Is a Kansas sale exempt when the seller ships the goods out of state by common carrier or the mail?

Plain-English summary

A seller asked the Department how Kansas Retailers' Sales tax applies when goods are shipped out of state.

The rule. "[W]hen the seller of tangible personal property is obligated to deliver said property to a point outside the state or delivers the respective property to an interstate common carrier or the mails for transportation to a point outside this state, the Kansas sales tax(es) does not apply."

Two ways to qualify. The exemption applies either when (1) the seller is obligated to deliver the property to a point outside Kansas, or (2) the seller delivers the property to an interstate common carrier or to the mails for transportation to a point outside Kansas. In both cases the goods leave the state in the stream of interstate commerce under the seller's delivery.

Bottom line: a sale is not subject to Kansas sales tax where the seller's delivery carries the goods out of state — either by the seller's own obligation to deliver outside Kansas, or by handing the goods to an interstate common carrier or the mail for out-of-state transportation. (This ruling addresses delivery out of Kansas; goods a customer picks up in Kansas can be taxed even if later removed from the state.)

What this means for you

Delivery out of state, by the seller, is the key

The exemption depends on the seller's delivery moving the goods out of Kansas — the seller being obligated to deliver outside the state, or turning the goods over to a common carrier or the mail bound for an out-of-state destination. That is what places the sale in interstate commerce.

Keep proof of the out-of-state delivery

Because the exemption rests on where and how the goods were delivered, retain shipping records — carrier bills of lading, tracking, or postal records — showing the goods were shipped to an out-of-state address. Documentation is what supports the exemption on audit.

Customer pickup in Kansas is different

If the buyer takes possession of the goods in Kansas, the sale can be taxable even if the buyer later carries the goods out of state. The favorable rule here is for deliveries the seller makes to a point outside Kansas.

Common questions

Q: Does Kansas sales tax apply to goods I ship out of state?
A: No, where you as the seller are obligated to deliver them to a point outside Kansas, or you deliver them to an interstate common carrier or the mail for transportation out of state — "the Kansas sales tax(es) does not apply."

Q: What if the customer picks the goods up at my Kansas store and drives them out of state?
A: That is a different situation. This ruling addresses the seller's delivery of goods to a point outside Kansas; an in-state pickup can be taxable even if the goods are later removed from the state.

Q: What should I keep to prove the sale qualifies?
A: Records showing the out-of-state delivery — common-carrier or postal shipping documents to an out-of-state destination — since the exemption turns on how and where the goods were delivered.

Citations and references

• The Department stated the interstate-delivery rule directly and did not cite a specific Kansas statute in the ruling. It issued the ruling under K.A.R. 92-19-59, the private-letter-ruling regulation.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1999-168

Original ruling text

Private Letter Ruling

Body:

Office of Policy and Research

July 28, 1999

TTTTTTTTTTT
TTTTTTTTTTT
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Dear Ms. TTTTTT:

We wish to acknowledge receipt of your letter dated June 22, 1999, regarding the application of Kansas Retailers’ Sales tax.

Please be advised that when the seller of tangible personal property is obligated to deliver said property to a point outside the state or delivers the respective property to an interstate common carrier or the mails for transportation to a point outside this state, the Kansas sales tax(es) does not apply.

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, or 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

Date Composed: 08/04/1999 Date Modified: 10/11/2001

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