisions of the
   constitution and laws of the United States.

 Kansas can, and does, require on-line and other remote sellers with no physical presence in

Kansas to collect and remit the applicable sales or use tax on sales delivered into Kansas.
Accordingly, a remote seller must register with Kansas and obtain a sales and/or use tax account
number.

   Remote sellers who are not already registered with the Kansas Department of Revenue must

register and begin collecting and remitting Kansas sales and/or use tax by October 1, 2019. The
Department will not enforce the statutory requirements to collect and remit on these remote sellers
for sales made into Kansas prior to October 1, 2019.

Registration

 Kansas is a full member of the Streamlined Sales and Use Tax Governing Board ("SSTGB").

Remote sellers can register for all 24 Streamlined member states (AR, GA, IN, IA, KS, KY, MI,
MN, NE, NV, NJ, NC, ND, OH, OK, RI, SD, TN, UT, VT, WA, WV, WI and WY) by completing
one online application through the Streamlined Sales Tax Registration System ("SSTRS"). There
is no fee to complete and submit this online registration form that is available at
www.sstregister.org

  Remote sellers can also register with Kansas specifically by visiting www.ksrevenue.org and

signing into the Department's Customer Service Center. After completing the application, a
confirmation number will be issued for both the registration and account number(s). In the
alternative, a completed business tax application may be mailed or faxed to the Department, or a
principal of the business may apply in person. For complete instructions about the application
process, you may obtain Pub. KS-1216, Business Tax Application and instructions from our
website. General questions about business registrations should be directed to 785-368-8222.

 It is important to note that failure to register may result in administrative enforcement action.

Collecting and Remitting

  Certified Service Providers. If a remote seller registers through the SSTRS and needs

assistance calculating the tax, preparing its returns, and remitting the appropriate sales and use
taxes in any of the Streamlined member states, the SSTGB has contracts with various certified
service providers ("CSP"). A CSP is an agent certified under the Streamlined Sales and Use Tax
Agreement to perform many of the seller's sales and use tax functions. CSP services are provided
free to qualifying volunteer remote sellers. To learn more about the CSP program, see the FAQs
related to certified service providers at www.streamlinedsalestax.org

  Kansas Department of Revenue. The Kansas Department of Revenue has a number of

publications that address different aspects of the Kansas sales and use tax, including what is subject
to tax, how to calculate the tax, and how to file sales and use tax returns and remit the tax. In
particular, please note our Pub. KS-1510, Kansas Sales and Compensating Use Tax which provides
general information and a list of other sales and use tax publications.

Sourcing Rules

  As previously noted, Kansas participates in the Streamlined Sales Tax Project (SSTP). Since

July 1, 2003, Kansas has been a destination-based sourcing state. Under SSTP destination-based
sourcing rules, sales tax is imposed at the rate determined by, and is paid to, the jurisdiction where
the purchaser takes delivery or possession of the purchased item(s). For remote sellers, this is
frequently the jurisdiction into which items are mailed or shipped.

 General information regarding sourcing rules is available in Pub KS-1510. More specific

information is found in K.S.A. 79-3669 through 79-3673.

Marketplace Facilitators

  A person who is a marketplace facilitator should contact the Department concerning entering

into a voluntary compliance agreement with the Department.

  The term "person" is defined to include "any individual, firm, copartnership, joint adventure,

association, corporation, estate or trust, receiver or trustee, or any group or combination acting as
a unit, and the plural as well as the singular number". K.S.A. 79-3602(z).

  A marketplace facilitator is a person who, pursuant to an agreement with a retailer, facilitates

sales by such retailer through a physical or electronic marketplace operated by the person, and:

 (i)   engages directly or indirectly, through one or more affiliated persons in any of the
       following:
       (1) transmitting or otherwise communicating the offer or acceptance between a buyer
            and retailer;
       (2) owning or operating the infrastructure, electronic or physical, or technology that
            brings buyers and retailers together;
       (3) providing a virtual currency that buyers are allowed or required to use to purchase
            products from the retailer; or
       (4) software development or research and development activities related to any of the
            activities described herein, if such activities are directly related to a physical or
            electronic marketplace operated by the person or an affiliated person; and

(ii)   engages in any of the following activities with respect to the retailer's products:
        (1) payment processing services;
       (2) fulfillment, delivery or storage services;
       (3) listing products for sale;
       (4) setting prices;
       (5) branding sales as those of the marketplace facilitator;
       (6) order taking;
       (7) advertising or promotion; or
       (8) providing customer service or accepting or assisting with returns or exchanges.

                              TAXPAYER ASSISTANCE

 Additional copies of this notice, 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
                           Scott Office Building, 1st Floor
                                  120 SE 10th Ave
                                   P. O. Box 3506
                              Topeka, KS 66601-3506
                                Phone: 785-368-8222
                                 Fax: 785-291-3614