Is a civic organization sponsoring community youth activities exempt from Kansas sales tax on its purchases and its fundraising sales?

Plain-English summary

A civic organization that sponsors community youth activities asked whether it is exempt from Kansas sales tax.

Nonprofit status alone is not enough. The Department acknowledged that "[m]any organizations, such as your civic organization, perform a great deal of services for their communities with the funds that they raise. However, not every non-profit organization enjoys an exemption from Kansas sales tax. Yours does not."

Purchases are taxable. The organization "would be obligated to pay any applicable Kansas sales tax(es) on its purchases of tangible personal property and taxable services, which would include, but not be limited to, sports equipment, uniforms, transportation, lighting, general maintenance, upkeep and improvements to the ball field, park, and playground equipment." One carve-out: "Mowing services are not currently subject to sales tax in the state of Kansas."

Its own sales are taxable too. The organization "would be obligated to register, collect, and remit both state and local sales tax on retail sales of admission tickets, shirts, hats, posters, snack-type items, and etc."

Resale purchases. "Items purchased for resale may be purchased without sales tax, by providing the vendor with a properly completed Kansas resale exemption certificate."

Bottom line: this civic group is treated like any taxable business — it pays tax on what it buys for its own use and collects tax on what it sells, and it must register with the Department to do so.

What this means for you

Being a nonprofit does not exempt your purchases

Kansas grants sales-tax exemptions only to specific listed organizations. A general community or civic group that sponsors youth activities is not on that list, so it pays sales tax on equipment, uniforms, transportation, lighting, and field/park/playground maintenance, upkeep, and improvements.

Mowing services are not taxed

Kansas did not tax mowing services at the time of this ruling, so those particular grounds-keeping charges were not taxable — but most other maintenance and improvement purchases are.

You must register and collect tax on your own sales

Fundraising and program sales — admission tickets, shirts, hats, posters, snacks — are taxable retail sales. The organization has to register with the Department and collect and remit both state and local tax on that gross.

Buy resale inventory tax-free with a certificate

Merchandise the group buys specifically to resell (not for its own use) can be purchased tax-free by giving the vendor a completed Kansas resale exemption certificate; the tax is then collected when the group sells the item.

Common questions

Q: Is our civic organization exempt from Kansas sales tax because we are nonprofit?
A: No. The Department stated that "not every non-profit organization enjoys an exemption from Kansas sales tax. Yours does not."

Q: Do we pay tax on equipment, uniforms, and field maintenance?
A: Yes — on sports equipment, uniforms, transportation, lighting, and general maintenance, upkeep, and improvements to the ball field, park, and playground equipment. Mowing services were not taxed.

Q: Do we have to collect tax on ticket, shirt, and snack sales?
A: Yes. You must register, collect, and remit both state and local sales tax on those retail sales. Items bought purely for resale can be purchased tax-free with a Kansas resale exemption certificate.

Citations and references

• K.S.A. 79-3603 — imposes Kansas retailers' sales tax on taxable retail sales of tangible personal property and enumerated services; this civic organization is not within any statutory exemption for its purchases or its sales.
• 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-1999-140

Original ruling text

Private Letter Ruling

Body:

Office of Policy and Research

June 23, 1999

TTTTTTTTTTTT
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Dear Mr. TTTTTT:

We wish to acknowledge receipt of your letter dated June 21, 1999, regarding the application of Kansas Retailers’ Sales tax.

Many organizations, such as your civic organization, perform a great deal of services for their communities with the funds that they raise. However, not every non-profit organization enjoys an exemption from Kansas sales tax. Yours does not.

Your organization would be obligated to pay any applicable Kansas sales tax(es) on its purchases of tangible personal property and taxable services, which would include, but not be limited to, sports equipment, uniforms, transportation, lighting, general maintenance, upkeep and improvements to the ball field, park, and playground equipment. Mowing services are not currently subject to sales tax in the state of Kansas.

In closing, your organization also would be obligated to register, collect, and remit both state and local sales tax on retail sales of admission tickets, shirts, hats, posters, snack-type items, and etc. Items purchased for resale may be purchased without sales tax, by providing the vendor with a properly completed Kansas resale exemption certificate. For your convenience, I have enclosed a Kansas Department of Revenue Business Tax Application, along with the applicable instructions. Additionally, I have enclosed a Kansas resale exemption certificate.

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

If I may be of further assistance, please contact me at your earliest convenience at (785) 296-7776.

Sincerely yours,

Thomas P. Browne, Jr.
Tax Specialist

TPB

Enc

Date Composed: 07/07/1999 Date Modified: 10/11/2001

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