Is labor to maintain and repair a residential swimming pool exempt from Kansas sales tax after the 1998 residential-services exemption?

Plain-English summary

A pool service company asked whether its labor to winterize, open, maintain, and repair residential swimming pools is exempt under the 1998 residential-services exemption.

A new exemption for residential services took effect July 1, 1998. The Department explained that "1998 Senate Bill No. 493 exempts certain construction services that were formerly subject to Kansas sales tax," and that "[e]ffective 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." The Department construes "K.S.A. 79-3603(p)(4) as exempting the land improvements that immediately surround a residence," making the residential repair/remodel exemption "coextensive with the exemption for the original construction of the residence."

Swimming pools are exempt residential land improvements. Land improvements — those with tangible personal property "erected upon or affixed to the land" that are "immediately near and ... principally serve the residence" — expressly "include, but not be limited to, sidewalks, driveways, patios, fences, sod, tree planting, utility pipes and wires, septic tanks, swimming pools, and tool sheds." Accordingly, "[t]he service of maintaining a pool, that is a permanent fixture to real property, at a residence would be exempt from sales tax ... regardless if chemicals or parts are provided by the service provider or pool owner."

But materials stay taxable. "The new law does not change the taxation of sales of materials and supplies ... [which] continue to be subject to state and local sales tax." In its four specific answers, the Department confirmed the labor is exempt whether the customer or the company provides the chemicals, and that a company buying chemicals for resale and then consuming them "would be required to accrue sales tax on the chemicals," while "[t]he service is exempt from sales tax."

Bottom line: residential pool maintenance and repair labor is exempt after July 1, 1998, but the chemicals, parts, and other materials are still taxable.

What this means for you

Residential pool maintenance labor is exempt

Because a swimming pool is a residential land improvement, the labor to maintain, winterize, open, or repair it at a residence is exempt as a residential service under K.S.A. 79-3603(p)(4).

The labor exemption does not depend on who supplies chemicals

The pool-maintenance labor is exempt whether the homeowner provides the chemicals or the service company does. Separately billing and taxing the chemicals does not make the labor taxable.

Materials and supplies remain taxable

Sales of chemicals, parts, and supplies are still subject to state and local sales tax. A company that buys chemicals for resale and then consumes them while performing the service must accrue tax on those chemicals.

The exemption is residential, and "principally serves the residence"

The exemption applies to improvements that principally serve a residence. The Department's examples show the line: a yard fence is exempt, but a fence to corral pleasure horses, or barns and machine sheds for farm equipment, are not.

Common questions

Q: Is labor to maintain a residential swimming pool taxable in Kansas?
A: No. Effective July 1, 1998, maintaining a residential pool that is a permanent fixture to real property is exempt as a residential service under K.S.A. 79-3603(p)(4).

Q: Does it matter whether the company or the homeowner provides the chemicals?
A: No. The labor is exempt either way; the Department answered "Yes" to the labor being exempt in each scenario.

Q: Are the pool chemicals and repair parts exempt too?
A: No. Materials and supplies remain subject to state and local sales tax.

Q: What if the company buys chemicals for resale but then uses them itself in the service?
A: It must accrue sales tax on the chemicals it consumes; the service itself remains exempt.

Citations and references

• K.S.A. 79-3603(p)(4) (as amended by 1998 Senate Bill No. 493, effective July 1, 1998) — exempts services to install or apply tangible personal property for the original construction, reconstruction, restoration, remodeling, renovation, repair, or replacement of a residence, which the Department construes to include land improvements immediately surrounding a residence, such as swimming pools.
• Revenue Notice 98-02, "Exemption of Residential Repair and Remodel Work" — Department guidance, enclosed with the ruling, explaining the residential repair and remodel exemption.
• K.A.R. 92-19-59 — the regulation authorizing private letter rulings; this ruling was issued under it and binds the Department only as to the requesting taxpayer.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1998-198

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

November 24, 1998

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Dear XXXXXXXXXXXXX:

The purpose of this letter is to respond to your letter dated November 5, 1998.

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.

The department has determined that it will construe and administer K.S.A. 79-3603(p)(4) as exempting the land improvements that immediately surround a residence. This means the exemption for residential repair and remodeling services generally will be coextensive with the exemption for the original construction of the residence.

The test for whether something is a “land improvement” shall be whether tangible personal property has been erected upon or affixed to the land. To qualify as residential, the land improvement must be immediately near and must principally serve the residence. This means that repairs to a yard fence are exempt but that repairs to a fence designed to corral pleasure horses are not. Barns and machine sheds for farm equipment shall not be considered to be land improvement that principally serve the residence.

Land improvements shall include, but not be limited to, sidewalks, driveways, patios, fences, sod, tree planting, utility pipes and wires, septic tanks, swimming pools, and tool sheds. Repair services to structures such as steps, stairs, acbess ramps, porches, and decks shall be exempt whether they are considered to be part of the residence because they are attached to it, or a land improvement because they are immediately nearby.

The service of maintaining a pool, that is a permanent fixture to real property, at a residence would be exempt from sales tax in the state of Kansas. This service would be exempt regardless if chemicals or parts are provided by the service provider or pool owner.

The new law does not change the taxation of sales of materials and supplies that are purchased for use in residential construction or in other type of construction. These sales continue to be subject to state and local sales tax.

You ask these specific questions and request answers:

1. The company provides maintenance service in winterizing customer’s pools for the winter and opening in the spring. No replacement parts are used and the customer provides all chemicals used in the process. Is the labor exempt from tax?

Answer: Yes.

2. Same situation as 1., except that the company provides the chemicals used in the winterizing and opening. If the chemical supplies are billed as a separate item and tax charged on the supplies, is the labor exempt from tax?

Answer: Yes.

3. Situation 2., except that the price of the maintenance service includes the price of the chemicals. Is the entire amount exempt from tax, and would the company be required to pay sales tax on the supplies as items purchased without tax but consumed by the company?

Answer: If the company purchases the supplies for the purpose of resale and then consumes the chemicals while providing a service, the company would be required to accrue sales tax on the chemicals. The service is exempt from sales tax.

4. In the course of winterizing or opening a pool, the company installs repair parts on the pool and equipment. The repair parts are listed separately and sales tax charged on the parts. Is the labor exempt from tax on the repair services and/or the winterizing maintenance services?

Answer: Yes.

This is a private letter ruling pursuant to Kansas Administrative Regulation 92-19-59. It 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 affects this ruling.

For your convenience, I have enclosed Revenue Notice 98-02, which is entitled, “Exemption of Residential Repair and Remodel Work”.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC
encl.

Date Composed: 12/08/1998 Date Modified: 10/10/2001

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