Private Letter Ruling

Ruling Number:P-1999-76
Tax Type:Kansas Retailers' Sales Tax
Brief Description:Drum reconditioning; lubricating oils.
Approval Date:03/11/1999

Office of Policy & Research

March 11, 1999


Re: Kansas Sales Tax


Your correspondence of February 18, 1999, has been referred to my attention. Its contents are duly noted. Your letter states, in pertinent part, as follows:
That portion of page 6 of the Kansas Exemption Certificates booklet to which you refer provides as follows:
necessary and essential to the finished product
be used in or on the finished product
become a physical part of the finished product, and
become an ingredient or compound part of property or service for retail sale. The provisions on page 6 to which you refer are based on Kansas Statute Annotated (K.S.A.) 79-3602(l). The statute provides:
The statute is interpreted by Kansas Administrative Regulation (K.A.R. 92-19-54). The regulation provides, in subsections (d), (e) and (f):
The issue you present is nearly identical to that considered by the Board of Tax Appeals (BOTA) in In The Matter Of The Appeal Of Hampel Oil Distributors, Inc. In that case, a copy of which is enclosed for your review, the BOTA stated, in Paragraph 21, Page 7:
Based on the statute, the regulation, and their interpretation by the BOTA on nearly identical facts, we must conclude it is proper for you to pay sales tax when you purchase the drums. In addition, it is proper for you to pay sales tax on charges for reconditioning the drums. However, because the purchase of new drums or payment for the reconditioning of drums is a taxable event under the retailer’s sales tax act, you should not charge your customer’s sales tax on the “sale” of these drums.

I trust this information is of assistance. If I can be of further service, please feel free to contact me.


Jim Weisgerber
Tax Specialist


Enclosure: In The Matter Of The Appeal Of Hampel Oil Distributors, Inc.

Date Composed: 03/29/1999 Date Modified: 10/11/2001