Do Kansas contractors owe sales or use tax on the materials and supplies they buy for their construction projects?

Plain-English summary

A contractor asked how Kansas sales and use tax applies to the materials and supplies it buys for its construction projects.

The Department explained the basic Kansas rule: contractors are the final consumer of the supplies and materials they use on their projects. That means each contractor is responsible for paying sales or use tax on all materials and supplies purchased for its jobs — the Department listed rock, sand, oil, fuel, and screenings as examples, but the rule is not limited to those.

There is one exception. On a tax-exempt job where the contractor has obtained a valid project exemption certificate, the materials may be purchased exempt from sales and use tax — but only if the purchase is made on or after the effective date shown on that project exemption certificate.

What this means for you

Contractors

Assume you owe sales or use tax on the materials and supplies you buy for a job. You are the consumer of those goods, not a reseller, so tax applies at the time of purchase.

Working on an exempt project

If the project qualifies for exemption (for example, work for an exempt entity) and you hold a valid project exemption certificate, you can buy the job materials tax-free — but watch the dates. Purchases before the certificate's effective date are still taxable.

Common questions

Q: Can a contractor buy job materials tax-free by claiming resale?
A: No. The contractor is the final consumer of the materials it uses on a project, so sales or use tax applies to those purchases.

Q: When can materials be bought exempt?
A: Only on a tax-exempt project where the contractor holds a valid project exemption certificate, and only for purchases made on or after the certificate's effective date.

Citations and references

• This ruling was issued under K.A.R. 92-19-59 (the Kansas private letter ruling regulation). It states the Department's general treatment of contractors as the final consumers of construction materials and supplies, and the project-exemption-certificate exception, without citing a specific K.S.A. section.

Source

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2004-002

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

February 6, 2004

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Dear Ms. TTTTTT:

We wish to acknowledge receipt of your letter dated December 31, 2003, regarding the application of Kansas Retailers’ Sales tax.

In Kansas, contractors are the final consumer of supplies and materials that are for use by them on their construction projects. Further, each contractor shall be responsible for the payment of sales/use tax on all materials and supplies purchased for use in these respective constructions projects. This would include, but not be limited to the purchase of rock, sand, oil, fuel and screenings. However, on tax exempt jobs, wherein you have obtained a valid project exemption certificate, these items may be purchased exempt from sales/use tax, if the respective purchase is made on or after the effective date on the project exemption certificate.

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: 02/16/2004 Date Modified: 02/16/2004

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