Private Letter Ruling

Ruling Number:P-2004-036
Tax Type:Kansas Retailers' Sales Tax
Brief Description:Diesel fuel used to transport an aggregate (rock) product from crushing plant to stockpile.
Approval Date:06/30/2004

Office of Policy & Research

June 30, 2004


This is a formal response to your inquiries regarding the application of the Kansas retailer’s sales tax to your business. Specifically, you stated:

Kansas sales tax law imposes tax on the sale of tangible personal property and enumerated services. However, K.S.A. 79-3606(n) provides a tax exemption for all sales of tangible personal property which is consumed in the production, manufacture, processing, mining, drilling, refining or compounding of tangible personal property for ultimate sale at retail within or without the state of Kansas. "Property which is consumed" includes tangible personal property which is essential or necessary to and which is used in the actual process of and consumed, depleted or dissipated within one year in the production, manufacture, processing, mining, drilling, refining or compounding of tangible personal property, which is not reusable for such purpose. K.S.A. 79-3602(dd).

In Docket No. 91-44-DT, the Board of Tax Appeals examined the exemption in K.S.A. 79-3606(n) and decided that the following two processes are not essential or necessary to an integrated rock production:

Thus, the diesel fuel used in these processes is not exempt from Kansas retailer’s sales tax. You should continue to add the cost of the diesel fuel used to transport the product to the stockpile to your monthly sales tax returns. You should also continue to pay sales tax on the fuel used by your front-end loader that loads the aggregate onto customers’ trucks.

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.

I sincerely apologize for the delay in answering your letter. If I may be of further assistance to you, please contact me at your earliest convenience at (785) 296-5330.


Mark Ciardullo

Date Composed: 07/06/2004 Date Modified: 07/09/2004