Are internet access fees and web hosting charges subject to Kansas sales tax?

Plain-English summary

A provider asked whether internet access fees and web hosting charges are subject to Kansas sales tax.

The ruling. "Charges for internet access fees and web hosting are not currently subject to sales tax in the state of Kansas. However, you must pay sales tax on all articles of tangible personal property and all taxable services purchased to provide the nontaxable service."

Bottom line: internet access and web hosting are non-taxable services in Kansas, so the provider does not charge its customers sales tax on those fees. But the provider is treated as the final consumer of the things it buys to deliver the service — equipment, supplies, and any taxable services — and must pay Kansas sales tax on those purchases.

What this means for you

Internet access and web hosting are not taxed

The Department confirmed that charges for internet access fees and web hosting are not currently subject to Kansas sales tax. The provider does not collect tax from customers on those charges.

The provider pays tax on its inputs

Because the service is nontaxable, the provider is the consumer of the property and services it uses to deliver it. It must pay sales tax on all tangible personal property and all taxable services it purchases to provide internet access and web hosting.

"Not currently" reflects the law as of 1998

The Department framed the answer as the treatment in effect at the time ("not currently subject to sales tax"). Later statutory changes could alter the result, and this ruling ceases to be valid if the law it relied upon changes substantially.

Separate your taxable inputs from your nontaxable output

The nontaxable status of the service does not extend to the provider's purchases; those follow the ordinary rules for taxable tangible personal property and taxable services.

Common questions

Are internet access fees taxable in Kansas?
No. The Department ruled they are not currently subject to Kansas sales tax.

Is web hosting taxable?
No. Web hosting charges are not currently subject to Kansas sales tax.

Does the provider owe any tax?
Yes. It must pay sales tax on all tangible personal property and taxable services it buys to provide the nontaxable service.

Does the provider charge customers tax on these fees?
No, because the service itself is not taxable — the tax falls on the provider's own purchases.

Citations and references

• The ruling states in prose that internet access fees and web hosting are not currently subject to Kansas sales tax, but the provider must pay sales tax on the tangible personal property and taxable services it purchases to provide the nontaxable service. No numbered statute is cited.
• 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 June 30, 1998 by Mark D. Ciardullo, Tax Specialist, Kansas Department of Revenue.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1998-55

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

June 30, 1998

XXXXXXXXXXXXX
XXXXXXXXXXXXX
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Dear XXXXXXXXXX:
The purpose of this letter is to respond to your letter dated June 4, 1998.

Charges for internet access fees and web hosting are not currently subject to sales tax in the state of Kansas. However, you must pay sales tax on all articles of tangible personal property and all taxable services purchased to provide the nontaxable service.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

Date Composed: 07/01/1998 Date Modified: 10/10/2001

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