Is a nonprofit senior center exempt from Kansas sales tax?

Plain-English summary

A nonprofit organization — a senior center, per the Department's index — asked whether it is exempt from Kansas sales tax. The Department's answer is no.

Being a nonprofit is not enough. The Department explained that when Governor Bill Graves signed Senate Bill 493 into law (effective July 1, 1998), it added "several sales tax exemptions to deserving organizations, including non-profit zoos and parent-teacher organizations." But, the Department wrote, "not every non-profit organization enjoys an exemption from Kansas sales tax. Yours does not."

Only the Legislature can fix that. The Department was direct that an exemption for an organization like this one "would require a change to Kansas statutes through legislative action" — the Department cannot create an exemption the statute does not already contain.

What the organization must do. Because it is not exempt, the organization is "obligated to pay on taxable purchases, and to collect the Kansas sales tax on all their taxable receipts, including fund raising projects." In other words it pays tax like any other buyer on what it purchases, and it must register, collect, and remit sales tax on its own taxable sales — fundraisers included.

Bottom line: nonprofit status by itself does not exempt an organization from Kansas sales tax. Kansas exemptions are specific and enumerated; unless the Legislature has named your type of organization, you pay tax on purchases and collect tax on taxable sales.

What this means for you

Nonprofit and community organizations

Do not assume "nonprofit" or "charitable" equals "sales-tax exempt" in Kansas. Exemptions run to specifically named categories of organizations. If your organization is not on that list, you are treated like any other retailer and consumer for sales-tax purposes.

Fundraising is taxable too

The ruling is explicit that a non-exempt organization must collect Kansas sales tax on its taxable receipts, including fund-raising projects. Selling taxable goods at a fundraiser generally means you must register, collect, and remit tax on those sales.

The path to an exemption is legislative

The Department cannot grant an exemption by ruling. If you believe your type of organization deserves one, the remedy is a change to the Kansas statutes — a legislative fix, like the one Senate Bill 493 provided for zoos and PTOs — not an administrative determination.

Common questions

Q: Is a nonprofit senior center exempt from Kansas sales tax?
A: No. The Department ruled that this organization does not qualify for any Kansas sales-tax exemption.

Q: Doesn't nonprofit status make an organization exempt?
A: No. The Department noted that not every nonprofit is exempt. Kansas exemptions are limited to specifically named organizations, and a senior center is not among them.

Q: How could an organization like this become exempt?
A: Only through legislative action. The Department said an exemption would require a change to the Kansas statutes, as Senate Bill 493 did for non-profit zoos and parent-teacher organizations.

Q: Does the organization still have to charge tax at its fundraisers?
A: Yes. Because it is not exempt, it must pay tax on its taxable purchases and collect Kansas sales tax on all of its taxable receipts, including fund-raising projects.

Citations and references

• Senate Bill 493 (signed by Governor Bill Graves, effective July 1, 1998) — added sales-tax exemptions for several organizations, including non-profit zoos and parent-teacher organizations, but not for this organization.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2001-121

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

October 26, 2001

XXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXX

Dear XXXXXXXXXXXXXXXX:

The purpose of this letter is to respond to your letter dated October 10, 2001.

Governor Bill Graves signed Senate Bill 493 into law, which became effective July 1, 1998. It contained several sales tax exemptions to deserving organizations, including non-profit zoos and parent-teacher organizations.

Many organizations, such as your XXXXXXXX, perform a great deal of services for their communities with the funds that they raise. However, not every non-profit organization enjoys an exemption from Kansas sales tax. Yours does not.

An exemption for XXXXXXXXX, such as yours would require a change to Kansas statutes through legislative action.

In closing, your organization would be obligated to pay on taxable purchases, and to collect the Kansas sales tax on all their taxable receipts, including fund raising projects.

This private letter ruling is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to make an accurate determination by the department, this ruling is null and void. This private letter ruling will be revoked in the future by operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or a published revenue ruling, that materially affects this private letter ruling.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

Date Composed: 10/30/2001 Date Modified: 10/30/2001

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