Could a Kansas retailer store exemption certificates only as scanned electronic images under the 1999 recordkeeping rules?

Plain-English summary

A taxpayer asked whether Kansas allows exemption certificates to be stored as scanned electronic images that can be reproduced on demand in printed form, and whether a printed reproduction of a scanned certificate would satisfy an auditor's request to produce the certificate.

The Department explained that its record-retention regulations, effective in 1987, were written in terms of microfilm and microfiche and did not clearly address electronically stored images. Given the statutory requirement that vendors have in their "possession a properly executed exemption certificate provided by the consumer claiming exemption," the Department construed the rule (K.A.R. 92-19-4a) as requiring the vendor to possess either a physical copy or a microfilm or microfiche copy. Until the regulation could be updated, retailers had to retain the original paper document or a microfilm/microfiche copy meeting K.A.R. 92-19-4a. The Department noted it would review the regulation in the coming months to consider whether and how it should be updated.

(This is a 1999 ruling. Recordkeeping rules and technology have changed since; confirm the current Kansas requirements before relying on this answer for electronic storage today.)

What this means for you

For the era of this ruling, exemption-certificate retention meant paper or film — not scanned images.

• Scanned images weren't enough (in 1999). The rule then recognized paper, microfilm, or microfiche, not electronic images.
• Keep the original paper or film copy. The Department required the original paper document or a compliant microfilm/microfiche copy.
• The Department flagged an update. It said it would review K.A.R. 92-19-4a to consider covering electronic storage.
• Verify today's rule. Given how old this is, check the current regulation before storing certificates electronically.

Common questions

Could a Kansas retailer keep only a scanned image of an exemption certificate (per this 1999 ruling)?
No. The Department required the original paper certificate or a microfilm/microfiche copy, because the rule then didn't clearly cover electronic images.

Would a printout of a scanned certificate satisfy an auditor then?
Not on its own — the retailer had to possess a physical, microfilm, or microfiche copy under K.A.R. 92-19-4a.

Has this changed?
The Department said it would review the rule, and recordkeeping standards have modernized since 1999. Confirm the current requirements before relying on electronic-only storage.

Can other retailers rely on this ruling?
Not directly, and it's dated. A private letter ruling binds the Department only for the requesting taxpayer and stated facts; here the underlying rule was expressly slated for review.

Citations and references

• K.A.R. 92-19-4a — the record-retention regulation (effective 1987, written for microfilm/microfiche) that the Department construed to require possession of a physical, microfilm, or microfiche copy of an exemption certificate; it did not clearly authorize electronic-image storage at the time. The ruling cites no numbered K.S.A. statute.

Source

• Original ruling (DOCX): https://www.ksrevenue.gov/pildocs/rulings/P-1999-50.docx
• Kansas Policy Information Library: https://www.ksrevenue.gov/prpil.html

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

March 3, 1999

XXXX
XXXX
XXXX

RE: Your letter received December 14, 1998

Dear XXXX:

I have been asked to answer your letter received in December. In it, you ask whether Kansas allows exemption certificates to be stored as scanned images on electronic media. Your specific questions are:

1. Does the storage of a certificate, or related relevant documents, as an electronic image, able to be reproduced on demand in printed form, meet your State’s requirements for certificate retention?
2. In the event of any audit proceeding, does the presentation of a printed reproduction of a scanned certificate comply with a request by an official of your department that a company produce a certificate?

Kansas regulations that fix record retention requirements became effective in 1987. These regulations are written in terms of microfilm and microfiche. They do not clearly address electronically stored images. Accordingly, the statutory requirement that vendors have in their “possession a properly executed exemption certificate provided by the consumer claiming exemption” must be construed as requiring vendors to possess either a physical copy or a microfilm or microfiche copy. See K.A.R. 92-19-4a, copy enclosed. We will review this regulation during the next few months to consider whether and how it should be updated. However, until it can be updated, retailers must retail the original paper document or a microfilm or microfiche copy that meets the requirements of K.A.R. 92-19-4a. Please call me if you have any additional questions.

Sincerely,

Thomas E. Hatten
Attorney/Policy & Research

Enclosure

Date Composed: 03/17/1999 Date Modified: 10/11/2001

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