How does a Kansas religious organization claim its sales tax exemption, and does it cover fuel or out-of-state purchases?

Plain-English summary

A religious organization asked several practical questions about using the Kansas religious-organization sales tax exemption under K.S.A. 79-3606(aaa), which exempts purchases of tangible personal property and services by a 501(c)(3) religious organization used exclusively for religious purposes.

How to claim it — a certificate, not a number. Asked what proof it must carry and whether a "sales tax certificate alone" is sufficient, the Department answered that it "does not intend to issue sales tax exemption numbers to religious organizations." The organization can "merely supply your vendor(s) with a completed copy of the enclosed exemption certificate, when making purchases that would come within the scope of the … exemption in K.S.A. 79-3606(aaa)."

Fuel — yes for sales tax, no for motor fuel tax. Asked whether the exemption applies to fuel purchases, the Department said "Yes. However, the exemption does not apply to motor fuel tax, since there is no sales tax on gasoline placed in a vehicle, you cannot claim exemption on such sales." In other words, the sales tax exemption reaches fuel that is subject to sales tax, but gasoline pumped into a vehicle is subject to motor fuel tax, not sales tax, so there is no sales tax exemption to claim.

Out-of-state purchases — no. Asked whether the exemption applies to purchases in other states (whether or not those states have their own exemptions), the Department answered "No" to both. The Kansas exemption does not follow the organization into other states.

Bottom line: a Kansas religious organization proves its exemption by handing vendors a completed exemption certificate — there is no exemption number. The exemption applies to Kansas sales tax (including on fuel that bears sales tax), but not to motor fuel tax on gasoline, and not to purchases made in other states.

What this means for you

Use the certificate, not a number

Kansas does not issue exemption numbers to religious organizations. To buy tax-free, the organization gives each vendor a completed exemption certificate for purchases that fall within the K.S.A. 79-3606(aaa) exemption.

The exemption is limited to Kansas sales tax

It applies to purchases subject to Kansas sales tax. It does not extend to motor fuel tax — gasoline placed in a vehicle is taxed under the motor fuel tax, not sales tax, so there is no sales tax exemption to claim on it.

It stops at the state line

Purchases the organization makes in other states are not covered, regardless of whether those states offer their own exemptions. The organization would need to look to each other state's law.

Match each purchase to the exemption's scope

The certificate should be used only for purchases used exclusively for religious purposes within the scope of K.S.A. 79-3606(aaa).

Common questions

Does a religious organization get an exemption number in Kansas?
No. The Department does not issue exemption numbers to religious organizations; the organization supplies vendors with a completed exemption certificate instead.

Does the exemption cover fuel?
It covers fuel that is subject to Kansas sales tax, but not motor fuel tax on gasoline placed in a vehicle — there is no sales tax on that fuel to exempt.

Does the Kansas exemption work in other states?
No. It does not apply to purchases made in other states, whether or not those states have their own exemptions.

What purchases qualify?
Purchases of tangible personal property and services used exclusively for religious purposes, within the scope of K.S.A. 79-3606(aaa).

Citations and references

• K.S.A. 79-3606(aaa) — exempts a 501(c)(3) religious organization's purchases used exclusively for religious purposes; claimed by giving vendors a completed exemption certificate rather than an exemption number.
• The ruling clarifies that the exemption does not reach motor fuel tax on gasoline placed in a vehicle, and does not apply to purchases made in other states.
• Notice 98-05 — the Department's guidance on sales taxation of purchases by religious organizations, enclosed with the ruling.
• 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 28, 1998 by Mark D. Ciardullo, Tax Specialist, Kansas Department of Revenue.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1998-106

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

August 28, 1998

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Dear XXXXXXXXXXXX:

The purpose of this letter is to respond to your letter dated August 12, 1998. This is a private letter ruling pursuant to Kansas Administrative Regulation 92-19-59.

K.S.A. 79-3606(aaa) exempts from sales tax: “all sales of tangible personal property and services purchased by a religious organization which is exempt from federal income taxation pursuant to section 501(c)(3) of the federal internal revenue code, and used exclusively for religious purposes.”

In your letter you the following questions.

“What proof of qualification do we need to carry with us, so that when we go to purchase items we are able to avoid paying the sales tax. It is the sales tax certificate alone sufficient?”

Answer: The Kansas Department of Revenue does not intend to issue sales tax exemption numbers to religious organizations. You can merely supply your vendor(s) with a completed copy of the enclosed exemption certificate, when making purchases that would come within the scope of the sales tax exemption in K.S.A. 79-3606(aaa).

“Are we assuming rightly that this would also apply to fuel purchases?”

Answer: Yes. However, the exemption does not apply to motor fuel tax, since there is no sales tax on gasoline placed in a vehicle, you cannot claim exemption on such sales.

“Does the sales tax exemption also apply if we are in other states then the state of Kansas, where sales tax exemptions apply in that particular state.”

Answer: No.

The sales tax exemption applies if we're purchasing items in other states that do not have sales tax exemption?

Answer: No.

I have enclosed Notice 98-05.

This 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

Enc.

Date Composed: 09/04/1998 Date Modified: 10/10/2001

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