How did Kansas sales tax and transient guest tax apply when an accommodations broker subleased apartments for short or extended stays?

Plain-English summary

A company rented apartments and then subleased them to people needing short or extended stays. K.S.A. 12-1692(f) defined an accommodations broker as a business maintaining an inventory of two or more rooms in one or more locations and offering them for pay for no more than 28 consecutive days.

Kansas sales tax applied to the broker's gross receipts from room rentals under K.S.A. 79-3603(g). The letter said sales tax applied regardless of the length of stay; there was no minimum-stay rule removing an extended rental from sales tax.

Transient guest tax worked differently. It applied to a person occupying a room for no more than 28 consecutive days. For a longer stay, the Department's example charged both taxes initially, then on day 29 credited the guest for transient guest tax previously paid and stopped charging that tax.

The company needed to register as an accommodations broker using the schedule in Publication KS-1216. Publication KS-1540 supplied lodging-tax examples and guidance.

What this means for you

Corporate-housing and apartment-sublease businesses

Determine whether your room inventory and rental periods make you an accommodations broker. Do not assume a stay becomes exempt from sales tax merely because it exceeds 28 days.

Lodging operators

Track consecutive occupancy by the same person or entity so transient guest tax can be adjusted when the stay crosses the 28-day threshold.

Accountants

Keep sales tax and transient guest tax separate: the letter applied sales tax throughout the stay but ended and credited transient guest tax after day 28.

Common questions

Q: Does Kansas sales tax stop after a 28-day stay?
A: No. The opinion says sales tax applies regardless of stay length.

Q: What happens to transient guest tax on day 29?
A: The broker stops charging it and credits the previously paid transient guest tax under the Department's example.

Q: What is an accommodations broker under the cited definition?
A: A business maintaining two or more rooms in one or more locations and offering them for pay for stays of no more than 28 consecutive days.

Citations and references

• K.S.A. 12-1692(f) — accommodations broker definition
• K.S.A. 2002 Supp. 79-3603(g) — sales tax on room rentals by accommodations brokers
• K.S.A. 2002 Supp. 12-1693 and 12-1697(a) — transient guest tax
• Publications KS-1540 and KS-1216 — lodging guidance and registration identified by the Department

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: O-2003-009

Original ruling text

Opinion Letter

Body:

Office of Policy & Research

December 17, 2003

XXXX
XXXX
XXXX

RE: Your e-mail received on December 15, 2003

Dear XXXX:

I have been asked to answer your recent e-mail. In it, you state that your company provides short and extended-stay living accommodations. You do this by subleasing apartments that you rent. This means your company is an "accommodation broker" under Kansas law, if it subleases more than two sleeping rooms:

(f) "Accommodations broker" means any business which maintains an inventory of two or more rooms in one or more locations which are offered for pay to a person or persons for not more than 28 consecutive days. K.S.A. 12-1692(f).

Sales tax is imposed "on the gross receipt from the service of renting rooms . . . by accommodation brokers, as defined by K.S.A. 12-1692, and amendments thereto." K.S.A. 2002 Supp. 79-3603(g). In addition to sales tax, accommodation brokers must collect and remit transient guest tax on its room rentals. K.S.A. 2002 Supp. 12-1693; K.S.A. 2002 Supp. 12-1697(a). Tax is figured on the accommodation brokers "gross receipts," and there is no "minimum stay" provision in Kansas law.

An accommodation broker's receipts are subject to sales tax regardless of the length of stay. Unlike sales tax, transient guest tax is not collect on rooms rented for more than 28 consecutive days to the same person or entity. This is because the law defines "transient guest" as a person who occupies a room for not more than 28 consecutive days. Accounting for the 28 day provision is straightforward, as is demonstrated by the example contained in Publication KS-1540, an Information Guide for Kansas Business Taxes for Hotels, Motels & Restaurants:

You rent a room to a guest for $50 per night, billed on a weekly basis of $350, plus 6.3% Sales and 6% Transient Guest Tax. On the 29th rental day (beginning of the 5th week), you will credit the guest's account for the previously paid Transient Guest Tax of 6%.

Publication KS-1540 is available on our web site, www.ksrevenue.org. Also available is the Kansas Business Tax Application Booklet, Publication KS-1216. You will need to complete the Registration Schedule in KS-1216 as an accommodation broker and submit the completed schedule to the department to register your business for tax purposes. You can order printed copies of these documents by calling our forms request line at 785-296-4937.

I believe that the two publications will answer any additional questions that you may have. If they don't, please call our Taxpayer Assistance Center at its toll free number, 1-877-526-7738, if you are outside Topeka, or 368-8222 for local calls.

Sincerely,

Thomas E. Hatten

Attorney/Policy & Research

Date Composed: 12/19/2003 Date Modified: 12/19/2003

Table 1

Table 2