Private Letter Ruling

Ruling Number:P-2014-004
Tax Type:Kansas Retailers' Sales Tax
Brief Description:Taxable Sales by Schools and Educational Institutions
Approval Date:09/10/2014

Office of Policy & Research

September 10, 2014


Thank you for your recent e-mail. In it, you state:
K.S.A. 79-3602(ii) provides: "(ii) 'Retailer' means a seller regularly engaged in the business of selling, leasing or renting tangible personal property at retail or furnishing electrical energy, gas, water, services or entertainment, and selling only to the user or consumer and not for resale." Kansas schools, including USD ABC, are required to register with the department as retailers and collect and report sales tax on the goods, admission charges, and enumerated services that they sell at retail. See State Tax Comm. v. Board of Education, 146 Kan. 722, 73 P.2d 49 (1937).

Publication KS-1550, Kansas Tax Guide for Schools and Educational Institutions, explains:
Publication KS-1550 and the Kansas Supreme Court decision in State Tax Comm. v. Board of Education clearly shows that USD ABC is required to charge and collect sales tax when it sells t-shirts to students. The Publication also shows the school received incorrect verbal advice from the department that suggested the sales are not taxable. K.A.R. 92-19-59(b) instructs: "A retailer, consumer, or other person shall not rely upon a verbal opinion from the department of revenue. Only a written private letter ruling issued to a retailer that concerns the retailer’s collection duties shall bind the department."

As Publication KS-1550 shows, a school's sales and rentals to students are taxable even when they are made to accommodate student participation in school activities. See Publication KS-1550, and its list of taxable school sales quoted above; State Tax Comm. v. Board of Education, supra. The school is a registered retailer and its sales and rentals are taxable regardless of whether the school realizes a profit on them.

Most questions that USD ABC will encounter about the taxability of its retail sales to students and employees are answered by Publication KS-1560, which lists representative taxable transactions. Please call Policy & Research if you have any questions about the school's collection duties that are not answered by the publication.

Date Composed: 09/16/2014 Date Modified: 09/16/2014