Are hauling and transporting services subject to Kansas sales tax?

Plain-English summary

The Department addressed whether hauling (transporting) services are taxable in Kansas. The short version: hauling is not a taxable service — Kansas taxes only enumerated services and transporting is not one — but the hauler still pays tax on what it buys to do the job. The Department noted the reply "is an informational letter only and not a private letter ruling pursuant to K.A.R. 92-19-59."

The Department's reasoning:

• Only enumerated services are taxed. "The state of Kansas taxes only enumerated services." Sales tax reaches services only when the Legislature has specifically listed them.
• Hauling is not on the list. "The transporting services that you are providing are not currently subject to sales tax in the state of Kansas, since you are not engaged in the sale of gravel or sand." The key fact is that the taxpayer is selling transportation, not selling the material being hauled.
• But the hauler owes tax on its inputs. "However, you must pay sales tax on all articles of tangible personal property and all taxable services purchased to provide the nontaxable services." Because the output service is not taxable, the hauler is the final consumer of its own supplies and taxable services and pays the tax on those.

What this means for you

Haulers and transportation providers

If you are paid to move material (and are not the one selling that material), your hauling service is not subject to Kansas sales tax. Do not charge your customers sales tax on the transportation charge.

Your own purchases

Because your service is nontaxable, you cannot buy your supplies tax-free for resale — you are the end user. Expect to pay sales tax on the tangible personal property and on any taxable services you buy to run the hauling operation.

Watch the "not selling the material" line

The result turns on the fact that you are not engaged in the sale of the gravel or sand. If you were selling the material and delivering it, the transaction could look different — the transportation could be part of a taxable sale of tangible personal property.

Common questions

Q: Do I charge sales tax on a hauling charge in Kansas?
A: No. Transporting services are not an enumerated taxable service, so hauling is not subject to Kansas sales tax when you are not the one selling the material.

Q: Why does the Department mention that I'm not selling the gravel or sand?
A: Because that is what keeps this a nontaxable transportation service. If you were selling the material, the delivery could be part of a taxable sale.

Q: Can I buy my equipment and supplies tax-free?
A: No. Since your service is nontaxable, you are the consumer and must pay sales tax on the tangible personal property and taxable services you purchase to provide the hauling.

Citations and references

• Enumerated-services rule — Kansas imposes sales tax only on services the Legislature has specifically enumerated; transporting/hauling is not among them, so the service is not taxable when the provider is not also selling the material.
• Tax on inputs — a provider of a nontaxable service must pay sales tax on all tangible personal property and taxable services it purchases to provide that service. (The Department cited no K.S.A. section in this letter.)

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: O-1998-13

Original ruling text

Opinion Letter

Body:

Office of Policy & Research

October 2, 1998

TTTTTTTTTT
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Dear Mr. TTTTT:

We wish to acknowledge receipt of your letter dated September 15, 1998, regarding the application of Kansas Retailers’ Sales tax.

This is an informational letter only and not a private letter ruling pursuant to K.A.R. 92-19-59.

The state of Kansas taxes only enumerated services. The transporting services that you are providing are not currently subject to sales tax in the state of Kansas, since you are not engaged in the sale of gravel or sand. However, you must pay sales tax on all articles of tangible personal property and all taxable services purchased to provide the nontaxable services. If I may be of further assistance, please contact me at your earliest convenience at (785) 296-7776.

Sincerely yours,

Thomas P. Browne, Jr.
Tax Specialist

TPB

Date Composed: 10/08/1998 Date Modified: 10/10/2001

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