When is a Kansas sale exempt because the goods are shipped out of state, and what proof of out-of-state delivery does Kansas accept?

Plain-English summary

A seller with a Kansas location asked how Kansas sales tax applies to goods sold there but shipped elsewhere. The Department drew a clear line based on how the goods leave the state.

Not taxable — delivery out of state. "When a Kansas seller is obligated to deliver said property to a point outside Kansas 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."

Taxable — delivery in state. "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." In other words, if the buyer takes possession in Kansas, the later out-of-state trip does not undo the tax.

Accepted proof of out-of-state transportation. The Department listed three:

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."

Resale parts, and no general export exemption. If the buyer was purchasing machinery repair and replacement parts for resale, the seller "would merely need to obtain a properly completed resale exemption certificate." And the Department cautioned: "Unlike some states, Kansas does not have a general law that exempts property intended for export." Export alone is not an exemption — the delivery method is what controls.

What this means for you

Retailers shipping goods across state lines

To keep an out-of-state sale free of Kansas tax, make sure the goods leave the state the right way: you deliver them to an out-of-state point yourself, or you hand them to an interstate common carrier or the mails for shipment out of state. Keep the waybill, bill of lading, postal receipt, or signed trip sheet as your proof.

Counter and will-call sales are still taxable

If the buyer (or the buyer's own non-carrier agent) picks up the goods in Kansas, charge Kansas tax — even if the buyer tells you they are taking the goods out of state. The buyer's later transport does not exempt the sale.

"For export" is not an exemption in Kansas

Do not treat goods as exempt just because they are destined for another state. Kansas has no general export exemption; the tax outcome turns on how delivery is made. A resale of parts, by contrast, can be exempt with a properly completed resale exemption certificate.

Common questions

Q: Is a Kansas sale taxable if the goods are shipped out of state?
A: Not when the seller is obligated to deliver the goods to an out-of-state point, or delivers them to an interstate common carrier or the mails for out-of-state shipment. Then Kansas sales tax does not apply.

Q: What if the buyer picks up the goods in Kansas and drives them out of state?
A: The sale is taxable. When goods are delivered in Kansas to the buyer or the buyer's agent (other than a common carrier), the tax applies even though the buyer later transports them out of state.

Q: What proof does Kansas accept for out-of-state delivery?
A: A waybill or bill of lading made to the seller's order; an insurance or registry receipt from the postal department; 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 Department did not cite a specific statute; it explained that a sale is not subject to Kansas tax when the seller is obligated to deliver out of state or delivers to an interstate common carrier or the mails, that in-state delivery to the buyer is taxable notwithstanding later export, and that Kansas has no general export exemption (parts for resale being exemptible with a resale certificate). Because no statute is quoted in the ruling itself, none is listed above.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1999-278

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

February 3, 2000

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Dear Mr. TTTTT:

We wish to acknowledge receipt of your letter postmarked August 3, 1999, regarding the application of Kansas Retailers’ Sales tax to sales made at one of your Kansas locations.

Please be advised that when a Kansas seller is obligated to deliver said property to a point outside Kansas 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 machinery repair and replacement parts for resale purposes, your company would merely need to obtain a properly completed resale exemption certificate. Unlike some states, Kansas does not have a general law that exempts property intended for export.

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: 03/15/2000 Date Modified: 10/11/2001

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