Did the requesting nonprofit organization's community work exempt its taxable retail sales from Kansas sales tax?

Plain-English summary

The nonprofit's community work did not place it within a Kansas sales-tax exemption, so it had to collect and remit tax on all taxable sales.

The Department recognized that organizations like the requester can provide substantial community services with the money they raise. But Kansas exemptions are specific, and the letter found no exemption extended to this organization.

The consequence was a collection duty on the organization's taxable sales. The ruling did not classify every receipt as taxable; it said the organization could not avoid tax collection merely because it was nonprofit or used proceeds for community work.

What this means for you

Nonprofit organizations

Mission and use of proceeds do not substitute for a statutory Kansas exemption. Identify the exact exemption that applies to the organization or transaction.

Fundraising and retail operations

Classify each sale. If the item or service is taxable and no organizational or transaction exemption applies, collect and remit the appropriate Kansas tax.

Common questions

Q: Did community-service activity create an exemption?
A: No.

Q: What did the organization have to do?
A: Collect and remit Kansas sales tax on all taxable sales.

Q: Did the ruling say every transaction was taxable?
A: No. It imposed collection on taxable sales; a separately exempt transaction would still need its own basis.

Citations and references

• K.A.R. 92-19-59 — Kansas Private Letter Ruling procedure

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2004-047

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

August 18, 2004

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RE: TTTTTTTTTTTT

Dear Mr. TTTTTTTT:

We wish to acknowledge receipt of your letter dated June 8, 2004, regarding the application of Kansas Retailers’ Sales tax.

Many organizations, such as yours, perform a great deal of services for their communities with the funds that they raise. However, Kansas has only certain exemptions, and there is no exemption that is extended to an organization, such as yours.

In closing, your organization will be obligated to collect and remit the appropriate Kansas sales tax(es) on all taxable sales.

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: 09/13/2004 Date Modified: 09/13/2004

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