Which YMCA purchases and sales qualified for Kansas sales-tax exemption under K.S.A. 79-3606(ii), and which taxable services remained subject to tax?

Plain-English summary

The YMCA's exemption covered qualifying tangible personal property for youth-development programs and its sales of tangible personal property, but it did not cover taxable services.

K.S.A. 79-3606(ii) exempted property purchased directly by a nonprofit organization for nonsectarian comprehensive multidisciplinary youth-development programs and activities, along with property sold by or on behalf of such an organization. The quoted statute excluded property customarily used for human habitation.

For this YMCA, the Department said:

• It could purchase tangible personal property tax-free only when the property was used in qualifying youth-development programs and activities.
• It could purchase tangible personal property for resale without paying tax.
• It could sell tangible personal property without a duty to register, collect, and remit sales tax on those property sales.
• It was not exempt when purchasing a taxable service.
• It still had to register, collect, and remit sales tax on gross receipts from providing a taxable service.

What this means for you

YMCAs and qualifying youth organizations

Tie each exempt purchase to the qualifying youth-development program. The organization-wide exemption described here did not extend to every transaction.

Organizations selling property and services

Keep property sales separate from taxable service receipts. The ruling relieved qualifying tangible-personal-property sales but preserved collection duties for taxable services.

Purchasing teams

Do not use the youth-development exemption for taxable services or property outside the qualifying program scope. Retain records showing program use and resale purchases.

Common questions

Q: Could the YMCA buy all property tax-free?
A: No. The ruling limited exempt purchases to tangible personal property used in qualifying youth-development programs and activities.

Q: Could it buy inventory for resale without tax?
A: Yes.

Q: Did the YMCA have to collect tax when selling tangible personal property?
A: No under this taxpayer-specific ruling and the cited exemption.

Q: Were taxable services exempt?
A: No. The YMCA owed tax on purchases of taxable services and had collection duties when it provided taxable services.

Citations and references

• K.S.A. 79-3606(ii) — exemption for qualifying youth-development organizations

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2004-055

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

December 10, 2004

XXXXXXXXXXXXX
XXXXXXXXXXXXX
XXXXXXXXXXXXXXXXX
XXXXXXXXXXX

Dear XXXXXXXXXXX:

I have been asked to respond to your letter received by this office on October 15, 2004. In it, you ask for guidance on the application of Kansas retailers’ sales tax on purchases and sales by the XXXXXXXXXXX YMCA.

The XXXXXXXX YMCA may only purchase tangible personal property exempt from sales tax for use in the YMCA’s youth development programs and youth development activities. The XXXXXXXXXXX YMCA may purchase tangible personal property for resale without the payment of sales tax. The XXXXXXXXXX YMCA may engage as a retailer of tangible personal property without any sales tax collection duties.

Allow me to explain our rationale:

K.S.A. 79-3606(ii) exempts from Kansas retailers’ sales tax, “all sales of tangible personal property purchased directly by a nonprofit organization for nonsectarian comprehensive multidiscipline youth development programs and activities provided or sponsored by such organization, and all sales of tangible personal property by or on behalf of any such organization. This exemption shall not apply to tangible personal property customarily used for human
habitation purposes;”

This means that all nonprofit organizations that qualify for this exemption may purchase tangible personal property exempt from sales or compensating tax; and sell tangible personal property with no duty to register, collect and remit sales tax. Please note that this exemption does not exempt the nonprofit organization from sales tax when purchasing of a taxable service; nor the duty to register, collect and remit sales tax on the gross receipts from the providing of a taxable service.

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: 12/13/2004 Date Modified: 12/13/2004

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