Are sales of truck tarps to interstate common carriers exempt from Kansas sales tax?

Plain-English summary

The requester asked whether sales of truck tarps to ICC (interstate common-carrier) motor carriers are exempt from Kansas sales tax. The Department's opinion is that they are — the tarps fall within the interstate-commerce exemption, so their sale is not subject to Kansas sales or use tax.

The Department relied on two authorities:

• K.S.A. 79-3606(f) exempts "tangible personal property purchased by a railroad or public utility for consumption or movement directly and immediately in interstate commerce."
• K.A.R. 92-19-28 explains how that exemption applies to motor carriers. Sales to a motor carrier are generally taxable "in the same manner as are sales to other firms," except for a carrier that qualifies as a public utility and is engaged in interstate commerce, where the following are exempt when used immediately and directly in interstate commerce: (1) rolling stock, including buses and trailers; (2) repair parts and replacement materials or parts; and (3) gasoline, distillate, and other motor fuels. The regulation adds that such items may be temporarily stored in the state until directly and immediately consumed in interstate commerce, and it notes that labor services for servicing, maintaining, or repairing rolling stock remain taxable.

Applying that framework, the Department stated: "it is the opinion of this office that the truck tarps would come within the scope of the sales tax exemption in K.S.A. 79-3606(f). Therefore the sale of the respective tarps would not be subject to Kansas sales/use tax(es)." (The letter carries the Department's standard private-letter-ruling reliance language keyed to the specific facts presented, but it is published in the Department's library as an Opinion Letter.)

What this means for you

Sellers of equipment to interstate carriers

Property that a qualifying interstate carrier (a public utility engaged in interstate commerce) buys for use directly and immediately in its interstate operations can be sold exempt under K.S.A. 79-3606(f). The Department treated truck tarps as within that scope.

Interstate motor carriers

Beyond rolling stock, repair parts, and motor fuels expressly listed in K.A.R. 92-19-28, other property used directly and immediately in your interstate operations — such as tarps — can qualify for the exemption. Be prepared to show the qualifying interstate use.

Watch the limits

The exemption is for the qualifying carrier's property used in interstate commerce; note that K.A.R. 92-19-28 still treats labor services to service, maintain, or repair rolling stock as taxable, and the exemption turns on the carrier's public-utility/interstate status.

Common questions

Q: Are truck tarps sold to an interstate carrier taxable in Kansas?
A: No. The Department's opinion is that they come within the K.S.A. 79-3606(f) interstate-commerce exemption, so the sale is not subject to Kansas sales or use tax.

Q: What law supports the exemption?
A: K.S.A. 79-3606(f), which exempts property bought by a railroad or public utility for use directly and immediately in interstate commerce, as applied to motor carriers by K.A.R. 92-19-28.

Q: Does the exemption cover repair labor on the carrier's equipment?
A: No. K.A.R. 92-19-28 states that charges for labor services to service, maintain, or repair rolling stock remain taxable.

Citations and references

• K.S.A. 79-3606(f) — exempts tangible personal property purchased by a railroad or public utility for consumption or movement directly and immediately in interstate commerce.
• K.A.R. 92-19-28 — applies the interstate-commerce exemption to motor carriers qualifying as public utilities (rolling stock, repair parts/materials, motor fuels), allows temporary in-state storage, and keeps servicing/repair labor taxable.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: O-1999-14

Original ruling text

Opinion Letter

Body:

Office of Policy and Research

June 3, 1999

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Dear Ms. TTTTT:

We wish to acknowledge receipts of your letter dated May 18, 1999, regarding the application of Kansas Retailers’ Sales tax.

K.S.A. 79-3606(f) exempts from sales tax: "tangible personal property purchased by a railroad or public utility for consumption or movement directly and immediately in interstate commerce. . ."

K. A. R. 92-19-28, states in part: "Sales of tangible personal property or services to any motor carrier engaged in the transportation of persons or property in interstate common-carrier transportation are subject to the Kansas retailers' sales tax in the same manner as are sales to other firms, persons or corporations except as follows:

1) Sales of rolling stock, including busses and trailers to each motor carrier qualifying as a public utility and engaged in either interstate commerce exclusively or interstate commerce and intrastate commerce, and the rolling stock are immediately and directly used in interstate commerce are exempt. The rolling stock may be temporarily stored within the state until it is directly and immediately consumed in interstate commerce. However, charges for labor services rendered to common carriers authorized to engage in interstate commerce commission for the servicing, maintenance, or repair of rolling stock including busses and trailers are taxable.

2) Sales of all repair parts and replacement materials or parts to each motor carrier qualifying as a public utility, engaged in either interstate commerce exclusively or interstate commerce and intrastate commerce, when the repair parts and replacement materials or parts are immediately and directly used in interstate commerce are exempt. The repair parts and replacement materials or parts may be temporarily stored within the state until they are directly or immediately consumed exclusively in interstate commerce.

3) Sales of gasoline, distillate and other motor fuels to each motor carrier qualifying as a public utility, engaged in either interstate commerce exclusively or interstate commerce and intrastate commerce when the gasoline, distillate and other petroleum products are immediately and directly used in interstate commerce are exempt. The gasoline, distillate and other motor fuels may be temporarily stored within the state until it is directly and immediately consumed in interstate commerce."

In closing, it is the opinion of this office that the truck tarps would come within the scope of the sales tax exemption in K.S.A. 79-3606(f). Therefore the sale of the respective tarps would not be subject to Kansas sales/use tax(es).

This is a private letter ruling pursuant to K.A.R. 92-19-59. It is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to an accurate determination by the department, this ruling is null and void. This ruling will be revoked in the future by the operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or published revenue ruling, that materially effects this private letter ruling. 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: 06/22/1999 Date Modified: 10/10/2001

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