Notice

Notice Number:03-03
Tax Type:Kansas Compensating Tax
Brief Description:Kansas Retailers' Compensating Tax
Keywords:
Approval Date:06/06/2003


Body:
Office of Policy & Research


NOTICE 03-03
KANSAS RETAILERS’ COMPENSATING TAX


The 2003 Kansas legislature has enacted compensating use tax changes that take effect July 1, 2003.

For those remitting KANSAS RETAILERS’ COMPENSATING USE TAX, the most noticeable difference will be the rate of compensating tax due. BEFORE JULY 1, 2003, the Kansas compensating use tax rate was the state sales tax rate only – currently 5.3%. ON AND AFTER JULY 1, 2003, the Kansas compensating use tax rate will be equal to the combined (state and local) sales tax rate on ALL purchases of tangible personal property used, stored or consumed in the state of Kansas.

EXAMPLE: On July 1, 2003 a Kansas resident purchases a $1,000 Desk from Nebraska Office Mart in Omaha and arranges to have it delivered to his home in Topeka. Nebraska Office Mart will collect Kansas retailers’ compensating use tax at a rate equal to the Topeka sales tax rate (7.2%) - ($1,000 X .072 = $72.00 Kansas retailers’ compensating use tax due).

EFFECTIVE JULY 1, 2003, the rate of Kansas retailers’ compensating use tax due will be the rate in effect where the customer takes delivery/possession of the purchased item(s). Under this new rule, the seller will collect Kansas retailers’ compensating use tax equal to the combined sales tax rate in effect at the “customer’s shipping address” in Kansas.

If the “shipping address” is not known to the seller, then it is the tax rate in effect at the “purchaser’s address” as maintained by the seller in the normal course of business. For more information concerning “Sourcing Rules” (the appropriate rate of tax to collect) see NOTICE 03-04.

KANSAS SALES TAX JURISDICTION CODE BOOKLET - PUBLICATION KS-1700. As noted, the new law requires Kansas retailers’ compensating tax to be equal to the combined sales tax rate. All of the sales/compensating tax rates for Kansas cities and counties are found in Pub. KS-1700, which is available from the department’s web site: http://www.ksrevenue.org/pdf/forms/pub1700.pdf or forms order line: (785) 296-4937.

The Streamlined Sales Tax legislation requires the Kansas Department of Revenue to provide and maintain a database, in downloadable format, describing boundary changes for all local taxing jurisdictions, including a description of the change and effective date, and the sales and use tax rates for those jurisdictions. The department must also provide and maintain a downloadable database that assigns each five and nine-digit zip code to the proper rates and taxing jurisdictions. The department is proceeding to develop these databases as soon as possible, and will notify retailers when they are available for use. However, they will take some time to develop and will not be available by July 1, 2003. Until these electronic databases become available, Publication KS-1700 should be used to identify the correct local sales tax rates and taxing jurisdictions.

FORM CT-9U – Retailers who remit Kansas retailers’ compensating use tax will report the tax due on Form CT-9U, which is available from the department’s web site: www.ksrevenue.org or forms order line: (785) 296-4937. Taxpayers who are currently registered to remit Retailers’ Compensating Use tax will automatically begin receiving Form CT-9U.

ADDITIONAL INFORMATION – Consult the “Kansas Sales And Compensating Use Tax” Information Guide, Publication KS-1510, which is available from the department’s web site: http://www.ksrevenue.org/pdf/forms/pub1510.pdf or forms order line: (785) 296-4937.

You may also contact the department toll free by calling 1-877-526-7738; press “1” for touch-tone phone (listen briefly), press “5” for Business Taxes (listen briefly); then press “2” to talk to a retailers’ compensating tax representative.

EXAMPLE AND COMPLETED FORM CT-9U

ABC Office Supply of Kansas City, Missouri is registered with the Department of Revenue to collect and remit Kansas retailers’ compensating tax on a monthly basis. During the month of July 2003, ABC Office Supply has Kansas gross sales of $100,000. The sales consists of:

1) $5,000 of exempt sales – sales to a qualified religious organization – the purchased items where delivered to the customer in Overland Park, Kansas.
2) $30,000 of sales delivered to customers within the city limits of Overland Park, Kansas.
3) $15,000 of sales delivered to customers outside the city limits of any city but, within Johnson County.
4) $20,000 of sales delivered to customers within the city limits of Prairie Village, Kansas.
5) $10,000 of sales delivered to customers within the city limits of Leawood, Kansas.
6) $20,000 of sales delivered to customers within the city limits of Kansas City, Kansas.


A completed Form CT-9U for this fictitious company appears on the following page

NOTES:
1) The $5,000 exempt sales are counted as part of Overland Park sales – as the items where delivered within the city limits of Overland Park.


SCANNED ATTACHMENTS/DOCUMENTS


Notice 03-03 sample return.pdf


Double click the above icon to launch Acrobat Reader and view the sample return.

Date Composed: 06/05/2003 Date Modified: 06/20/2003