Does Kansas sales tax apply when a seller ships tangible personal property to a buyer at a point outside Kansas?

Plain-English summary

A seller asked whether Kansas sales tax applies when tangible personal property is delivered to a customer at a point outside Kansas. The Department drew the line at where delivery occurs.

Out-of-state delivery — no Kansas tax. "[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." The determining factor is that the seller moves the goods out of state (itself, or through a common carrier or the mail).

In-state delivery — taxable even if later exported. By contrast, "where tangible personal property pursuant to a sale is delivered in this state to the buyer or his agent other than a common carrier, the sales tax applies, notwithstanding that the buyer may subsequently transport the property out of this state." Handing the goods to the buyer (or the buyer's own agent) in Kansas is a taxable Kansas sale; the buyer taking them across the state line afterward does not undo the tax.

Proof of out-of-state delivery. The Department listed the "most acceptable proof": (1) "[a] waybill or bill of lading made out to the seller's order calling for delivery"; (2) "[a]n insurance or registry receipt issued by the United States postal department, or a post office department's receipt"; or (3) "[a] trip sheet signed by the seller's delivery agent and showing the signature and address of the person outside the state who received the delivered goods."

Sales for resale. Separately, if the buyer is purchasing for resale, the seller "would merely need to obtain a properly completed resale exemption certificate," and Kansas "would accept a resale exemption certificate from your customer's home state."

Bottom line: the exemption for interstate sales turns on the seller delivering the goods out of state (by its own vehicle, common carrier, or mail) and keeping proof. A Kansas pickup is taxable regardless of where the goods end up, and a resale sale is handled with a resale certificate.

What this means for you

Sellers shipping goods out of state

Keep proof that you delivered out of state — a bill of lading to your order, a postal registry/insurance receipt, or a signed trip sheet showing the out-of-state recipient. With that documentation, the sale is not subject to Kansas sales tax.

Watch in-state pickups

If the customer or the customer's own (non-carrier) agent takes possession in Kansas, charge Kansas sales tax, even if they plan to haul the goods out of state. The later export does not make the sale exempt.

Sales for resale

For a resale sale, obtain a properly completed resale exemption certificate. Kansas will accept a resale certificate from the customer's home state.

Common questions

Q: Is a sale taxable if the seller ships the goods out of Kansas?
A: No. When the seller delivers the property out of state — including by interstate common carrier or the mail — Kansas sales tax does not apply.

Q: What if the buyer picks the goods up in Kansas and drives them out of state?
A: That in-state delivery is taxable. The tax applies even though the buyer later transports the property out of Kansas.

Q: What proof of out-of-state delivery does Kansas accept?
A: A waybill or bill of lading to the seller's order, a U.S. postal insurance/registry or post office receipt, or a trip sheet signed by the seller's delivery agent showing the out-of-state recipient's signature and address.

Citations and references

• The ruling states the interstate-delivery and in-state-pickup rules, the three accepted proofs of out-of-state delivery, and the resale-certificate point as the Department's administrative policy without citing a specific K.S.A. subsection; the reasoning is described in prose above rather than tied to a numbered statute.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1999-224

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

October 11, 1999

TTTTTTTTTTT
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Dear Ms. TTTTTT:

We wish to acknowledge receipt of your letter dated September 13, 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. However, where tangible personal property pursuant to a sale is delivered in this state to the buyer or his agent other than a common carrier, the sales tax applies, notwithstanding that the buyer may subsequently transport the property out of this state.

The most acceptable proof of transportation outside the state will be:

1) A waybill or bill of lading made out to the seller’s order calling for delivery; or
2) An insurance or registry receipt issued by the United States postal department, or a post office department’s receipt; or
3) A trip sheet signed by the seller’s delivery agent and showing the signature and address of the person outside the state who received the delivered goods.

In closing, if the buyer was purchasing the books for resale purposes, your company would merely need to obtain a properly completed resale exemption certificate. The state of Kansas would accept a resale exemption certificate from your customer’s home state.

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: 10/19/1999 Date Modified: 10/11/2001

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