Does a group selling coupon books have to collect Kansas sales tax on the sales?

Plain-English summary

A seller of coupon books - described as the kind of thing "a group of school students" might sell - asked whether it had to collect Kansas sales tax on the sales. The Department ruled that it does.

A coupon book is tangible personal property, so selling it is a taxable retail sale. The ruling quotes the core imposition statute, K.S.A. 79-3603(a), which taxes "the gross receipts received from the sale of tangible personal property at retail within this state."

It does not matter that the seller sells nothing else taxable. The Department was explicit: "Any organization, such as a group of school students, engaged in selling coupon books who does not sell tangible personal property or taxable services shall collect sales tax on the gross receipts received from the sale of the coupon books." In other words, even a group whose only sales activity is the coupon book must register and collect tax on those receipts.

Bottom line: the sale of a coupon book is a retail sale of tangible personal property, and the seller must collect Kansas sales tax on the full price charged for the book.

What this means for you

Groups running coupon-book fundraisers

If your school club, team, or nonprofit sells coupon books, the sale is a taxable retail sale. You must collect Kansas sales tax on the price of each book and remit it, even if the coupon book is the only thing you sell.

The tax is on the book, not the coupons

The taxable item is the coupon book itself - a piece of tangible personal property. What the buyer later redeems the coupons for is a separate question; this ruling addresses only the sale of the book.

Register and collect

Because the receipts are taxable, a group that would not otherwise be a retailer still needs to collect and remit the tax on its coupon-book sales.

Common questions

Q: Does a school group selling coupon books have to collect Kansas sales tax?
A: Yes. The Department ruled that any organization selling coupon books must collect sales tax on the gross receipts, even one that sells no other tangible personal property or taxable services.

Q: Why is a coupon book taxable?
A: Because it is tangible personal property, and K.S.A. 79-3603(a) taxes the gross receipts from the retail sale of tangible personal property.

Q: What if the group isn't otherwise in business?
A: It still must collect the tax. The ruling specifically covers a seller "who does not sell tangible personal property or taxable services" apart from the coupon books.

Citations and references

• K.S.A. 79-3603(a) - imposes Kansas retailers' sales tax on "the gross receipts received from the sale of tangible personal property at retail within this state." Because a coupon book is tangible personal property, its sale is taxable, and the seller must collect tax on the receipts.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2001-007

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

January 31, 2001

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Dear Ms. TTTTTTT:

We wish to acknowledge receipt of your letter dated September 3, 1999, regarding the application of Kansas Retailers’ Sales tax. I apologize for the delay in getting a response to you.

K.S.A. 79-3603(a) imposes a sales tax upon: “The gross receipts received from the sale of tangible personal property at retail within this state. . .”

Any organization, such as a group of school students, engaged in selling coupon books who does not sell tangible personal property or taxable services shall collect sales tax on the gross receipts received from the sale of the coupon books.

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: 02/13/2001 Date Modified: 10/11/2001

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