Is a nonprofit community concert association exempt from Kansas sales tax on its purchases?

Plain-English summary

A community concert association asked whether it is exempt from Kansas sales tax on its purchases and enclosed its by-laws. The Department ruled it is not exempt and must continue to pay sales tax on its purchases.

"I have reviewed the association's by-laws. There is nothing in them that would serve as the basis for a sales tax exemption. In Kansas, there is no broad-based sales tax exemption for nonprofit organizations that qualify under Section 501(c)(3) of the Internal Revenue Code."

The Department explained that Kansas exemptions are granted one at a time by the legislature. "A number of organization have petitioned the Kansas legislature for exemption and received an exemption" — the Department named, among others, the American Heart Association (Kansas Affiliate), the Kansas Alliance for the Mentally Ill, the American Diabetes Association (Kansas Affiliate), the American Lung Association of Kansas, and the Kansas chapters of the Alzheimer's Disease and Related Disorders Association — along with exemptions for "nonsectarian, comprehensive multidiscipline youth development programs" and others. "However, none of the exemptions can be read as encompassing your organization. Accordingly, the association should continue to pay tax on its purchases."

What this means for you

Nonprofit and 501(c)(3) organizations in Kansas

Federal tax-exempt status does not, by itself, exempt you from Kansas sales tax on what you buy. Kansas has no general nonprofit exemption.

Exemptions come from the legislature

The only way a Kansas nonprofit gets a purchase exemption is if the legislature has specifically named the organization or its category in the exemption statutes. If your organization is not covered, your purchases are taxable.

Check whether a specific exemption names you

Before claiming exemption, confirm that a statute actually reaches your organization or program. A community concert association, for example, is not covered, so it must pay tax on its purchases.

Common questions

Q: Is a 501(c)(3) nonprofit automatically exempt from Kansas sales tax?
A: No. Kansas has no broad-based sales tax exemption for 501(c)(3) organizations. Exemption exists only where the legislature has specifically granted it.

Q: How do some nonprofits get exemptions then?
A: They petition the legislature and are named individually (or by category) in the exemption statutes — as several health associations and youth-development programs have been.

Q: What must a non-covered nonprofit do?
A: Continue to pay Kansas sales tax on its purchases, because no exemption reaches it.

Citations and references

• The Department did not cite a specific statute number. It relied on the principle that Kansas has no general 501(c)(3) sales tax exemption and grants exemptions only to organizations or categories the legislature has specifically named — none of which reach a community concert association.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: O-2000-014

Original ruling text

Opinion Letter

Body:

Office of Policy & Research

August 1, 2000

XXXX
XXXX
XXXX

RE: Your letter of July 10, 2000

Dear XXXX:

Thank you for your letter that we received last month. In it, you ask if the XXXX Community Concert Association is exempt from paying Kansas sales tax on its purchases. You included the by-laws of the association.

I have reviewed the association’s by-laws. There is nothing in them that would serve as the basis for a sales tax exemption. In Kansas, there is no broad-based sales tax exemption for nonprofit organizations that qualify under Section 501(c)(3) of the Internal Revenue Code. A number of organization have petitioned the Kansas legislature for exemption and received an exemption. These include the American Heart Association, Kansas Affiliate, Inc. ,the Kansas Alliance for the Mentally Ill, Inc. the Kansas Mental Illness Awareness Council, the American Diabetes Association Kansas Affiliate, Inc., the American Lung Association of Kansas, Inc., and the Kansas chapters of the Alzheimer's Disease and Related Disorders Association, Inc. There are also exemptions extended to purchases by organizations for nonsectarian, comprehensive multidiscipline youth development programs, as well as a number of other exemptions. However, none of the exemptions can be read as encompassing your organization. Accordingly, the association should continue to pay tax on its purchases.

I hope that this adequately explains the law and how it applies to your organization. If not, please call me and we can discuss this matter further.

Sincerely,

Thomas E. Hatten
Attorney/Policy & Research

Date Composed: 08/09/2000 Date Modified: 10/10/2001

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