Questions and Answers
Kansas Retailers' Sales Tax
HOSPITALS (NONPROFIT) #52 (8/91)
STATUS: EXEMPT ON DIRECT PURCHASES
exempts from sales tax; "all sales of tangible personal property or service, including the renting and leasing of tangible personal property purchased directly by......a public or private nonprofit hospital...and used exclusively for...hospital...purposes, except when: (1) Such...hospital is engaged or proposes to engage in any business specifically taxable under the provisions of this act and such items of tangible personal property or service are used or proposed to be used in such business,..."
defines a hospital as: "an establishment with an organized medical staff of physicians; with permanent facilities that include inpatient beds; and with medical services, including physician services, and continuous registered professional nursing services for not less than twenty-four (24) hours of every day, to provide diagnosis and treatment for four or more nonrelated patients who have a variety of medical conditions."
Accordingly, for the sales tax exemption to apply, the following criteria must be met:
1. The hospital must meet the definition of "hospital" pursuant to K.S.A. 65-425.
2. The purchase of the tangible personal property or taxable service must be a direct purchase. To qualify as a direct purchase, each bill, invoice, contract or other evidence of the transaction shall be made out in the name of the hospital which qualifies for an exemption under the act, and each payment shall be made on the check, warrant or voucher of that hospital.
3. The hospital must be a non-profit hospital. A for-profit hospital is not exempt from sales tax.
4. The tangible personal property or taxable service, purchased by the non-profit hospital, must be used exclusively for hospital purposes.
, reading in part, exempts from sales tax, "all sales of tangible personal property or services purchased by a contractor for the purpose of constructing, equipping, reconstructing, maintaining, repairing, enlarging, furnishing or remodeling facilities for any public or private nonprofit hospital..., which would be exempt from taxation under the provisions of this act if purchased directly by such hospital... When any...public or private nonprofit hospital...shall contract for the purpose of constructing, equipping, reconstructing, maintaining, repairing, enlarging, furnishing or remodeling facilities, it shall obtain from the state and furnish to the contractor an exemption certificate for the project involved, and the contractor may purchase materials for incorporation in such project..."
Accordingly, for a contractor to purchase materials exempt from sales tax, for such a project, the nonprofit hospital must apply for and receive from the Kansas Department of Revenue a project exemption certificate.
The nonprofit hospital must have a valid project exemption certificate per project. The project exemption certificate is valid only from the date the certificate was issued. Project exemption certificates may not be applied for after the completion of a project.
Revenue Ruling 19-78-9
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