Are labor services to repair residential pools and spas exempt from Kansas sales tax, and what about materials or shop repairs?

Plain-English summary

A pool and spa repair business asked how Kansas sales tax applies to its residential repair work after a 1998 law change.

The law change. "1998 Senate Bill No. 493 exempts certain construction services that were formerly subject to Kansas sales tax. Effective July 1, 1998, services performed to install or apply tangible personal property are exempt from sales tax when the services involve the original construction, reconstruction, restoration, remodeling, renovation, repair or replacement of a residence."

Residential pool/spa repair labor is exempt — labor only. "Kansas law exempt[s] from Kansas retailers' sales tax the gross receipts from repair services performed on residential pools and spas. This exemption is for services only. Materials would … be subject to sale or compensating taxes."

It must be on-site, and only for residential pools. "For the repair to be exempt[,] the repair must be performed at the residential site." Qualifying residential types are "homeowner's residential, residential apartment complex and home owners association." A "for-profit hospital or rehabilitation clinic would not qualify for this exemption."

Shop repairs are taxable. "Repairs performed in your shop on residential pool components or equipment do not come within the exemption and are subject to sales tax."

Bottom line: the exemption is a narrow, labor-only, on-site exemption for repairing residential pools and spas. Materials are still taxed, work brought back to the shop is taxable, and non-residential (for-profit) facilities don't qualify.

What this means for you

The exemption covers labor, not materials

1998 SB 493 exempts the repair-service labor on residential pools and spas. The parts and materials used in the repair remain subject to Kansas sales or compensating tax, so a provider should separate exempt labor from taxable materials.

The work must be done at the residential site

On-site is a condition of the exemption. If the provider takes components back to its shop to repair them, that repair is taxable — the exemption applies only to repairs performed at the residence.

"Residential" is defined by the setting

The exemption reaches homeowner residences, residential apartment complexes, and homeowners-association pools/spas. A for-profit hospital or rehabilitation clinic is not residential and does not qualify.

Bill and document the two components separately

Because only the labor is exempt and only when performed on site, providers should keep records that distinguish exempt on-site repair labor from taxable materials and any taxable shop work.

Common questions

Is labor to repair a residential pool or spa taxable in Kansas?
No. Under 1998 SB 493 (effective July 1, 1998), the repair-service labor on residential pools and spas is exempt from Kansas sales tax.

Are the materials exempt too?
No. The exemption is for services only; materials remain subject to sales or compensating tax.

Does the repair have to be done at the home?
Yes. The repair must be performed at the residential site. Repairs done in the provider's shop on residential pool components are taxable.

Does a for-profit hospital or clinic pool qualify?
No. A for-profit hospital or rehabilitation clinic does not qualify; the exemption is limited to residential settings such as homes, residential apartment complexes, and homeowners associations.

Citations and references

• 1998 Senate Bill No. 493 — effective July 1, 1998, exempts services to install or apply tangible personal property in the original construction, reconstruction, restoration, remodeling, renovation, repair, or replacement of a residence; the Department applied it to on-site residential pool and spa repair labor.
• The ruling limits the exemption to labor (materials remain taxable), requires the repair to be performed at the residential site, and excludes non-residential settings such as a for-profit hospital or rehabilitation clinic; it does not cite a numbered subsection.
• K.A.R. 92-19-59 — authorizes Kansas private letter rulings; this ruling binds the Department only as to the requesting taxpayer and the facts presented.
• Issued August 29, 1998 by Mark D. Ciardullo, Tax Specialist, Kansas Department of Revenue.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1998-103

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

August 29, 1998

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Dear XXXXXXXXXXXXX:

The purpose of this letter is to respond to your letter dated August 3, 1998. This is a private letter ruling pursuant to Kansas Administrative Regulation 92-19-59.

1998 Senate Bill No. 493 exempts certain construction services that were formerly subject to Kansas sales tax. Effective July 1, 1998, services performed to install or apply tangible personal property are exempt from sales tax when the services involve the original construction, reconstruction, restoration, remodeling, renovation, repair or replacement of a residence.

It is the opinion of Kansas Department of Revenue:

Kansas law exempt from Kansas retailers’ sales tax the gross receipts from repair services performed on residential pools and spas. This exemption is for services only. Materials would to be subject to sale or compensating taxes. For the repair to be exempt the repair must be performed at the residential site. Pools and spas of the following types would be deemed to be residential and exempt: homeowner’s residential, residential apartment complex and home owners association.

A for-profit hospital or rehabilitation clinic would not qualify for this exemption.

Repairs performed in your shop on residential pool components or equipment do not come within the exemption and are subject to sales tax.

This response private letter ruling 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 private letter ruling will be revoked in the future by operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or a published revenue ruling, that materially effects this private letter ruling.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

Date Composed: 09/03/1998 Date Modified: 10/10/2001

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