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Ezel / Tax Rulings / KS
KS P-2001-046 Kansas Retailers' Sales Tax 2001-05-16

Are the gross receipts from coin-operated video games located in Kansas subject to sales tax?

Short answer: Taxable. The Department ruled that gross receipts from coin-operated video games located in Kansas are subject to sales tax under K.S.A. 79-3603(f), which taxes the operation of any coin-operated device dispensing tangible personal property, amusement, or other services (except laundry services). Vending machines that provide goods (candy, chips, pop, newspapers), amusement (arcade games), or services (shoe shines) are all covered, and an honor box counts as a vending machine. Under K.A.R. 92-21-13, the sale is sourced to where the machine is located.

Apply this to your situation

This page answers the general question as of 2001. Ezel answers yours, under current Kansas tax law, with citations.

Currency note: this ruling is from 2001
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Kansas Department of Revenue Private Letter Ruling (issued under K.A.R. 92-19-59). It binds the Department only as to the specific retailer who requested it and the facts stated; taxpayer-identifying details are redacted. It may not be cited or relied upon as precedent by any other person, and it ceases to be valid if a statute, regulation, or interpretation it relied upon changes substantially. Kansas state and local sales and use taxes are administered centrally by the Department, so there is no self-collected home-rule city tax outside its scope. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

A taxpayer asked how Kansas retailers' sales tax applies to coin-operated video games located in Kansas. The Department ruled the receipts are taxable.

Coin-operated devices are taxed by statute. Under K.S.A. 79-3603(f), Kansas imposes sales tax "upon the gross receipts from the operation of any coin-operated device dispensing or providing tangible personal property, amusement or other services except laundry services, whether automatic or manually operated." So the statute reaches coin-operated machines broadly, carving out only laundry services.

The statute covers goods, amusement, and services alike. The Department gave examples: machines "providing tangible personal property" include candy, cookies, chips, pop, newspapers, and movie rentals; machines "providing amusement" include arcade games; and machines "providing services" include shoe shines. It also noted that "[a]n honor box shall be considered as a vending machine."

Video games are taxable, sourced to the machine's location. The Department concluded that "the gross receipts received from the video games located in this state, would be subject to the appropriate Kansas sales tax(es)." And under K.A.R. 92-21-13, "[t]he retailer's place of business when making sales through a vending machine is the place where the vending machine is located when such sales are made" - so the tax follows where the machine sits.

Bottom line: coin-operated video games (a form of amusement device) located in Kansas are taxable under K.S.A. 79-3603(f), and the sale is sourced to the machine's location.

What this means for you

Operators of coin-operated machines

If you operate coin-operated devices in Kansas - video/arcade games, vending machines for snacks or drinks, movie-rental kiosks, or even a shoe-shine machine - the gross receipts are generally taxable under K.S.A. 79-3603(f). The only statutory carve-out mentioned is laundry services.

An honor box counts

The Department treats an honor box as a vending machine, so unattended, honor-system sales through such a device fall under the same rule.

Source the tax to the machine's location

Under K.A.R. 92-21-13, your "place of business" for a vending-machine sale is where the machine is located. Charge and report the sales tax for that location.

Common questions

Q: Are coin-operated video games taxable in Kansas?
A: Yes. Their gross receipts are taxable under K.S.A. 79-3603(f), which taxes the operation of coin-operated devices providing amusement.

Q: What kinds of machines does K.S.A. 79-3603(f) cover?
A: Machines dispensing tangible personal property (candy, chips, pop, newspapers, movie rentals), amusement (arcade games), or other services (shoe shines) - everything except laundry services.

Q: Which location's sales tax applies?
A: Under K.A.R. 92-21-13, the sale is sourced to where the vending machine is located when the sale is made.

Citations and references

  • K.S.A. 79-3603(f) - imposes sales tax on the gross receipts from the operation of any coin-operated device dispensing or providing tangible personal property, amusement, or other services (except laundry services), whether automatic or manually operated.
  • K.A.R. 92-21-13 - provides that the retailer's place of business, for sales through a vending machine, is the place where the machine is located when the sales are made.

Source

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

May 16, 2001

TTTTTTTTTT
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Dear Ms. TTTTTT:

We wish to acknowledge receipt of your letter dated May 15, 2001, regarding the application of Kansas Retailers’ Sales tax.

K.S.A. 79-3603(f) imposes a sales tax: "upon the gross receipts from the operation of any coin-operated device dispensing or providing tangible personal property, amusement or other services except laundry services, whether automatic or manually operated."

Examples of vending machines providing tangible personal property would include candy, cookies, chips, pop, newspapers and movie rentals.

Examples of vending machines providing amusement would include arcade games.

Examples of vending machines providing services would include shoe shines.

An honor box shall be considered as a vending machine.

K.A.R. 92-21-13 states in part: "The retailer's place of business when making sales through a vending machine is the place where the vending machine is located when such sales are made."

In closing the gross receipts received from the video games located in this state, would be subject to the appropriate Kansas sales tax(es).

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: 05/21/2001 Date Modified: 10/11/2001

Table 1

Ruling Number: P-2001-046

Table 2

Tax Type: Kansas Retailers' Sales Tax
Brief Description: Vending machines and video games.
Keywords:
Approval Date: 05/16/2001

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