Questions and Answers

Identifying Information:Multi-Level Distributors
Tax Type:Kansas Retailers' Sales Tax
Brief Description:Multi-Level Distributors
Keywords:
Effective Date:08/01/1991



Body:

SUBJECT: MULTI-LEVEL DISTRIBUTORS #79 (8/91)

STATUS: TAXABLE

BASIS: K.S.A. 79-3604, provides, "...Whenever the director of taxation determines that retail sales of tangible personal property or services because of the nature of the operation of the business including the turnover of independent contractors, the lack of a place of business in which to display a registration certificate or keep records, the lack of adequate records or because such retailers are minors or transients, and there is a likelihood that the state will lose tax funds due to the difficulty of policing such business operations, the director of taxation shall refuse to issue a registration certificate to such person. It shall then be the duty of the vendor to such person to collect the full amount of the tax imposed by this act and to make a return and payment of the tax to the director of taxation in like manner as that provided for the making of returns and the payment of taxes by retailers under the provisions of this act."
A multi-level distributorship company is required to register as a retailer in the state of Kansas. All distributors, representatives, consultants, etc. for a multi-level distributorship company in Kansas will be denied application for sales tax registration. The responsibility of collecting and remitting Kansas sales tax is upon the multi-level distributorship company.
For the purposes of Kansas sales tax, a company's distributors and representatives will be viewed as acting as a conduit between the ultimate user, the multi-level distributorship company, and the state of Kansas. Under K.S.A. 79-3604, the various distributors and representatives for a company operating in the state should not collect sales tax and directly remit it, to the state of Kansas. The responsibility of collecting and remitting sales tax to Kansas is upon the multi-level distributorship company, and the tax should be collected at the time of sale to the company's distributor or representative.

Kansas sales tax must be charged, to the company's distributor or representative, on the suggested retail price of the company's products. The company must assess local sales taxes which are in effect at the site of the company's distributor or representative in Kansas. The sales invoice provided to the final consumer should state that the sales tax is included in the selling price.
If the company should sell to a retail business, that is not part of a multi-level distributorship, the retailer is allowed to purchase exempt from sales tax, tangible personal property for resale, upon providing a valid completed Kansas resale exemption certificate.

The state of Kansas does not exempt from sales tax the sale of food, food products or food supplements.




Date Composed: 10/02/1997 Date Modified: 10/11/2001