Opinion Letter

Letter Number:O-2013-002
Tax Type:Kansas Retailers' Sales Tax
Brief Description:Processing charges subject to sales tax.
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Office of Policy & Research


July 10, 2013

XXXX
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XXXX Dear XXXX:

Thank you for your recent letter. You sharpen saws. You intend to begin charging customers a processing fee when they use a credit or debit card to pay for your services. You ask if a processing charge is taxable. The answer is yes. The line-item processing charge is part of the tax base and is taxed when your services are taxed. If you provide services to a high school shop, vocational school, or other entity that provides you with an exempt entity exemption certificate, the processing fee isn’t taxed because your line-item services charges aren’t taxed because of the exemption.

K.A.R. 92-19-3a(e)(1) specifically addresses your question about the taxability of the credit/debit card processing fees that you bill to customers. K.A.R. 92-19-3a(e)(2) addresses the treatment of charges that a credit/debit card company bills to you or deducts from your account for the use of their services. Subsection (e) of the administrative regulation provides:


Date Composed: 07/16/2013 Date Modified: 07/16/2013