Are charges for Internet service subject to Kansas sales tax?

Plain-English summary

An Internet service provider asked whether Internet services are subject to Kansas sales tax. The Department said they are not.

The reasoning is about how Kansas taxes services. In Kansas, a service is taxable only if it is enumerated — specifically listed — in K.S.A. 79-3603. Because Internet services are not listed in 79-3603, charges to customers for Internet use are not taxable, and an Internet provider's charges to consumers should not be taxed.

This is the general rule for Internet access charges. A companion ruling from the same period, P-1999-55, reaches the same conclusion for Internet access while drawing a line: the underlying telephone transmission service that an Internet provider buys can be a taxable telephone service under K.S.A. 79-3603(b), so a bundled charge may need to be unbundled. For a straightforward charge to end-user customers for Internet use, though, no Kansas sales tax applies.

What this means for you

If you sell or buy Internet access in Kansas, the starting point is that the access charge is untaxed.

• Services are taxed only if listed. Kansas taxes a service only when 79-3603 enumerates it. If a service isn't on the list, it isn't taxable — and Internet service isn't on the list.
• Internet access charges to customers are not taxable. An ISP's charges to consumers for Internet use should not have Kansas sales tax added.
• Watch bundled telecom components. As P-1999-55 explains, telephone transmission services can be taxable even though Internet access isn't; if you bill Internet access bundled with taxable telecom, separate the components.
• Federal law also protects Internet access. The federal Internet Tax Freedom Act broadly bars new state taxes on Internet access, reinforcing the Kansas result (a point the Department developed in P-1999-55).

Common questions

Are Internet service charges taxable in Kansas?
No. Charges to customers for Internet use are not subject to Kansas sales tax.

Why aren't they taxed?
Because Kansas taxes a service only if it is enumerated in K.S.A. 79-3603, and Internet services are not listed there.

Does an ISP charge sales tax to its customers?
Not on Internet use. The Department said an Internet provider's charges to consumers for Internet use should not be taxed.

Is any part of an ISP's costs taxable?
Possibly the telecom inputs. Companion ruling P-1999-55 explains that telephone transmission services billed to an Internet provider can be taxable under 79-3603(b), even though Internet access itself is not taxed.

Citations and references

• K.S.A. 79-3603 — enumerates the services subject to Kansas sales tax; because Internet services are not among the listed (enumerated) services, charges to customers for Internet use are not taxable.

Source

• Original ruling (DOCX): https://www.ksrevenue.gov/pildocs/rulings/P-1999-25.docx
• Kansas Policy Information Library: https://www.ksrevenue.gov/prpil.html

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

February 26, 1999

XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX

Dear XXXXXXXXX:

I have been asked to respond to your letter of February 10, 1999. In it, you ask if Internet services are subject to Kansas sales tax. You state that your XXXXXXXX is an Internet provider.

Charges to customers for Internet use are not subject to Kansas sales tax. Charges for services are subject to sales tax in Kansas only if the service is enumerated in K.S.A. 79-3603. Since Internet services are not listed in K.S.A. 79-3603, Internet charges to consumers should not be taxed.

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 by operation of law without further department action if there is a change in the controlling statutes, administrative regulations, revenue rulings or case law that materially affects this determination..

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

Date Composed: 03/01/1999 Date Modified: 10/11/2001

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