Does an antique dealer conducting estate sales for owners and their heirs have to collect Kansas sales tax?

Plain-English summary

An antique dealer planning to run estate sales for owners and their heirs asked whether it must collect Kansas sales tax. At these sales, "second hand items such as household items, antiques, appliances and other personal belongings are sold in a garage sale fashion over a three day sale at the home of the owner." The dealer is "enlisted to sort, price, arrange and sell the houseful," deposits the proceeds into its own account, and "issues a check to the owner for the total amount less the dealer's commission and any fees." The dealer worried about audit exposure for not collecting tax.

The general tax, and the exemption. Kansas sales tax is imposed by K.S.A. 79-3603, and subsection (a) taxes "[t]he gross receipts received from the sale of tangible personal property at retail within this state." But K.S.A. 79-3606(l) exempts "all isolated or occasional sales of tangible personal property, services, substances or things, except isolated or occasional sale of motor vehicles specifically taxed under the provisions of subsection (o) of K.S.A. 79-3603."

The key definition. "Isolated or occasional sale" is defined in K.S.A. 79-3602(j) as "the nonrecurring sale of tangible personal property . . . by a person not engaged at the time of such sale in the business of selling such property." The definition expressly includes "(2) any sale of tangible personal property made by an auctioneer or agent on behalf of not more than two principals or households if such sale is nonrecurring and any such principal or household is not engaged at the time of such sale in the business of selling tangible personal property."

The holding. "Based on these statutes, we are of the opinion that the sales described in your letter are not subject to Kansas sales tax." The dealer is acting as an agent conducting a nonrecurring sale for a household that is not in the business of selling — the situation the isolated-or-occasional-sale exemption is designed to cover.

Bottom line: an estate sale run by a dealer as agent for a household's belongings is an exempt isolated or occasional sale, so the dealer does not collect Kansas sales tax — provided the statutory conditions (nonrecurring, for not more than two principals/households, and the household not being in the selling business) are met.

What this means for you

Estate sale companies and antique dealers

When you run a nonrecurring estate sale as agent for a household's own belongings — and the household is not in the business of selling such property — the sale is an exempt isolated or occasional sale, so you do not collect Kansas sales tax. Keep records showing you acted for not more than two principals or households per sale.

Households and heirs selling a loved one's belongings

Selling off a household's personal property through a dealer at a one-time estate sale is generally not a taxable retail activity. It falls within the isolated-or-occasional-sale exemption, unlike ongoing retail selling.

Where the exemption stops

The exemption is for nonrecurring sales by someone not in the business of selling. Regular, recurring sales, sales of your own inventory, or motor-vehicle sales taxed under K.S.A. 79-3603(o) are treated differently — do not assume every sale you handle is exempt.

Common questions

Q: Does an estate sale dealer collect Kansas sales tax on a household's items?
A: No. The Department ruled these estate sales are exempt isolated or occasional sales under K.S.A. 79-3606(l), so no Kansas sales tax is due.

Q: Why is the dealer's sale exempt when the dealer is in business?
A: Because K.S.A. 79-3602(j) treats a nonrecurring sale made by an auctioneer or agent on behalf of not more than two principals or households — where the household is not in the business of selling — as an isolated or occasional sale.

Q: Are there limits to this exemption?
A: Yes. It applies to nonrecurring sales for not more than two principals/households whose members are not in the business of selling such property, and it does not cover motor vehicles taxed under K.S.A. 79-3603(o).

Citations and references

• K.S.A. 79-3606(l) — exempts isolated or occasional sales of tangible personal property (except motor vehicles taxed under K.S.A. 79-3603(o)); the basis for exempting the estate sales.
• K.S.A. 79-3602(j) — defines "isolated or occasional sale," including a nonrecurring sale made by an auctioneer or agent on behalf of not more than two principals or households not in the business of selling; the definition that fits the dealer's estate sales.
• K.S.A. 79-3603(a) — imposes Kansas sales tax on the gross receipts from retail sales of tangible personal property; the general tax the exemption operates against.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1999-209

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

October 1, 1999

XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX

Re: Kansas Sales Tax

Dear XXXXX:

Your correspondence of September 27, 1999, has been referred to me for response. Thank you for your inquiry.

Your letter indicates your are in the antique business and will soon begin conducting estate sales on behalf of the owners and their heirs. Your letter describes this process, and your concerns, in pertinent part, as follows:

At these sales, second hand items such as household items, antiques, appliances and other personal belongings are sold in a garage sale fashion over a three day sale at the home of the owner or previous owner.

A dealer, such as ourselves, is enlisted to sort, price, arrange and sell the houseful. The dealer deposits the checks and cash into their own checking account then issues a check to the owner for the total amount less the dealer’s commission and any fees.

By depositing large amounts into our checking account, from local sales, which we did not collect sales tax on, I am concerned about the consequences if we were to be audited someday.

The Kansas 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. Subsection (l) of the statute provides an exemption for:

(l) all isolated or occasional sales or tangible personal property, services, substances or things, except isolated or occasional sale of motor vehicles specifically taxed under the provisions of subsection (o) of K.S.A. 79-3603 and amendments thereto;

The phrase “isolated or occasional sale” is defined in K.S.A. 79-3602. Subsection (j) of the statute provides:

(j) “Isolated or occasional sale” means the nonrecurring sale of tangible personal property, or services taxable hereunder by a person not engaged at the time of such sale in the business of selling such property or services. Any religious organization which makes a nonrecurring sale of tangible personal property acquired for the purpose of resale shall be deemed to be not engaged at the time of such sale in the business of selling such property. Such term shall include: (1) Any sale by a bank, savings and loan institution, credit union or any finance company licensed under the provisions of the Kansas uniform consumer credit code of tangible personal property which has been repossessed by any such entity; and (2) any sale of tangible personal property made by an auctioneer or agent on behalf of not more than two principals or households if such sale is nonrecurring and any such principal or household is not engaged at the time of such sale in the business of selling tangible personal property. (Emphasis added.)

Based on these statutes, we are of the opinion that the sales described in your letter are not subject to Kansas sales tax.

This private letter ruling is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to make 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 private letter ruling.

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

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

Table 1

Table 2