Is a labor auction — where volunteers do work for the high bidder — subject to Kansas sales tax?

Plain-English summary

A requester asked about the sales tax treatment of labor auctions. In the auctions described, volunteers offer to do work for whoever is the high bidder for the respective service. The Department advised that, because that is the case, the transaction would not be subject to sales tax in the state of Kansas.

What this means for you

If your group (for example, a nonprofit or school) runs a fundraiser where volunteers auction off their labor to the highest bidder, that transaction was treated as not subject to Kansas sales tax.

• Volunteer labor auctions are not taxed. The key facts were that volunteers perform the work and the service goes to the high bidder.
• Watch the facts. The result rests on the volunteer nature of the labor as described. A different arrangement — for example, auctioning taxable goods, or selling a taxable service performed by the organization's own paid staff/business — could be taxable.
• This is a fundraiser-friendly result, but confirm your own event's structure before relying on it.

Common questions

Is a labor auction taxable in Kansas?
No, on the facts here. The Department ruled that a labor auction in which volunteers do work for the high bidder is not subject to Kansas sales tax.

Why isn't it taxable?
The work is performed by volunteers and provided to the high bidder, which the Department concluded is not a taxable transaction.

Would auctioning goods be treated the same?
Not necessarily. This ruling addresses volunteer labor auctions; auctioning tangible personal property can raise separate sales tax questions.

Can our organization rely on this ruling?
Not directly. A private letter ruling binds the Department only for the requesting taxpayer and stated facts; use it as guidance.

Citations and references

• The ruling states the Department's conclusion that the volunteer labor auction described is not subject to Kansas sales tax; it does not cite a specific numbered statute.

Source

• Original ruling (DOCX): https://www.ksrevenue.gov/pildocs/rulings/P-1999-89.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

TTTTTTTTTTT
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Dear Mr. TTTTTTT:

We wish to acknowledge receipt of your letter dated February 26, 1999, regarding the application of Kansas Retailers’ Sales tax.

Please be advised that labor auctions, as you have described them in your letter to this department, have volunteers that offer to do work for whoever is the high bidder for the respective service. Since this is the case, the transaction would not be subject to sales tax in the state of Kansas.

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 affects 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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