Kansas Retailers' Sales Tax
Property damaged in transit
SALES AND COMPENSATING (USE) TAX. PROPERTY DAMAGED IN TRANSIT AND TRANSFERRED BY A RETAILER TO A FREIGHT CARRIER AFTER PAYMENT OF CLAIMS.
Advice has been requested on the application of sales or compensating tax to the transfer of tangible personal property damaged in transit and subsequently transferred by a retailer to a carrier after settlement of claims.
Payments made by a carrier to a retailer represent only the recovery of damages for the loss, injury or conversion of property and are not retail sales as contemplated by KSA 79-3602 (e) of the Kansas retailers' sales tax act. Therefore, Kansas sales or compensating tax would not be due on such transfers.
However, the carrier who receives tangible personal property in settlement for freight claims will be required to register and collect Kansas sales tax on such property be resold by the carrier for use, storage or consumption in the state of Kansas.
In addition, if tangible personal property transferred to the carrier is subsequently used or consumed by the carrier rather than resold, the carrier must pay the Kansas compensating tax based upon the carrier's coat of acquiring the property.
F. KENT KALB
SECRETARY OF REVENUE
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