Questions and Answers
Federal Excise Tax
Kansas Retailers' Sales Tax
Federal Excise Tax
FEDERAL EXCISE TAX #35 (8/91)
STATUS: SALE OF PASSENGER VEHICLES, HEAVY TRUCK AND TRAILERS, BOATS, AIRCRAFT, JEWELRY, FURS - EXEMPT
SHORT TERM LEASES OF PASSENGER VEHICLES - TAXABLE
LEASE OF FURS, JEWELRY, AIRCRAFT, HEAVY TRUCKS AND
TRAILERS - TAXABLE
BASIS: Internal Revenue Code, Section 4001 et seq., imposes a federal excise tax on the sale of passenger vehicles, heavy trucks and trailers, boats, aircraft, jewelry, furs.
The Kansas Department of Revenue directs that the Federal Excise tax imposed on the sale of passenger vehicles, heavy trucks and trailers, boats, aircraft, jewelry, furs, should not be included in the gross receipts subject to Kansas Retailers' Sales tax. The Federal Excise tax shall be separately stated on the billing or invoice if it is to be excluded from the sales tax base. This rule should apply to all leases of passenger vehicles over one year in duration, and to all leases of boats and aircraft regardless of the duration of the lease on boats and aircraft.
In cases of short term leases of passenger vehicles (less than one year), and all leases of furs, jewelry, aircraft, heavy trucks and trailers, the federal excise tax should be included in the gross receipts of the rental charge subject to the Kansas Retailers' Sales tax. The rational for this position is that the Rental Agency is considered to have made the first retail purchase upon which the federal excise tax is imposed. Therefore, in cases of short term leases of passenger vehicles, and all leases of furs, jewelry, aircraft, heavy trucks and trailers, the federal excise tax is on the retailer and not on the consumer.
NOTICE, issued April 1991. TO: All Retailers' Registered to Collect Kansas Retailers' Sales Tax
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