Can a library buy books free of Kansas sales tax, and does it get a tax-exempt number?

Plain-English summary

A library reported that book companies and other vendors, which used to let it buy without paying sales tax, now demand its "tax exempt number," and it asked the Department to provide one.

The tax and the general rule. The Kansas retailers' sales tax is imposed by K.S.A. 79-3603, subsection (a): tax on "[t]he gross receipts received from the sale of tangible personal property at retail within this state." The Department then explained: "Libraries, per se, do not qualify for exemption."

When a library IS exempt. "However, a library which operate[s] as a political subdivision will enjoy the exemption extended to a political subdivision." The controlling exemption, K.S.A. 79-3606(b), covers property and services "purchased directly by the state of Kansas, a political subdivision thereof, other than a school or educational institution ... and used exclusively for state, political subdivision, [or specified hospital/blood-bank] purposes."

What "political subdivision" means. K.S.A. 79-3602(n) defines it as "any municipality, agency or subdivision of the state which is, or shall hereafter be, authorized to levy taxes upon tangible property within the state or which certifies a levy" to such an entity, and it "also shall include any public building commission, housing, airport, port, metropolitan transit or similar authority established pursuant to law."

The holding. "If your library is a political subdivision it qualifies for the exemption ... it can provide book companies and other businesses with an exemption certificate and make purchases exempt from sales tax.... On the other hand, if your library is not a political subdivision it is responsible for paying tax on any purchases it makes."

Bottom line: the answer turns on whether the library is legally a political subdivision. If so, it uses an exemption certificate (Kansas works by certificate, not by issuing a "tax-exempt number"); if not, its purchases are taxable.

What this means for you

Being a "library" does not by itself exempt you

Kansas does not grant a blanket exemption to libraries. The exemption depends on the library's legal status, not its function.

A library that is a political subdivision is exempt

If the library is organized as a political subdivision — generally a municipal or state subdivision authorized to levy property taxes (or that certifies a levy), or a qualifying public authority — it qualifies for the K.S.A. 79-3606(b) exemption and can buy books and supplies tax-free.

The mechanism is an exemption certificate, not a "number"

Vendors asking for a "tax exempt number" are really asking for documentation. A qualifying political-subdivision library provides a completed exemption certificate to its vendors, which is what supports the tax-free purchase.

If you are not a political subdivision, you pay tax

A library that is not a political subdivision (for example, some independently organized or association libraries) is responsible for paying Kansas sales tax on its purchases. Confirm your entity's legal status before claiming exemption.

Common questions

Q: Can a library always buy books without sales tax?
A: No. Libraries "per se" do not qualify. Only a library that operates as a political subdivision gets the exemption.

Q: How does a qualifying library document the exemption?
A: By giving vendors a completed exemption certificate. Kansas uses exemption certificates rather than issuing a tax-exempt number.

Q: What if the library is not a political subdivision?
A: Then it "is responsible for paying tax on any purchases it makes."

Citations and references

• K.S.A. 79-3603(a) — imposes Kansas retailers' sales tax on the gross receipts from the retail sale of tangible personal property in the state.
• K.S.A. 79-3606(b) — exempts direct purchases by the state and its political subdivisions (and certain hospitals and blood/tissue/organ banks) used exclusively for those purposes.
• K.S.A. 79-3602 — defines "political subdivision" (subsection (n)) for purposes of the sales-tax act.
• 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-1999-129

Original ruling text

Private Letter Ruling

Body:

Office of Policy and Research

June 10, 1999

XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX

Re: Kansas Sales Tax

Dear XXXXX:

Your correspondence of April 30, 1999, has been referred to me for response. Thank you for your inquiry.

Your letter indicates that in the past certain book companies and other business have allowed your library to make purchases without paying sales tax. These same companies are now requiring your tax exempt number. Therefore, by your letter you are requesting we provide you with a tax exempt number.

The Kansas retailers’ sales tax is imposed by K.S.A. 79-3603. Subsection (a) of the statute imposes sales tax on:

(a) The gross receipts received from the sale of tangible personal property at retail within this state;

Exemptions from sales tax are found in K.S.A. 79-3606. Libraries, per se, do not qualify for exemption. However, a library which operate as a political subdivision will enjoy the exemption extended to a political subdivision. The controlling statute, K.S.A. 79-3606(b) provides an exemption for:

(b) all sales of tangible personal property or service, including the renting and leasing of tangible personal property, purchased directly by the state of Kansas, a political subdivision thereof, other than a school or educational institution, or purchased by a public or private nonprofit hospital or public hospital authority or nonprofit blood, tissue or organ bank and used exclusively for state, political subdivision, hospital or public hospital authority or nonprofit blood, tissue or organ bank purposes, . . . .

The term “political subdivision” is defined in K.S.A. 79-3602. Subsection (n) of the statute provides:

(n) “Political subdivision” means any municipality, agency or subdivision of the state which is, or shall hereafter be, authorized to levy taxes upon tangible property within the state or which certifies a levy to a municipality, agency or subdivision of the state which is, or shall hereafter be, authorized to levy taxes upon tangible property within the state. Such term also shall include any public building commission, housing, airport, port, metropolitan transit or similar authority established pursuant to law.

If your library is a political subdivision it qualifies for the exemption permitted by K.S.A. 79-3606. In this event, it can provide book companies and other businesses with an exemption certificate and make purchases exempt from sales tax. A copy of the exemption certificate is enclosed for your convenience. On the other hand, if your library is not a political subdivision it is responsible for paying tax on any purchases it makes.

I trust this information is of assistance. If I can be of further service, please feel free to contact me.

Sincerely,

Jim Weisgerber
Attorney
Tax Specialist

JW:jw

Enclosure: State of Kansas or Political Subdivision Exemption Certificate

Date Composed: 06/22/1999 Date Modified: 10/11/2001

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