Private Letter Ruling
Kansas Retailers' Sales Tax
Safety equipment for employees providing certain oil well drilling services.
Office of Policy & Research
September 13, 2012
RE: Your letter received August 20, 2012
Thank you for your letter requesting a private letter ruling. Your company’s website shows it provides oil well drilling services, sells oil exploration and drilling equipment, and services equipment in its shop and at well sites in Kansas. Your website identifies the services and equipment as:
Contract pumper service
New & used pumping unit sales
Pumping unit reconditioning & servicing
Complete machine shop services
Welding & fabrication
New & used tubing, casing & rod sales
Endary & drift
Tubing & equipment storage
Crane & winch work
Over the road trucking
Hot shot services
You ask if safety equipment your company buys and gives to employees who perform these services and sell and deliver such equipment are exempt from Kansas sales tax. The safety equipment includes hydrogen sulfide monitors for each employee, hard hats, safety glasses, ear plugs, safety lanyards and harnesses, and flame resistant apparel, among other things. The answer to your question is no, your company is required to pay or accrue Kansas sales or use tax on all of these purchases.
The listed services are performed in oil exploration and drilling operations, at your machine shop, and to control weeds at a well site, among other things. Much of the equipment your company sells and installs also appears to be used in oil exploration and drilling operations. Consequently, the safety equipment your company buys and gives to employees is taxable when your company buys it. The purchases are not exempt from Kansas sales tax under K.S.A. 79-3606(kk).
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.
Thomas E. Hatten
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