Which sports-field maintenance services are taxable in Kansas and which are exempt?

Plain-English summary

A company that maintains sports fields asked which of its services are subject to Kansas sales tax. The Department gave a service-by-service list: routine maintenance is exempt, but anything that installs or applies materials is taxable.

The list. The Department set out each service and its status:

• Exempt: aerating; edging and/or trimming; mowing; dethatching; rototilling; general field clean-up.
• Taxable: chemical application; seeding; sodding; landscaping; planting shrubs and/or trees; top soil, sand or rock/stone.

Tax on inputs for the nontaxable work. "Since, you are providing some nontaxable services, you would need to pay sales tax on all articles of tangible personal property, such as equipment and supplies, purchased to provide the nontaxable service. Additionally, you may not claim an exemption from sales tax, merely because you have a tax registration number."

Resale materials and collecting on taxable services. "You may purchase your materials, such as seed, sod and trees/shrubs exempt from sales tax, by providing your vendors a properly completed Kansas resale exemption certificate. Then, on all taxable services, which involve the installation [of] tangible personal property, you would be obligated to collect and remit the appropriate Kansas sales tax(es) on the gross receipts received therefrom."

Project exemption certificates for schools. The Department added that "schools are eligible to obtain project exemption certificates" — a numbered document that exempts "the entire project, materials and labor, from sales tax." Schools should request one for each construction, remodel, or repair project so contractors can buy materials and subcontractor labor exempt.

What this means for you

Grounds and sports-field maintenance companies

Split your billing by service. Pure upkeep — mowing, aerating, edging, dethatching, rototilling, general clean-up — is not taxed. But services that put new material onto the field — chemical application, seeding, sodding, landscaping, planting, or supplying soil/sand/rock — are taxable, and you must collect Kansas sales tax on those receipts.

Buy resale materials tax-free, pay tax on the rest

Materials you resell as part of a taxable job (seed, sod, trees, shrubs) can be bought with a resale exemption certificate. But equipment and supplies you consume performing the exempt maintenance services are taxable to you — and simply holding a sales tax registration number does not let you buy them tax-free.

Working for a school? Ask about a project exemption certificate

For a construction, remodel, or repair project, a school can obtain a project exemption certificate that exempts the whole project — materials and labor, including subcontractors — which can significantly cut the project's cost.

Common questions

Q: Is mowing and aerating a sports field taxable in Kansas?
A: No. The Department listed aerating, edging/trimming, mowing, dethatching, rototilling, and general field clean-up as exempt.

Q: Which sports-field services are taxable?
A: Chemical application, seeding, sodding, landscaping, planting shrubs/trees, and supplying top soil, sand, or rock/stone — services that install or apply tangible personal property.

Q: Can I buy my seed and sod tax-free?
A: Yes, with a properly completed Kansas resale exemption certificate, because you resell them as part of a taxable service. You then collect sales tax on those taxable installation services. Equipment and supplies used for the exempt services are taxable to you.

Q: Does having a tax registration number make my purchases exempt?
A: No. The Department said you may not claim an exemption merely because you have a tax registration number.

Citations and references

• The Department did not cite a specific K.S.A. section. It applied Kansas's rule that untaxed maintenance services are exempt while services installing or applying tangible personal property are taxable, and described the use of a Kansas resale exemption certificate for resold materials and a project exemption certificate available to schools for construction/remodel/repair projects.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2000-03

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

January 24, 2000

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Dear Mr. TTTTT:

We wish to acknowledge receipt of your letter postmarked January 11, 2000, regarding the application of Kansas Retailers’ Sales tax.

The following is the list of services that your company may provide for sports fields, and the sales tax status of each service.

Aerating - Exempt
Edging and/or trimming - Exempt
Mowing - Exempt
Dethatching - Exempt
Chemical application - Taxable
Seeding - Taxable
Sodding - Taxable
Landscaping - Taxable
Rototilling - Exempt
General field clean-up - Exempt
Planting shrubs and/or trees - Taxable
Top soil, sand or rock/stone - Taxable

Since, you are providing some nontaxable services, you would need to pay sales tax on all articles of tangible personal property, such as equipment and supplies, purchased to provide the nontaxable service. Additionally, you may not claim an exemption from sales tax, merely because you have a tax registration number.

Please be advised that schools are eligible to obtain project exemption certificates. A project exemption certificate is a numbered document issued by the Kansas Department of Revenue. Its purpose it to exempt the entire project, materials and labor, from sales tax. To avoid the additional cost of sales tax on project materials and labor services of subcontractors, schools should request a project exemption certificate for each construction, remodel, or repair project. A project exemption certificate may significantly reduce a project’s cost since contractors may buy materials and purchase subcontractor labor for the project exempt from sales tax.

You may purchase your materials, such as seed, sod and trees/shrubs exempt from sales tax, by providing your vendors a properly completed Kansas resale exemption certificate. Then, on all taxable services, which involve the installation tangible personal property, you would be obligated to collect and remit the appropriate Kansas sales tax(es) on the gross receipts received therefrom.

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: 02/15/2000 Date Modified: 10/11/2001

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