Which local sales tax applies to airplane sales and rentals — and how is the location determined?

Plain-English summary

A company selling and/or renting airplanes asked which local sales tax applies. The Department explained the Kansas sourcing rule: for local sales tax purposes, all retail sales occur at the place of business of the retailer.

Based on the information provided, the place where the airplane order is taken and where negotiations are carried on is the company's sales office. Accordingly, if that sales office is located in a city or county that has imposed a local sales tax, the company must collect the appropriate state and local sales tax on its taxable sales and/or rentals of airplanes.

What this means for you

If you sell or lease aircraft (or other tangible personal property) in Kansas, the local sales tax rate generally follows your place of business, not the customer's location.

• Sourced to the sales office. The relevant location is where the order is taken and negotiated — the retailer's place of business.
• Local tax depends on that location. If your sales office sits in a taxing city or county, collect the applicable state and local sales tax on taxable sales and rentals.
• Applies to both sales and rentals. The Department applied the rule to taxable sales and/or rentals of airplanes.

(Note: while this ruling is indexed under "Airplane hanger rental," the Department's stated analysis addresses the local-tax sourcing of the company's taxable airplane sales and rentals to its place of business.)

Common questions

Which local sales tax applies to an aircraft sale in Kansas?
The local tax of the city or county where the retailer's place of business (the sales office where the order is taken and negotiated) is located.

Does the customer's location determine the local rate?
Under this ruling, no — the sale is sourced to the retailer's place of business for local sales tax purposes.

Does the rule apply to rentals as well as sales?
Yes. The Department applied it to the company's taxable sales and/or rentals of airplanes.

What if the sales office is in a non-taxing area?
The obligation to collect local tax arises if the sales office is in a city or county that has imposed a local sales tax; the state tax still applies to taxable transactions.

Citations and references

• The ruling states the Kansas local-sales-tax sourcing rule that all retail sales occur at the retailer's place of business; it does not cite a specific numbered statute.

Source

• Original ruling (DOCX): https://www.ksrevenue.gov/pildocs/rulings/P-1999-88.docx
• Kansas Policy Information Library: https://www.ksrevenue.gov/prpil.html

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

March 22, 1999

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Dear Ms. TTTTTTTT:

We wish to acknowledge receipt of your letter dated March 3, 1999, regarding the application of Kansas Retailers’ Sales tax.

For local sales tax purposes, all retail sales occur at the place of business of the retailer. Based upon the information that you provided in your letter to this department, it appears that the place where the airplane order is taken and where the negotiations are carried on is your sales office. With this in mind, if your sales office is located in a city or county that has imposed a local sales tax, then your company would be obligated to collect the appropriate state and local sales tax(es) on your respective taxable sales and or rentals of airplanes.

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: 04/02/1999 Date Modified: 10/11/2001

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