Private Letter Ruling

Ruling Number:P-2010-006
Tax Type:Kansas Retailers' Sales Tax
Brief Description:Manufacturer and third-party rebates.
Approval Date:09/09/2010

Office of Policy & Research

September 9, 2010


Thank you for your recent letter. You ask how Kansas sales tax laws apply to manufacturer and third-party rebates. Rebates are addressed in K.S.A. 79-3602(ll) and K.A.R. 92-19-16a(e).

K.S.A. 79-3602(ll) defines "sales or selling price":

The exception for motor vehicle rebates mentioned in Subsection (3)(E) of K.S.A. 79-3602(ll) expired on June 30, 2009. Because of this, manufacturers' rebates currently do not reduce tax base for the retail sale of a motor vehicle.

Subsection (e) of K.A.R. 92-19-16a provides:
As noted above, the exception discussed in the last sentence no longer applies and the tax base for the sale of a motor vehicle by the amount of a motor vehicle manufacturer's rebate that the buyer assigns to the dealer at the time of sale.

Your letter states:

You pose four questions about the taxability of these "instant point of sale rebates." I will repeat each question and then answer it:
The treatment of rebates that you discuss was the same treatment that the Kansas legislature provided for vehicle manufacturer's rebates in Subsection (3)(E) of K.S.A. 79-3602(ll), which expired on June 30, 2009. This provision was an exception to the rule since it allowed sales tax to be calculated on the agreed upon selling price less the amount of a manufacturer's rebate assigned to the motor vehicle dealer at the time of sale. This "exception" shows the rule is that rebates assigned to a retailer at the time of sale do not reduce the tax base on which sales tax is figured.

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 you have any additional questions, please call me at 785-296-3081.

Date Composed: 09/13/2010 Date Modified: 09/13/2010