Did the requesting not-for-profit qualify for exemption from Kansas retailers' sales and compensating taxes?

Plain-English summary

The not-for-profit did not qualify for a Kansas sales-tax exemption because it did not clearly fit any exemption in K.S.A. 79-3606.

Kansas construes tax exemptions narrowly. The ruling explained that some exemptions name particular organizations, while others describe categories such as nonprofit hospitals, political subdivisions, and nonprofit zoos. Some cover all purchases and others only particular purchases.

After reviewing the statutory exemptions, the Department found none that encompassed the requesting organization. As a result, it owed Kansas sales or compensating tax on purchases and had to register and collect Kansas retailers' sales tax when making retail sales.

What this means for you

Not-for-profit organizations

Organizational status alone does not establish a Kansas sales-tax exemption. Identify the exact statutory language that names your organization or describes a category you clearly meet.

Organizations that also sell goods

Analyze purchases and sales separately. Without an exemption, the organization pays tax when buying taxable items and collects tax when selling taxable property at retail.

Common questions

Q: Does not-for-profit status automatically create a Kansas sales-tax exemption?
A: No. The organization must qualify under the plain language of a specific exemption.

Q: What statute did the Department review?
A: K.S.A. 79-3606.

Q: What was the result for purchases?
A: The organization remained subject to Kansas sales or compensating tax.

Q: What was the result for retail sales?
A: It had to register and collect Kansas retailers' sales tax.

Citations and references

• K.S.A. 79-3606 — specific Kansas sales-tax exemptions

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2004-056

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

December 10, 2004

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Dear XXXXXXXXXX:

The purpose of this letter is to respond to your letter dated November 4, 2004. In your letter you formally request an exemption from Kansas retailers’ sales and or compensating taxes.

Tax exemptions are narrowly construed. This means that a group that claims exemption must clearly qualify for exemption within the plain language of the statute. The Kansas sales tax act lists various groups that are exempt from tax. Some statutes identify the exempt entity by name. These include the statute that exempts the American Heart Association, Kansas Affiliate, Inc. and the American Lung Association of Kansas, Inc., among others. Other statutes extend exemption by describing the entity in general terms, such as the exemptions extended to non-profit hospitals, political subdivisions of the state, and nonprofit zoos. Some exemptions are limited to certain purchases while other exemptions extend to all purchases.

K.S.A. 79-3606 contains more than 60 additional exemptions. I have reviewed these exemptions and cannot find any that encompass your organization.

Therefore, your organization is subject to sales tax on purchases and your organization is required to register and collect Kansas retailers’ sales tax when making retail sales. Your organization may register by completing “Application to register a business” available at www.ksrevenue.org.

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: 12/14/2004 Date Modified: 12/14/2004

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