When can a venue accept an exemption certificate for tickets, drinks, and desserts bought by hospitals, religious groups, schools, PTAs, or government?

Plain-English summary

A ticketed entertainment venue — which also sells drinks and desserts — asked for a clear ruling on when it may honor exemption certificates presented by nonprofit hospitals, religious organizations, schools, parent-teacher associations, and government buyers for purchases of tickets and/or drinks, beverages and desserts. The venue had assumed those items did not qualify because they were not "used for hospital purposes," and said a phone call to the Department had confirmed its view.

The written ruling reached the opposite result. The Department advised:

"Any direct purchase (including tickets, meals and drinks) by a Not for Profit Hospital (in state or out of state), Religious Organizations (in state or out of state), School or Educational Institutions (in state or out of state), Parent-Teacher Associations (in state or out of state), State of Kansas or Political Subdivisions (of Kansas only) is exempt from Kansas sales tax."

The key is that the exempt entity must be the direct purchaser (the purchase is made and paid by the entity). When that is so, the exemption applies to the purchase itself — the Department did not limit it to items "used for hospital purposes." The Department enclosed a publication containing the appropriate exemption certificates.

One important limit on government buyers: the exemption for political subdivisions applies to Kansas political subdivisions only — an out-of-state city, county, or similar subdivision is not exempt. By contrast, nonprofit hospitals, religious organizations, schools/educational institutions, and PTAs qualify whether in state or out of state.

Bottom line: direct purchases of tickets, meals, and drinks by these qualifying entities are exempt when supported by a proper exemption certificate — the nature of the item (entertainment, food, drink) does not defeat the exemption.

What this means for you

Venues, caterers, and ticket sellers

If one of these qualifying entities makes a direct purchase and gives you a valid Kansas exemption certificate, you may sell tickets, meals, and drinks exempt — you don't have to judge whether the item is "used for the entity's purposes." Keep the completed certificate on file to support the exempt sale.

Watch the "direct purchase" requirement

The exemption depends on the entity itself being the buyer and payer. A purchase made and paid by an individual (for example, an employee or member paying personally, even if later reimbursed) is generally not an exempt direct purchase.

Government buyers — Kansas only for political subdivisions

State of Kansas agencies and Kansas political subdivisions qualify; out-of-state political subdivisions do not. Nonprofit hospitals, religious organizations, schools, and PTAs qualify in or out of state.

Common questions

Q: Can a nonprofit hospital buy event tickets, drinks, and desserts tax-free?
A: Yes, if it is a direct purchase by the hospital and it provides a valid Kansas exemption certificate. The Department said such direct purchases — including tickets, meals, and drinks — are exempt.

Q: The items are entertainment and food, not "hospital purposes" — does that matter?
A: No. The ruling did not limit the exemption to items used for the entity's core purpose. What matters is that a qualifying entity is the direct purchaser with a proper certificate.

Q: Does an out-of-state city or county qualify?
A: No. The political-subdivision exemption is for Kansas political subdivisions only. Out-of-state hospitals, religious organizations, schools, and PTAs can still qualify, but out-of-state political subdivisions cannot.

Q: What do I need to keep on file?
A: The qualifying entity's completed Kansas exemption certificate for the exempt sale. The Department enclosed a publication with the appropriate certificates.

Citations and references

• K.A.R. 92-19-59 — the regulation authorizing Kansas private letter rulings.
• The ruling applies Kansas's statutory sales-tax exemptions for direct purchases by nonprofit hospitals, religious organizations, schools and educational institutions, parent-teacher associations, and the State of Kansas and its political subdivisions, supported by exemption certificates; it does not cite a specific K.S.A. subsection.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2002-048

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

June 11, 2002

XXXXXXXXXX
XXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXX

Dear XXXXXXXXX:

The purpose of this letter is to respond to your letter dated May 8, 2002. In it, you request advice on the application of Kansas retailers’ sales tax on sales to various entities.

In your letter you stated in pertinent part:

Recently I have taken issue with a group whom upon remitting the payment for their additional drinks and desserts deducted the sales tax from their payment. This is a Not for Profit Hospital located in the State of Missouri. A Missouri Sales Tax Exemption certificate was submitted with the payment. I have examined the Kansas Department of Revenue Exemption Certificate and have concluded that the purchase of beverages, drinks and desserts (or for that matter, tickets) do not constitute tangible personal property or services used for hospital purposes. My call to the Department of Revenue confirmed my position in this particular case.

It is my desire to properly collect the required sales tax while honoring those exemptions that comply with the intent of sales tax exemptions. From time to time we receive exemption certificates for religious organizations, schools and state municipalities (Parks & Recreation departments bringing groups on outings). The above situation however has given me cause to ask for a clearly defined ruling as relates to our entertainment venue (tickets), the additional purchase of beverages, drinks and desserts and exemption from sales taxes.

I am requesting at this time a written ruling on the use of sales tax exemption certificates by Kansas and out of state Public or Private Non Profit Hospitals, Religious Organizations, School or Educational Institutions, Parent-Teacher Associations, State of Kansas or Political Subdivisions for the purchase of tickets and/or drinks, beverages and desserts as relates toXXXXXXXXXX.

It is my intent to supply this written ruling to any of the above entities that might take issue with our decision to not remove sales tax from their purchase of either tickets or drinks, beverages and desserts.

Thank you for your assistance in enabling us to fully comply with the intent of sales tax exemptions.

Any direct purchase (including tickets, meals and drinks) by a Not for Profit Hospital (in state or out of state), Religious Organizations (in state or out of state), School or Educational Institutions (in state or out of state), Parent-Teacher Associations (in state or out of state), State of Kansas or Political Subdivisions (of Kansas only) is exempt from Kansas sales tax. I have enclosed a publication that contains the appropriate exemption certificates.

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: 06/18/2002 Date Modified: 06/18/2002

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