Must a vendor selling meals on a Kansas military base (Fort Leavenworth) charge Kansas sales tax?

Plain-English summary

A vendor that sells meals in the food-service area of the command college at Fort Leavenworth — under contract with the Army & Air Force Exchange Service — asked whether it must charge Kansas sales tax. It had been charging tax, but service members complained that other products on post are sold without tax.

The Department said the vendor must charge both state and any applicable local sales tax on its sales at Fort Leavenworth. Kansas retailers are required to collect Kansas sales tax on retail sales made on military reservations in Kansas, and those sales are taxable whether the buyer is a civilian or military personnel. The rule reaches:

• businesses located on a military post;
• retailers who enter the post to make retail sales; and
• sales through vending machines on the post.

The only exemption is a sale made directly to the federal government itself. A sale to an individual service member is not a direct federal sale unless the federal government pays for it directly.

This long-standing Kansas policy is based on the federal Buck Act (4 U.S.C. §§ 105-110), which allows state and local sales tax to be collected in federal areas such as a military reservation — just not from the federal government itself.

What this means for you

Vendors and concessionaires on Kansas military posts

Charge Kansas state and local sales tax on your retail sales, including meals. It does not matter that your customers are service members or that some other seller on post is not charging tax — the sale is still taxable.

When a sale is actually exempt

Only sales billed to and paid for directly by the federal government are exempt. A service member paying with personal funds is a taxable retail sale.

Common questions

Q: My customers are military personnel — aren't their purchases exempt?
A: No. Sales on a military reservation are taxable whether the buyer is a civilian or military personnel. The exemption is only for direct sales to the federal government itself.

Q: Why can Kansas tax sales on a federal military base?
A: The federal Buck Act (4 U.S.C. §§ 105-110) permits states to collect sales tax in federal areas such as military reservations, but not from the federal government.

Q: What about vending-machine sales on post?
A: Kansas sales tax is due on those sales too.

Citations and references

• 4 U.S.C. §§ 105-110 (the Buck Act) — the federal law that allows Kansas to collect state and local sales tax on retail sales made in federal areas such as a military reservation, while exempting the federal government itself.

Source

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2004-005

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

April 7, 2004

XXXX
XXXX
XXXX

Re: Request for Private Letter Ruling re Sales at Fort Leavenworth

Dear XXXX:

You indicate that your business sells meals in the food service area in the command college at Ft. Leavenworth. Your business is under contract with the Army Air Force Exchange Services. Your business has registered as a retailer with the department. After you charged sales tax on the meals that you sell, military personnel purchasing these meals complained that they are not charged sales tax on other products purchased at Fort Leavenworth. You ask whether your business should be charging sales tax on the meals you sell at Fort Leavenworth.

Please be advised that your business must charge both state and any applicable local sales tax on the sales your business makes at Fort Leavenworth. Kansas retailers are required to charge and collect Kansas sales tax on retail sales made on military reservations in Kansas. Sales made on a military reservation are taxable regardless of whether they are made to civilians or military personnel. Taxable sales includes sales made by retail businesses that are located on a military post and sales made by retailers who enter the post and make retail sales to civilians or military personnel. In addition, Kansas sales tax is due on sales made through vending machines located at the post. A sale is exempt when the sale is made directly to the federal government itself. Such direct sales do not include sales to military personnel unless the purchase is paid for directly by the federal government.

This long-standing Kansas tax policy is based on the federal Bucks act, which provides that state and local sales tax can be collected in federal areas such as on a military reservation, although not from the federal government itself. 4 USC Sec. 105-110.

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.

Very truly yours,

Richard L. Cram

Date Composed: 04/08/2004 Date Modified: 04/08/2004

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