Is safety and protective apparel for production employees exempt under the integrated production exemption, and are safety shoes exempt if the employee shares the cost?

Plain-English summary

A manufacturer asked how Kansas sales tax applies to safety and protective apparel it provides to production employees — and specifically to safety shoes where the employee shares the cost. The answer turns on whether the apparel is furnished entirely free of charge.

The exemption. Effective July 1, 2000, K.S.A. 79-3606(kk)(1) exempts (A) sales of machinery and equipment used as an integral part of an integrated production operation by a manufacturing/processing plant, (B) installation, repair, and maintenance services on that machinery, and (C) repair and replacement parts and accessories. The Department explained that the (kk) exemption also applies to safety and protective apparel that is purchased by the employer and furnished without charge to employees involved in production or research activities.

What qualifies — when given free. Exempt items (if supplied without charge) include: rubber boots, gloves, goggles, plano safety glasses, face shields, rubber & protective aprons (chemical protection), ear muffs (hearing protection), hard hats, safety shoes, prescription safety glasses, and respirators.

What doesn't qualify. General uniforms and weather-related apparel are not exempt — for example, sweat bands, stocking caps (weather protection), and uniforms (long-sleeve shirts and long pants).

The safety-shoes twist. The exemption requires the apparel to be furnished entirely without charge. Here, the safety shoes were not furnished entirely free to the production employees (the employees shared the cost), so the total cost of the safety shoes is subject to Kansas sales/use tax — the cost-sharing defeats the exemption for those shoes.

Bottom line: employer-provided safety/protective apparel for production or research workers is exempt only when given to employees at no charge. Once the employee pays any part of the cost — as with these safety shoes — the item is fully taxable.

What this means for you

Manufacturers and processors

You can buy safety and protective apparel exempt under 79-3606(kk)(1) — but only if you furnish it to production/research employees free of charge. Set up your program so qualifying gear is provided at no cost if you want the exemption.

Cost-sharing kills the exemption

If employees pay any portion (payroll deduction, copay, buy-up), the item is not "furnished without charge," and its full cost is taxable — as happened with the safety shoes here. Even a partial employee charge makes the whole item taxable.

Know the boundary

Task-specific safety gear (boots, gloves, goggles, face shields, aprons, ear muffs, hard hats, safety shoes, prescription safety glasses, respirators) can qualify. General uniforms and weather clothing (sweat bands, stocking caps, ordinary shirts and pants) do not, regardless of who pays.

Common questions

Q: Is employer-provided safety apparel exempt in Kansas?
A: Yes, under K.S.A. 79-3606(kk)(1) — but only when the employer buys it and furnishes it without charge to production or research employees.

Q: Are safety shoes exempt?
A: They can be, if furnished free. Here the shoes were not furnished entirely without charge, so their full cost is taxable.

Q: What items don't qualify?
A: General uniforms and weather-related apparel — sweat bands, stocking caps, and uniforms like long-sleeve shirts and long pants.

Q: If an employee pays part of the cost, is the item partly exempt?
A: No. The apparel must be furnished entirely without charge; if it isn't, the total cost is taxable.

Citations and references

• K.S.A. 79-3606(kk)(1) — the integrated production exemption for machinery/equipment, related installation/repair/maintenance services, and repair/replacement parts; the Department applies it to safety and protective apparel furnished without charge to production or research employees.
• Notice 00-08 — Department notice on the manufacturing-machinery exemptions, enclosed with the ruling.
• 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-2002-015

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

February 11, 2002

TTTTTTTTTTT
TTTTTTTTTTT
TTTTTTTTTTT
TTTTTTTTTTT
TTTTTTTTTTT

Dear Mr. TTTTT:

We wish to acknowledge receipt of your letter dated January 29, 2002, regarding the application of Kansas Retailers’ Sales tax.

Effective July 1, 2000, K.S.A. 79-3606(kk)(1) exempts (A) all sales of machinery and equipment used in Kansas as an integral or essential part of an integrated production operation by a manufacturing or processing plant or facility, (B) all sales of installation, repair and maintenance services performed on such machinery and equipment; and (C) all sales of repair and replacement parts and accessories for such machinery and equipment.

The exemption contained in (kk) applies to safety and protective apparel that is purchased by an employer and furnished without charge to employees who are involved in production or research activities.

The exemption does not apply to general uniforms and weather related apparel.

Therefore, the following items are exempt from tax if supplied without charge to your employees: rubber boots, gloves, goggles, plano safety glasses, face shields, rubber & protective aprons (all to protect from chemicals); ear muffs (hearing protection); hard hats, safety shoes; prescription safety glasses; respirators.

Sweat bands, stocking caps (for weather protection) and uniforms (long sleeve shirts and long pants) do not qualify for exemption.

I have enclosed a copy Notice 00-08.

In closing, since the safety shoes are not furnished entirely without charge to the production employees, the total cost of the respective safety shoes would be subject to the appropriate Kansas sales/use 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: 02/12/2002 Date Modified: 02/21/2002

Table 1

Table 2