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Ezel / Tax Rulings / KS
KS P-1999-227 Kansas Retailers' Sales Tax 1999-10-15

How does Kansas sales tax apply to security equipment installation and monitoring for commercial versus residential customers?

Short answer: Monitoring is not taxable; commercial installations are taxed on both labor and materials, while residential installations are taxed only on materials. A Missouri company that installs security equipment and provides monitoring asked the Department to confirm how Kansas sales tax applies to Kansas accounts. The Department confirmed three points: (1) charges for monitoring service are not taxable, because the Kansas retailers' sales tax act does not impose tax on monitoring services; (2) equipment installed in a Kansas commercial establishment is taxable on both labor and materials, under K.S.A. 79-3603(a) (property) and K.S.A. 79-3603(p) (installation labor); and (3) equipment installed in a Kansas residence is taxable only on the materials, because installation labor into a residence is exempt under K.S.A. 79-3603(p).

Apply this to your situation

This page answers the general question as of 1999. Ezel answers yours, under current Kansas tax law, with citations.

Currency note: this ruling is from 1999
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Kansas Department of Revenue Private Letter Ruling (issued under K.A.R. 92-19-59). It binds the Department only as to the specific retailer who requested it and the facts stated; taxpayer-identifying details are redacted. It may not be cited or relied upon as precedent by any other person, and it ceases to be valid if a statute, regulation, or interpretation it relied upon changes substantially. Kansas state and local sales and use taxes are administered centrally by the Department, so there is no self-collected home-rule city tax outside its scope. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

A Missouri company that "installs security equipment and provides monitoring service" was considering buying a company with Kansas accounts and asked the Department to confirm how Kansas sales tax would apply. The Department confirmed the company's understanding on all three points.

Monitoring service — not taxable. "A Missouri company charging Kansas residents for monitoring service is not required to charge Kansas sales tax for monitoring." The reason: "the Kansas retailers' sales tax act does not impose sales tax on monitoring services." Monitoring is not an enumerated taxable service.

Commercial installation — labor and materials both taxable. "Equipment installed in a Kansas commercial establishment is subject to sales tax for both labor and materials." Kansas taxes all sales of tangible personal property under K.S.A. 79-3603(a), and "[l]abor services for the installation of tangible personal property are specifically enumerated in the law as a service which is subject to tax" under K.S.A. 79-3603(p).

Residential installation — materials only. "Equipment installed in a Kansas residence is subject to sales tax only on the materials." The property itself is taxable under K.S.A. 79-3603(a), but "there is an exemption from sales tax for labor services performed for the installation of tangible personal property such as monitoring equipment into a residence" under K.S.A. 79-3603(p). So the installation labor at a residence is not taxed.

Bottom line: the answer depends on where the equipment is installed. Monitoring is never taxed; a commercial install is taxed on both labor and materials; a residential install is taxed on materials only, because residential installation labor is exempt.

What this means for you

Security and alarm companies

Do not charge Kansas sales tax on monitoring service. On installations, tax both the labor and the materials for commercial jobs, but tax only the materials for residential jobs — the installation labor into a residence is exempt. Track the job type so you bill tax correctly.

Out-of-state (e.g., Missouri) companies serving Kansas customers

The same Kansas rules apply to your Kansas accounts. Monitoring charges to Kansas customers are not subject to Kansas sales tax, but your Kansas installations follow the commercial/residential split above.

Commercial vs. residential customers

Commercial customers should expect tax on both the equipment and the installation labor. Residential customers should expect tax on the equipment (materials) but not on the installation labor.

Common questions

Q: Is security-system monitoring taxable in Kansas?
A: No. The Kansas retailers' sales tax act does not impose sales tax on monitoring services.

Q: How is a commercial security installation taxed?
A: Both the labor and the materials are taxable — the property under K.S.A. 79-3603(a) and the installation labor under K.S.A. 79-3603(p).

Q: How is a residential security installation taxed?
A: Only the materials are taxable. Installation labor into a residence is exempt under K.S.A. 79-3603(p), so it is not taxed.

Citations and references

  • K.S.A. 79-3603(a) — imposes sales tax on the sale of tangible personal property; the basis for taxing the security equipment (materials) in both commercial and residential installations.
  • K.S.A. 79-3603(p) — taxes labor services for installing tangible personal property, but exempts such installation labor performed into a residence; the basis for taxing commercial installation labor while exempting residential installation labor.

Source

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

October 15, 1999

XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXXXX

Re: Kansas Sales Tax

Dear XXXXX:

Your correspondence of May 25, 1999, has been referred to me for response. Thank you for your inquiry.

Your letter indicates you are a Missouri company which installs security equipment and provides monitoring service. You are contemplating purchasing a company which has accounts in Kansas. By your letter you ask for confirmation of your understanding of how the Kansas sales tax would apply to your business. You note it is your understanding that:

· A Missouri company charging Kansas residents for monitoring service is not required to charge Kansas sales tax for monitoring.
· If equipment is installed in a Kansas commercial establishment both labor and materials are subject to Kansas sales tax.
· If equipment is installed in a Kansas resident only the material is subject to Kansas sales tax.

In response to your request, please be advised your understanding is correct.

A Missouri company charging Kansas residents for monitoring service is not required to charge Kansas sales tax for monitoring. This is true because the Kansas retailers’ sales tax act does not impose sales tax on monitoring services.

Equipment installed in a Kansas commercial establishment is subject to sales tax for both labor and materials. Kansas law generally imposes sales tax on all sales of tangible personal property [K.S.A. 79-3603(a)]. Labor services for the installation of tangible personal property are specifically enumerated in the law as a service which is subject to tax [K.S.A. 79-3603(p)].

Equipment installed in a Kansas residence is subject to sales tax only on the materials. Kansas law generally imposes sales tax on all sales of tangible personal property [K.S.A. 79-3603(a)]. Labor services for the installation of tangible personal property are specifically enumerated in the law as a service which is subject to tax, but there is an exemption from sales tax for labor services performed for the installation of tangible personal property such as monitoring equipment into a residence [K.S.A. 79-3603(p)].

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

Table 1

Ruling Number: P-1999-227

Table 2

Tax Type: Kansas Retailers' Sales Tax
Brief Description: Installation of security equipment and provision of monitoring services by a Missouri company to Kansas businesses and residents.
Keywords:
Approval Date: 10/15/1999

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