Are management services subject to Kansas sales tax?

Plain-English summary

A company asked whether management services are subject to Kansas sales tax. The Department ruled they are not — management services are not a taxable service in Kansas.

The Department explained how Kansas taxes services: "The Kansas sales tax act imposes tax on all retail sales of tangible personal property. Various exemption are then applied to this broad imposition. Under the act, sales tax applies only to those services that are enumerated (specified) by statutes. Management services are not specifically taxed under the law. Therefore, the providing of management services by one company to a related entity is not subject to Kansas sales tax."

What this means for you

Companies providing management services

Charging another company — including a related entity — for management services does not trigger Kansas sales tax, because management services are not on the list of specifically taxed services.

The enumerated-services rule

Kansas taxes sales of tangible personal property broadly, but it taxes services only when a statute specifically names (enumerates) them. If your service is not enumerated, it is not taxable — though you still owe tax on any taxable goods you buy to perform it.

Related-entity arrangements

The ruling applies even when the management services are provided between related companies; the intercompany nature does not change the non-taxable result.

Common questions

Q: Does Kansas charge sales tax on management services?
A: No. Management services are not one of the services specifically enumerated as taxable, so they are not subject to Kansas sales tax.

Q: Why are some services taxed and others not?
A: Kansas taxes retail sales of tangible personal property broadly but taxes services only when a statute specifically lists them. Unlisted services, like management services, are not taxed.

Q: Does it matter that the service is between related companies?
A: No. The Department said management services provided by one company to a related entity are still not subject to Kansas sales tax.

Citations and references

• The Department did not cite a specific statute number. It relied on the general Kansas rule that sales tax applies to services only when they are enumerated (specified) by statute, and management services are not among the enumerated taxable services.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: O-2000-028

Original ruling text

Opinion Letter

Body:

Office of Policy & Research

October 24, 2000

XXXX
XXXX
XXXX

RE: You e-mail inquiry

Dear XXXX:

I have been asked to answer your e-mail that we received last week. You ask if management services are subject to sales tax. Please be advised that they are not taxable services. The Kansas sales tax act imposes tax on all retail sales of tangible personal property. Various exemption are then applied to this broad imposition. Under the act, sales tax applies only to those services that are enumerated (specified) by statutes. Management services are not specifically taxed under the law. Therefore, the providing of management services by one company to a related entity is not subject to Kansas sales tax.

I hope that this answers your questions. If you have any additional questions, you can visit our web site at www.ink.org/public/kdor/ or can call me at (785) 296-3081.

Sincerely,

Thomas E. Hatten

Attorney/Policy & Research

Date Composed: 10/24/2000 Date Modified: 10/10/2001

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