How does Kansas sales tax apply to a farm special-events business — barn rental, tables and chairs, catering, and horse-drawn carriage rides?

Plain-English summary

A client runs a special-events business on a Kansas farm — weddings, anniversaries, banquets — and asked how Kansas sales tax applies to five things: barn rental, tables and chairs, catered food, and horse-drawn carriage/wagon/stagecoach rides both on and off the farm.

The Department broke it down:

• Barn (facility) rental — not taxable. Kansas does not tax rentals of banquet rooms, ballrooms, reception rooms, and other meeting rooms (K.A.R. 92-19-24). Charges for use of the barn are not subject to sales tax.
• Tables and chairs — not taxable as bundled. Because they are provided as part of the barn rental with no separate charge, they are an incidental part of the (nontaxable) facility rental. The operator is the final consumer and pays sales tax when she buys or rents tables and chairs — even if she occasionally rents extras and recovers the cost. If she starts separately charging for them, she should register and collect tax on those rental charges.
• Catering — taxable, but who collects depends on the contract. Catering charges are taxable (K.A.R. 92-19-69). If the customer contracts directly with the caterer, the caterer charges and remits the tax and the operator has no obligation. If the operator contracts for catering on her own account and rebills the customer, she must collect tax on the full rebilled amount (and can give the caterer a resale exemption certificate).
• Off-farm carriage/wagon/stagecoach rides — taxable. These are taxable admissions to amusement, entertainment, or recreation (K.S.A. 79-3603(e); K.A.R. 92-19-22a(b)(6), covering sightseeing rides held out for sightseeing or entertainment), consistent with Surrey's on the Plaza, Inc. v. Director of Revenue. She must register and collect tax, whether she bills an event planner or the individual riders.
• On-farm rides offered free with the event — not taxable. Because they are offered on a take-it-or-leave-it basis and the price of the event/barn rental does not change whether or not a customer asks for a ride, they are part of a bundled transaction and no sales or use tax is owed. That changes if she starts charging separately for the rides or offers unrelated rides (e.g., hay rides) on the farm.

What this means for you

Event-venue and wedding-barn operators

Renting your space is not taxable, and equipment like tables and chairs bundled into the rental at no extra charge rides along tax-free — but you pay tax on those items as the consumer. Separately charging for equipment or amusement rides flips them into taxable sales you must collect on.

Caterers and venues that arrange food

Catering is taxable. Know who holds the catering contract: if you (the venue) contract and rebill, you collect tax on the whole catering charge; if the customer contracts directly with the caterer, the caterer handles the tax.

Businesses offering rides or entertainment

Sightseeing/entertainment rides are taxable amusement admissions when separately provided or charged — especially off-site — even though a free, bundled, take-it-or-leave-it ride included in an event is not.

Common questions

Q: Is renting a barn or reception space for a wedding taxable in Kansas?
A: No. Rentals of banquet, reception, and other meeting rooms are not taxed under K.A.R. 92-19-24, and tables and chairs bundled in at no separate charge are not taxed either.

Q: Are horse-drawn carriage rides taxable?
A: Off-site rides are taxable admissions to amusement/recreation. On-site rides offered free with the event, on a take-it-or-leave-it basis that doesn't change the price, are not taxed as part of a bundled transaction.

Q: Who charges sales tax on the catering?
A: The caterer, if the customer contracts directly with the caterer. If the venue contracts for catering and rebills the customer, the venue collects tax on the full rebilled amount.

Citations and references

• K.A.R. 92-19-24 — Kansas sales tax is not imposed on rentals of banquet rooms, ballrooms, reception rooms, and other meeting rooms.
• K.A.R. 92-19-69 — charges for food catering services are taxable.
• K.S.A. 79-3603(e); K.A.R. 92-19-22a(b)(6) — tax on admissions to places providing amusement, entertainment, or recreation, including sightseeing rides held out for sightseeing or entertainment.
• Streamlined Sales and Use Tax Agreement, "bundled transaction" — cited for treating the free on-farm rides, offered take-it-or-leave-it with the event, as part of a bundled transaction not separately taxed.
• Surrey's on the Plaza, Inc. v. Director of Revenue, 128 S.W.3d 508 (Mo. 2004) — horse-drawn carriage rides are a place of amusement and the ride charges are taxable admissions.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2008-003

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

March 19, 2008

XXXX
XXXX
XXXX

RE: Your letter dated January 8, 2008

Dear XXXX:

Thank you for your recent letter. Your client, XXXX, (XXXX) operates a farm near Dogjaw, Kansas. The farm serves as the location for XXXX's special-events business that hosts weddings, anniversaries, banquets, and other events. You provide the following description of the facilities and services that XXXX offers and ask how Kansas sales tax applies to them:

1. A barn is rented out for use at wedding, anniversaries and other celebrations.
2. Tables and chairs are provided for these events, but there is no separate billing.
3. Food and drink is provided by a separate caterer and is billed separately by that individual.
4. Horse-drawn carriage, wagon and stage-coach rides are available at the events at the customer's request. There is no separate billing or charges for providing this service.
5. Horse-drawn carriage, wagon and stage-coach rides are sometimes provided at events away from the farm. For liability reasons, XXXX is always the one who provides the rides. The houses and equipment are not rented out separately.

Kansas sales tax is not imposed on rentals of banquet rooms, ballrooms, reception rooms, and other meeting rooms. See K.A.R. 92-19-24. XXXX's charges to her special-events customers for the use of the barn are not subject to Kansas sales tax.

XXXX provides chairs and tables as part of the barn rental and she does not bill the customer for their use. Accordingly, the tables and chairs are treated as an incidental part of the barn rental, which is not taxed. See Pub. KS-1540, Kansas Business Taxes for Hotels, Motels, and Restaurants, pp. 10, 16. XXXX is treated as the final user or consumer of the chairs and tables. She must pay sales tax as a consumer whenever she buys or rents additional chairs and tables. These rules apply even if XXXX occasionally needs to rent additional chairs and tables from a third-party rental company and recovers her rental expenses by charging her customer an additional fee. If she stops providing chairs and tables as part of the facility rental and starts to charge a separate fee for them or if she to regularly needs to rent additional chairs or tables that she rebills to the her customers, she should register as a retailer and start collecting tax on the rental charges.

Charges for food catering services are taxable in Kansas. K.A.R. 92-19-69. From your description, it appears that XXXX's customers contract directly with the caterer for their services. In such cases, the caterer is required to charge sales to XXXX's customers and remit it to the department. XXXX would have no sales tax obligations vis-a-vis the catered food and meals.

However, if XXXX contracts with a caterer for the catering services on her own account and then rebills the customer, XXXX is required to collect sales tax on the total amount that she rebills to the customer for the catered food and services. If XXXX adopts this practice in the future, she will be required to collect tax on the total amount that is billed to the customer for the food services. This would allow her to give the caterer a resale exemption certificate.

XXXX also provides rides on horse-drawn carriages, wagons and stage couches away from her farm. These services are taxable. Kansas sales tax is imposed on: "the gross receipts from the sale of admissions to any place providing amusement, entertainment or recreation services." K.S.A. 79-3603(e). K.A.R 92-19-22a implements this statute. It provides in parts relevant here:

(b) Admission charges that shall be subject to sales tax shall include charges for the following:. . . (6) sightseeing rides or tours on buses, aircraft, boats, trains, or other forms of transportation. If a ride or tour is advertised or otherwise held out as being primarily for sightseeing or entertainment, the charge shall be considered to be for a recreational activity rather than for a transportation service. K.A.R 92-19-22a(b)(6).

This Kansas regulation is consistent with Surrey's on the Plaza, Inc. v. Director of Revenue, 128 SW 3rd 508 (Mo. 2004) which held that horse-drawn carriages at Kansas City's Country Club Plaza are places of amusement for purposes of a similar Missouri sales tax statute and that the charges for the rides were taxable charges for admissions to a place of amusement or entertainment.

Because these charges are taxable, XXXX is required to register for sales tax purposes and collect sales tax when she charges customers for rides on the horse-drawn carriage, wagon or stage coach. Her charges are taxable whether she bills an event planner or the individual riders.

XXXX also provides rides on horse-drawn carriages, wagons and stage couches on her farm. You state: "Horse-drawn carriage, wagon and stage-coach rides are available at the events at the customer's request. There is no separate billing or charges for providing this service." From this description, XXXX appears to offer these services to customers on a take it or leave it basis. In addition, the prices for the event planning service or barn rental do not vary depending on whether or not the customer asks for the rides to be provided. Because of this arrangement, XXXX does not owe Kansas sales or use tax when a customer elects to have a ride at a special event. See e.g. Appendix C, Library of Definition, Part I, "bundled transaction," (A)(2), Streamlined Sales and Use Tax Agreement. Please note, these charges would become taxable if she began to separately charge for the rides or begins to offer hay rides or similar rides on her farm that are unrelated to her special-events business.

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,

Thomas E. Hatten
Attorney/Policy & Research

Date Composed: 03/19/2008 Date Modified: 03/19/2008

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