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79-3603. Retailers' sales tax imposed; rate. For the privilege of engaging in the business of selling tangible personal property at retail in this state or rendering or furnishing any of the services taxable under this act, there is hereby levied and there shall be collected and paid a tax at the rate of 6.5%. On and after January 1, 2023, 17% and on and after January 1, 2025, 18% of the tax rate imposed pursuant to this section and the rate provided in K.S.A. 2023 Supp. 79-3603d, and amendments thereto, shall be levied for the state highway fund, the state highway fund purposes and those purposes specified in K.S.A. 68-416, and amendments thereto, and all revenue collected and received from such tax levy shall be deposited in the state highway fund.

Within a redevelopment district established pursuant to K.S.A. 74-8921, and amendments thereto, there is hereby levied and there shall be collected and paid an additional tax at the rate of 2% until the earlier of the date the bonds issued to finance or refinance the redevelopment project have been paid in full or the final scheduled maturity of the first series of bonds issued to finance any part of the project.

Such tax shall be imposed upon:

(a) The gross receipts received from the sale of tangible personal property at retail within this state;

(b) the gross receipts from intrastate, interstate or international telecommunications services and any ancillary services sourced to this state in accordance with K.S.A. 79-3673, and amendments thereto, except that telecommunications service does not include: (1) Any interstate or international 800 or 900 service; (2) any interstate or international private communications service as defined in K.S.A. 79-3673, and amendments thereto; (3) any value-added nonvoice data service; (4) any telecommunication service to a provider of telecommunication services which will be used to render telecommunications services, including carrier access services; or (5) any service or transaction defined in this section among entities classified as members of an affiliated group as provided by section 1504 of the federal internal revenue code of 1986, as in effect on January 1, 2001;

(c) the gross receipts from the sale or furnishing of gas, water, electricity and heat, which sale is not otherwise exempt from taxation under the provisions of this act, and whether furnished by municipally or privately owned utilities, except that, on and after January 1, 2006, for sales of gas, electricity and heat delivered through mains, lines or pipes to residential premises for noncommercial use by the occupant of such premises, and for agricultural use and also, for such use, all sales of propane gas, the state rate shall be 0%; and for all sales of propane gas, LP gas, coal, wood and other fuel sources for the production of heat or lighting for noncommercial use of an occupant of residential premises, the state rate shall be 0%, but such tax shall not be levied and collected upon the gross receipts from: (1) The sale of a rural water district benefit unit; (2) a water system impact fee, system enhancement fee or similar fee collected by a water supplier as a condition for establishing service; or (3) connection or reconnection fees collected by a water supplier;

(d) the gross receipts from the sale of meals or drinks furnished at any private club, drinking establishment, catered event, restaurant, eating house, dining car, hotel, drugstore or other place where meals or drinks are regularly sold to the public;

(e) the gross receipts from the sale of admissions to any place providing amusement, entertainment or recreation services including admissions to state, county, district and local fairs, but such tax shall not be levied and collected upon the gross receipts received from sales of admissions to any cultural and historical event which occurs triennially;

(f) the gross receipts from the operation of any coin-operated device dispensing or providing tangible personal property, amusement or other services except laundry services, whether automatic or manually operated;

(g) the gross receipts from the service of renting of rooms by hotels, as defined by K.S.A. 36-501, and amendments thereto, or by accommodation brokers, as defined by K.S.A. 12-1692, and amendments thereto, but such tax shall not be levied and collected upon the gross receipts received from sales of such service to the federal government and any agency, officer or employee thereof in association with the performance of official government duties;

(h) the gross receipts from the service of renting or leasing of tangible personal property except such tax shall not apply to the renting or leasing of machinery, equipment or other personal property owned by a city and purchased from the proceeds of industrial revenue bonds issued prior to July 1, 1973, in accordance with the provisions of K.S.A. 12-1740 through 12-1749, and amendments thereto, and any city or lessee renting or leasing such machinery, equipment or other personal property purchased with the proceeds of such bonds who shall have paid a tax under the provisions of this section upon sales made prior to July 1, 1973, shall be entitled to a refund from the sales tax refund fund of all taxes paid thereon;

(i) the gross receipts from the rendering of dry cleaning, pressing, dyeing and laundry services except laundry services rendered through a coin-operated device whether automatic or manually operated;

(j) the gross receipts from the rendering of the services of washing and washing and waxing of vehicles;

(k) the gross receipts from cable, community antennae and other subscriber radio and television services;

(l) (1) except as otherwise provided by paragraph (2), the gross receipts received from the sales of tangible personal property to all contractors, subcontractors or repairmen for use by them in erecting structures, or building on, or otherwise improving, altering, or repairing real or personal property.

(2) Any such contractor, subcontractor or repairman who maintains an inventory of such property both for sale at retail and for use by them for the purposes described by paragraph (1) shall be deemed a retailer with respect to purchases for and sales from such inventory, except that the gross receipts received from any such sale, other than a sale at retail, shall be equal to the total purchase price paid for such property and the tax imposed thereon shall be paid by the deemed retailer;

(m) the gross receipts received from fees and charges by public and private clubs, drinking establishments, organizations and businesses for participation in sports, games and other recreational activities, but such tax shall not be levied and collected upon the gross receipts received from: (1) Fees and charges by any political subdivision, by any organization exempt from property taxation pursuant to K.S.A. 79-201 Ninth, and amendments thereto, or by any youth recreation organization exclusively providing services to persons 18 years of age or younger which is exempt from federal income taxation pursuant to section 501(c)(3) of the federal internal revenue code of 1986, for participation in sports, games and other recreational activities; and (2) entry fees and charges for participation in a special event or tournament sanctioned by a national sporting association to which spectators are charged an admission which is taxable pursuant to subsection (e);

(n) the gross receipts received from dues charged by public and private clubs, drinking establishments, organizations and businesses, payment of which entitles a member to the use of facilities for recreation or entertainment, but such tax shall not be levied and collected upon the gross receipts received from: (1) Dues charged by any organization exempt from property taxation pursuant to K.S.A. 79-201 Eighth and Ninth, and amendments thereto; and (2) sales of memberships in a nonprofit organization which is exempt from federal income taxation pursuant to section 501(c)(3) of the federal internal revenue code of 1986, and whose purpose is to support the operation of a nonprofit zoo;

(o) the gross receipts received from the isolated or occasional sale of motor vehicles or trailers but not including: (1) The transfer of motor vehicles or trailers by a person to a corporation or limited liability company solely in exchange for stock securities or membership interest in such corporation or limited liability company; (2) the transfer of motor vehicles or trailers by one corporation or limited liability company to another when all of the assets of such corporation or limited liability company are transferred to such other corporation or limited liability company; or (3) the sale of motor vehicles or trailers which are subject to taxation pursuant to the provisions of K.S.A. 79-5101 et seq., and amendments thereto, by an immediate family member to another immediate family member. For the purposes of paragraph (3), immediate family member means lineal ascendants or descendants, and their spouses. Any amount of sales tax paid pursuant to the Kansas retailers sales tax act on the isolated or occasional sale of motor vehicles or trailers on and after July 1, 2004, which the base for computing the tax was the value pursuant to K.S.A. 79-5105(a), (b)(1) and (b)(2), and amendments thereto, when such amount was higher than the amount of sales tax which would have been paid under the law as it existed on June 30, 2004, shall be refunded to the taxpayer pursuant to the procedure prescribed by this section. Such refund shall be in an amount equal to the difference between the amount of sales tax paid by the taxpayer and the amount of sales tax which would have been paid by the taxpayer under the law as it existed on June 30, 2004. Each claim for a sales tax refund shall be verified and submitted not later than six months from the effective date of this act to the director of taxation upon forms furnished by the director and shall be accompanied by any additional documentation required by the director. The director shall review each claim and shall refund that amount of tax paid as provided by this act. All such refunds shall be paid from the sales tax refund fund, upon warrants of the director of accounts and reports pursuant to vouchers approved by the director of taxation or the director's designee. No refund for an amount less than $10 shall be paid pursuant to this act. In determining the base for computing the tax on such isolated or occasional sale, the fair market value of any motor vehicle or trailer traded in by the purchaser to the seller may be deducted from the selling price;

(p) the gross receipts received for the service of installing or applying tangible personal property which when installed or applied is not being held for sale in the regular course of business, and whether or not such tangible personal property when installed or applied remains tangible personal property or becomes a part of real estate, except that no tax shall be imposed upon the service of installing or applying tangible personal property in connection with the original construction of a building or facility, the original construction, reconstruction, restoration, remodeling, renovation, repair or replacement of a residence or the construction, reconstruction, restoration, replacement or repair of a bridge or highway.

For the purposes of this subsection:

(1) "Original construction" means the first or initial construction of a new building or facility. The term "original construction" shall include the addition of an entire room or floor to any existing building or facility, the completion of any unfinished portion of any existing building or facility and the restoration, reconstruction or replacement of a building, facility or utility structure damaged or destroyed by fire, flood, tornado, lightning, explosion, windstorm, ice loading and attendant winds, terrorism or earthquake, but such term, except with regard to a residence, shall not include replacement, remodeling, restoration, renovation or reconstruction under any other circumstances;

(2) "building" means only those enclosures within which individuals customarily are employed, or which are customarily used to house machinery, equipment or other property, and including the land improvements immediately surrounding such building;

(3) "facility" means a mill, plant, refinery, oil or gas well, water well, feedlot or any conveyance, transmission or distribution line of any cooperative, nonprofit, membership corporation organized under or subject to the provisions of K.S.A. 17-4601 et seq., and amendments thereto, or municipal or quasi-municipal corporation, including the land improvements immediately surrounding such facility;

(4) "residence" means only those enclosures within which individuals customarily live;

(5) "utility structure" means transmission and distribution lines owned by an independent transmission company or cooperative, the Kansas electric transmission authority or natural gas or electric public utility; and

(6) "windstorm" means straight line winds of at least 80 miles per hour as determined by a recognized meteorological reporting agency or organization;

(q) the gross receipts received for the service of repairing, servicing, altering or maintaining tangible personal property which when such services are rendered is not being held for sale in the regular course of business, and whether or not any tangible personal property is transferred in connection therewith. The tax imposed by this subsection shall be applicable to the services of repairing, servicing, altering or maintaining an item of tangible personal property which has been and is fastened to, connected with or built into real property;

(r) the gross receipts from fees or charges made under service or maintenance agreement contracts for services, charges for the providing of which are taxable under the provisions of subsection (p) or (q);

(s) on and after January 1, 2005, the gross receipts received from the sale of prewritten computer software and the sale of the services of modifying, altering, updating or maintaining prewritten computer software, whether the prewritten computer software is installed or delivered electronically by tangible storage media physically transferred to the purchaser or by load and leave;

(t) the gross receipts received for telephone answering services;

(u) the gross receipts received from the sale of prepaid calling service and prepaid wireless calling service as defined in K.S.A. 79-3673, and amendments thereto;

(v) all sales of bingo cards, bingo faces and instant bingo tickets by licensees under K.S.A. 75-5171 et seq., and amendments thereto, shall be exempt from taxes imposed pursuant to this section;

(w) all sales of charitable raffle tickets in accordance with K.S.A. 75-5171 et seq., and amendments thereto, shall be exempt from taxes imposed pursuant to this section; and

(x) commencing on January 1, 2023, and thereafter, the state rate on the gross receipts from the sale of food and food ingredients shall be as set forth in K.S.A. 2023 Supp. 79-3603d, and amendments thereto.

History: L. 1937, ch. 374, § 3; L. 1947, ch. 463, § 2; L. 1951, ch. 497, § 1; L. 1957, ch. 509, § 2; L. 1958, ch. 31, § 1 (Special Session); L. 1964, ch. 38, § 1 (Budget Session); L. 1965, ch. 533, § 1; L. 1970, ch. 389, § 2; L. 1971, ch. 321, § 2; L. 1973, ch. 403, § 1; L. 1977, ch. 337, § 2; L. 1978, ch. 416, § 2; L. 1979, ch. 326, § 1; L. 1981, ch. 390, § 1; L. 1986, ch. 386, § 1; L. 1987, ch. 182, § 108; L. 1988, ch. 386, § 2; L. 1989, ch. 209, § 59; L. 1992, ch. 280, § 59; L. 1994, ch. 2, § 2; L. 1994, ch. 198, § 1; L. 1995, ch. 118, § 2; L. 1995, ch. 118, § 3; L. 1995, ch. 242, § 3; L. 1997, ch. 185, § 6; L. 1998, ch. 130, § 30; L. 1998, ch. 181, § 2; L. 1999, ch. 158, § 11; L. 2000, ch. 140, § 9; L. 2001, ch. 96, § 1; L. 2001, ch. 199, § 2; L. 2002, ch. 185, § 6; L. 2003, ch. 147, § 6; L. 2004, ch. 90, § 2; L. 2004, ch. 171, § 7; L. 2005, ch. 2, § 2; L. 2007, ch. 155, § 4; L. 2007, ch. 195, § 58; L. 2010, ch. 160, § 1; L. 2013, ch. 135, § 3; L. 2015, ch. 62, § 20; L. 2015, ch. 99, § 7; L. 2015, ch. 102, § 6; L. 2020, ch. 8, § 13; L. 2022, ch. 89, § 6; January 1, 2023.

Revisor's Note:

Section was amended twice in the 1998 session, see also 79-3603a.

Section was amended twice in the 2000 session, see also 79-3603b.

Section was amended twice in the 2003 session, see also 79-3603c.

Section was also amended by L. 2007, ch. 124, § 1, but that version was repealed by L. 2007, ch. 195, § 59.

Cross References to Related Sections:

Rate change effect, see 79-3666.

Rate for certain construction contracts, see 79-3695.

Rate on sale of food and food ingredients, see 79-3603d.

Law Review and Bar Journal References:

Case in annotation No. 9 below discussed and case in annotation No. 8 below mentioned in 1955-56 survey of taxation law, Leslie T. Tupy, 5 K.L.R. 324, 332 to 334 (1956).

Sales tax is properly collected from a city on the sale of water and electricity and on the sale of admissions to city's municipal swimming pool, 9 K.L.R. 257 (1960).

Quoted in 1963-65 survey of taxation, Leslie T. Tupy, 14 K.L.R. 365, 366 (1965).

"The Nature and Taxability of Computer Software," Kurt Stohlgren, 22 W.L.J. 103, 104, 118 (1982).

"Survey of Kansas Law: Taxation," Sandra Craig McKenzie, 41 K.L.R. 727, 750 (1993).

"Kansas' Sales and Use Tax Law: Exemptions for Manufacturing Machinery and Equipment and the Integrated Plant Theory," Douglas A. Hager, 37 W.L.J. 543 (1998).

Attorney General's Opinions:

Sales tax imposed on contractors for utilities and cable television firms. 80-237.

Situs of taxable transactions; rules and regulations. 81-79.

Sales to contractors on projects of Kansas park and resources authority not exempt from sales tax. 82-156.

Tax exempt sales. 83-155.

Tax imposed on certain vehicles held for resale by licensed vehicle dealer. 84-12.

County and city retailers' sales taxes; other city and county excise taxes prohibited. 85-86.

Sales tax on admissions to county fairs. 85-180.

Telephone answering service for nonprofit hospital service is exempt from sales tax; rental of beepers is taxable. 87-141.

Kansas retailers' sales tax; building construction; installation of sewer and water mains. 88-78.

Exempt property. Machinery and equipment of electric utility company. 88-158.

Computation of sales tax on certain construction services. 92-79.

Sales tax; state and federal excise taxes as part of total cost to consumer. 93-53.

Collection of retailers' sales tax on sale of motor vehicle at auction by auctioneer. 96-19.

Public water supply systems: one time choice—pay new flat fee on water sales or pay state sales tax. 2001-37.

CASE ANNOTATIONS

1. Only general admission to fairgrounds exempted hereunder; amusements taxable. State Tax Comm. v. Board of Agriculture, 146 Kan. 720, 72 P.2d 965.

2. Various school expenditures considered and held not for education purposes. State Tax Comm. v. Board of Education, 146 Kan. 722, 723, 729, 73 P.2d 49.

3. Receipts from school activities not wholly expended for educational purposes nonexempt hereunder. State Tax Comm. v. Board of Education, 146 Kan. 722, 723, 729, 73 P.2d 49.

4. Airplane plant purchases under government contract not exempt from tax; federal instrumentality. Boeing Airplane Co. v. Commission of Revenue and Taxation, 153 Kan. 712, 715, 113 P.2d 110.

5. Tax collectible on mail orders taken within state; sale on approval. Montgomery Ward & Co. v. Commission of Revenue and Taxation, 156 Kan. 408, 409, 412, 133 P.2d 1008.

6. Sales and use taxes apply to purchases of equipment for municipal utility. City of Chanute v. Commission of Revenue and Taxation, 156 Kan. 538, 540, 542, 134 P.2d 672.

7. History, intent and purpose of act discussed; exemptions; test to determine taxable transactions. Southwestern Bell Tel. Co. v. State Commission of Revenue and Taxation, 168 Kan. 227, 228, 230, 231, 232, 212 P.2d 363.

8. Construed to show legislature intended to exclude tax on merchandise vending machine receipts prior to 1951 amendment. Rooney v. Horn, 174 Kan. 11, 13, 14, 15, 254 P.2d 322.

9. Subsection (f) construed; does not violate state or federal constitution. Stevens Enterprises, Inc., v. State Commission of Revenue & Taxation, 179 Kan. 696, 697, 699, 700, 701, 703, 705, 298 P.2d 326.

10. Tax is upon sale of admissions not participation in activities. Grauer v. Director of Revenue, 193 Kan. 605, 607, 608, 609, 610, 396 P.2d 260.

11. Mentioned in decision disallowing exemption to city for material used to construct swimming pool. Board of Park Comm'rs, City of Wichita v. State, ex rel., 212 Kan. 716, 717, 512 P.2d 1040.

12. Mentioned; materials used in printing city directory exempt from tax; refund ordered. R.L. Polk & Co. v. Armold, 215 Kan. 653, 655, 527 P.2d 973.

13. Subsection (p) held unconstitutional; vague; violation of due process; application. Kansas City Millwright Co., Inc. v. Kalb, 221 Kan. 658, 659, 660, 661, 663, 665, 666, 667, 668, 670, 671, 562 P.2d 65. Modified, 221 Kan. 752, 753, 562 P.2d 65.

14. Finance company selling repossessed tangible personal property to consumers, held retailer under act. Personal Thrift Plan of Wichita, Inc. v. State, 229 Kan. 622, 623, 625, 629 P.2d 184 (1981).

15. Construing place of business for local sales tax on services purposes in 12-191 to mean place where service performed; K.A.R. 92-21-18 declared invalid. Capital Electric Line Builders, Inc. v. Lennen, 232 Kan. 379, 381, 384, 654 P.2d 464 (1982).

16. All gas and water wells irrespective of whether originally intended for storage, disposal or production, excluded under subsection (p). Sterling Drilling Co. v. Kansas Dept. of Revenue, 9 Kan. App. 2d 108, 111, 673 P.2d 456 (1984).

17. Subsection (p) construed and upheld; no provision to collect compensating tax from consumer where transaction wholly within state and subject to sales tax. J. G. Masonry, Inc. v. Department of Revenue, 235 Kan. 497, 499, 501, 503, 509, 680 P.2d 291 (1984).

18. Provisions hereof not constitutionally vague. In re Tax Appeal of R & R Janitor Service, 9 Kan. App. 2d 500, 502, 505, 683 P.2d 909 (1984).

19. Welding pipe into pipeline and angle iron into drilling rig considered altering under (q); section construed. In re Tax Appeal of Black, 9 Kan. App. 2d 666, 670, 684 P.2d 1036 (1984).

20. Cited in holding BOTA lacks authority to adopt or determine laws contrary to statutory provisions. Director of Taxation v. Kansas Krude Oil Reclaiming Co., 236 Kan. 450, 456, 459, 691 P.2d 1303 (1984).

21. Cited; in felony theft (21-3701) prosecution, retail outlet has owner interest (21-3110(13)) in sales tax collected. State v. Parsons, 11 Kan. App. 2d 220, 221, 720 P.2d 671 (1986).

22. Cited; sales tax on gross receipts for repair services on telephones provided to Bell customers examined. In re Tax Appeal of AT&T Technologies, Inc., 242 Kan. 554, 556, 749 P.2d 1033 (1988).

23. Cited; gross receipts, selling price and total cost to consumer as including mandatory gratuity examined. In re Tax Appeal of Newton Country Club Co., 12 Kan. App. 2d 638, 641, 753 P.2d 304 (1988).

24. Term installing does not include excavation services; construction contracts divisible into taxable and nontaxable components. In re Tax Appeal of Bernie's Excavating Co., 13 Kan. App. 2d 476, 480, 772 P.2d 822 (1989).

25. Construed, repairs to utility property subject to tax, utility ultimate consumer. Kansas Power & Light Co. v. Aarens, 16 Kan. App. 2d 620, 621, 623, 827 P.2d 74 (1992).

26. Labor services to install outdoor swimming pools not exempt from sales tax as original construction. In re Tax Appeal of McKee, 19 Kan. App. 2d 43, 55, 861 P.2d 1386 (1993).

27. Whether contractor taxpayer is exempt from retailers' sales tax for materials and labor purchased for political subdivision project examined; original construction exemption discussed. In re Tax Appeal of Harbour Brothers Constr. Co., 256 Kan. 216, 220, 883 P.2d 1194 (1994).

28. Greenhouse operation is an agricultural use for sales tax exemption purposes; KDR regulation partially invalid. In re Tax Appeal of Alex R. Masson, Inc., 21 Kan. App. 2d 863, 865, 909 P.2d 673 (1995).

29. Cable television franchise fees collected from subscribers are part of gross receipts subject to sales tax. In re Tax Appeal of Atchison Cablevision, 262 Kan. 223, 936 P.2d 721 (1997).

30. Appellant taxed at rate of 2.5% for electrical use in its water system although similar condition in Johnson County was not subject to tax. In re Tax Appeal of City of Wichita, 274 Kan. 915, 59 P.3d 336 (2002).

31. Health club's purchase of electricity, heat, water and other personal property not exempt from sales tax. In re Tax Appeals of Genesis Health Clubs, 42 Kan. App. 2d 239, 210 P.3d 663 (2009).

32. Retail sales tax paid on travel expenses and associated sales tax paid by a vendor and separately invoiced to a purchaser are held subject to refund. In re Tax Appeal of Cessna Employees' Credit Union, 47 Kan. App. 2d 275, 277 P.3d 1157 (2012).


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