Are hotel room rentals purchased directly by a school exempt from Kansas sales tax, and does the transient guest tax still apply?

Plain-English summary

A school asked how Kansas sales tax applies when an educational institution rents hotel rooms. The Department explained that a direct purchase by the school is exempt from sales tax, but with important conditions — and a separate tax that still applies.

The exemption. Kansas exempts "all sales of tangible personal property or services, including the renting and leasing of tangible personal property, purchased directly by a public or private elementary or secondary school or public or private nonprofit educational institution and used primarily by such school or institution for nonsectarian programs and activities provided or sponsored by such school or institution," under K.S.A. 79-3606(c). So "[d]irect sales to your school are exempt from Kansas retailers' sales tax."

What makes it a "direct sale." A direct sale must meet all the requirements of K.A.R. 92-19-76: "the billing from the hotel must be to the school, and . . . payment must be made to the hotel on a school check or voucher." Critically, "[p]urchases by teachers, students or school organizations or groups are not exempt." If an individual pays and seeks reimbursement, the exemption does not apply.

Transient guest tax still applies. The Department flagged the key limit: "while these charges are exempt from Kansas sales tax, they are still subject to Kansas transient guest tax." The sales-tax exemption does not reach the separate transient guest (lodging) tax.

Bottom line: a school can rent hotel rooms free of sales tax only through a proper direct purchase (billed to and paid by the school), and even then the transient guest tax is still owed.

What this means for you

Schools and educational institutions booking lodging

To get the sales-tax exemption on hotel rooms, buy directly: have the hotel bill the school and pay with a school check or voucher. Rooms an employee or student pays for personally — even for school business — are not exempt, so arrange direct billing in advance.

Hotels serving school groups

Honor the exemption only on a proper direct sale documented under K.A.R. 92-19-76 (billed to and paid by the school). Keep the school's exemption certificate and payment records. Do not exempt rooms paid for by individual teachers, students, or groups.

The transient guest tax is separate

Even on an exempt direct purchase, collect the Kansas transient guest tax on the room charges. The sales-tax exemption does not extend to that lodging tax.

Common questions

Q: Are hotel rooms bought by a school exempt from Kansas sales tax?
A: Yes, if it is a direct purchase. Rentals purchased directly by a qualifying school or nonprofit educational institution are exempt under K.S.A. 79-3606(c).

Q: What makes a hotel purchase a qualifying "direct sale"?
A: Under K.A.R. 92-19-76, the hotel must bill the school and be paid by a school check or voucher. Rooms paid for by teachers, students, or school groups are not exempt.

Q: Does the school still owe any tax on the rooms?
A: Yes. Even when the sales-tax exemption applies, the charges remain subject to Kansas transient guest tax.

Citations and references

• K.S.A. 79-3606(c) — exempts tangible personal property and services (including rentals) purchased directly by a qualifying public/private school or nonprofit educational institution for its nonsectarian programs; the basis for exempting the school's direct hotel-room rentals from sales tax.
• K.A.R. 92-19-76 — defines the "direct purchase" requirements: billing to the school and payment by school check or voucher, with purchases by teachers, students, or groups excluded; the standard the hotel rental must meet to be exempt.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1999-245

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

November 4, 1999

XXXXXXXXXXXX
XXXXXXXXXXXXXX
XXXXXXXXXXXXXXX

I have been asked to respond to your letter dated November 4, 1999. In it, you ask for guidance in the application sales tax on sales to educational institutions on rentals of hotel rooms.

Direct sales by Kansas retailers to XXXXXXXXXXXXX are exempt from Kansas retailers’ sales tax.

Kansas sales tax law exempts “all sales of tangible personal property or services, including the renting and leasing of tangible personal property, purchased directly by a public or private elementary or secondary school or public or private nonprofit educational institution and used primarily by such school or institution for nonsectarian programs and activities provided or sponsored by such school or institution. . .” K.S.A. 79-3606(c).

Direct sales to your school are exempt from Kansas retailers’ sales tax. A “direct sale” is one that meets all requirements as contained in Kansas Administrative Regulation 92-19-76. This means that the billing from the hotel must be to the school, and that payment must be made to the hotel on a school check or voucher. Purchases by teachers, students or school organizations or groups are not exempt. See Kansas administrative Regulation 92-19-76 contained in Appendix. Please note that while these charges are exempt from Kansas sales tax, they are still subject to Kansas transient guest 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.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

Date Composed: 11/05/1999 Date Modified: 10/11/2001

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