Are radio frequency generators and catheters exempt from Kansas sales tax when bought directly by a nonprofit hospital versus by a for-profit surgical center or doctor?

Plain-English summary

The question was whether radio frequency generators and catheters are exempt from Kansas sales tax. The Department's answer turns entirely on who buys them.

A nonprofit hospital's direct purchase is exempt. Under K.S.A. 79-3606(b), Kansas exempts sales of tangible personal property (including rentals and leases) "purchased directly by ... a public or private nonprofit hospital ... and used exclusively for ... hospital ... purposes." Applying that, the Department advised that "if a public or private nonprofit hospital purchases the Radio frequency Generators and Catheters directly, said purchases would be exempt from Kansas sales tax(es), pursuant to K.S.A. 79-3606(b)."

A for-profit center's or doctor's purchase is taxable. The Department was equally clear that "the Kansas Sales Tax Law does not contain a sales tax exemption for such purchases or rentals made by for-profit surgical centers and doctors." The same equipment is fully taxable in their hands.

Two conditions on the hospital exemption. The statute requires the purchase be made directly by the hospital and be used exclusively for hospital purposes. (The statute also withdraws the exemption where the hospital uses the items in a separately taxable business it operates.)

Bottom line: the exemption is an entity exemption, not a product exemption. The identical device is exempt for a nonprofit hospital buying directly and taxable for a for-profit surgical center or physician.

What this means for you

Nonprofit hospitals

Buy qualifying equipment directly — in the hospital's own name, on its account — and use it exclusively for hospital purposes to claim the K.S.A. 79-3606(b) exemption. Purchases routed through a physician, a for-profit affiliate, or a third party can lose the exemption because the statute keys on a direct purchase by the hospital.

For-profit surgical centers and physicians

There is no Kansas sales-tax exemption for your equipment purchases or rentals — even for the same devices a nonprofit hospital could buy tax-free. Expect to pay sales or use tax on generators, catheters, and similar items.

Sales-tax status follows the buyer, not the item

This ruling is a clean illustration that Kansas's medical exemption is about who is buying and how, not what the device is. Vendors selling to a mix of hospitals, ambulatory surgery centers, and physicians should confirm each buyer's status and collect tax accordingly.

Common questions

Q: Are radio frequency generators and catheters exempt from Kansas sales tax?
A: They are exempt when purchased directly by a public or private nonprofit hospital for hospital purposes; they are taxable when bought or rented by for-profit surgical centers or doctors.

Q: Why is the same equipment exempt for one buyer and taxable for another?
A: Because K.S.A. 79-3606(b) is an exemption for the nonprofit hospital as an entity, not for the equipment itself. Kansas law provides no comparable exemption for for-profit centers or physicians.

Q: What does 'purchased directly' mean?
A: The hospital itself must be the buyer and use the items exclusively for hospital purposes. Purchases made by or through a for-profit provider are not covered.

Citations and references

• K.S.A. 79-3606(b) — exempts tangible personal property and services (including rentals and leases) purchased directly by a public or private nonprofit hospital and used exclusively for hospital purposes, subject to an exception for items used in a separately taxable business.
• K.A.R. 92-19-59 — the regulation authorizing Kansas private letter rulings.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2002-006

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

January 11, 2002

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Dear Ms. TTTTTTT:

We wish to acknowledge receipt of your letter dated November 12, 2001, regarding the application of Kansas Retailers’ Sales tax.

K.S.A. 79-3606(b) exempts from sales tax: "all sales of tangible personal property or service, including the renting and leasing of tangible personal property purchased directly by......a public or private nonprofit hospital...and used exclusively for...hospital...purposes, except when: (1) Such...hospital is engaged or proposes to engage in any business specifically taxable under the provisions of this act and such items of tangible personal property or service are used or proposed to be used in such business,..."

Please be advised that if a public or private nonprofit hospital purchases the Radio frequency Generators and Catheters directly, said purchases would be exempt from Kansas sales tax(es), pursuant to K.S.A. 79-3606(b). However, the Kansas Sales Tax Law does not contain a sales tax exemption for such purchases or rentals made by for-profit surgical centers and doctors.

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: 01/14/2002 Date Modified: 01/16/2002

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