Notice

Notice Number:15-02
Tax Type:Kansas Retailers' Sales Tax
Brief Description:Recent Legislation Increases Kansas Sales and Use Tax Rate from 6.15% to 6.5% Effective July 1, 2015
Keywords:
Effective Date:06/22/2015
Approval Date:06/22/2015


Body:
NOTICE 15-02

RECENT LEGISLATION INCREASES THE KANSAS STATE SALES
AND USE TAX RATE FROM 6.15% TO 6.5% EFFECTIVE JULY 1, 2015

June 22, 2015

The Kansas state sales and use tax rate will increase from 6.15% to 6.5% on July 1, 2015. This Notice explains how the rate increase affects the collection and reporting of sales and use tax by Kansas retailers. The department will issue a separate notice that explains other changes to Kansas tax laws made this session. Please review our website periodically for these updates.
The new law contains a transition provision for binding written construction contracts entered into before May 1, 2015. When applied for and properly documented before July 10, 2015, the transition provision allows the 6.15% rate to apply to material purchases and labor service charges for a qualifying construction contract made after the July rate increase.
Notice 15-03 explains adjustments that certain retailers will need to make to correctly report taxable retail sales billed to customers at the 6.15% rate that are being reported on their July return (due date August 25, 2015).
When this Notice indicates the 6.15% or 6.5% state tax rate applies, retailers are required to charge customers a combined tax rate that equals the sum of the appropriate state rate plus all applicable local tax rates. When used in this notice, "goods" means "tangible personal property" as defined in K.S.A. 79-3602(pp). "Services" means services that are taxable under K.S.A. 79-3603. K.S.A. 79-3602(nn).

The following guidelines apply to retail sales of goods: The following guidelines apply to retail charges for taxable services: The following guidelines apply to construction contracts:

Use tax - A 6.5% state use tax, plus the applicable local use tax, is imposed on the use in Kansas of any taxable tangible personal property on which Kansas tax has not been paid. Kansas use tax law provides a credit for sales taxes lawfully paid to another state. For purposes of determining whether Kansas use tax is owed when another state's sales tax is being credited against the Kansas use tax owed, the 6.5% state rate applies if the first use of the property in Kansas occurred on or after July 1, 2015. The difference between the applicable state and local tax rates of both states is used to determine the Kansas use tax owed, if any.
When an out-of-state retailer incorrectly charges the 6.15% state rate instead of the 6.5% state rate on property delivered to a Kansas business on or after July 1, 2015, the business should report the addition .35% state use tax on its consumers' use tax return. If no Kansas tax is collected by an out-of-state retailer, the Kansas business is required to report state and local use tax on the purchase. The date the Kansas business takes delivery of its purchases determines whether the 6.15% or 6.5% state rate applies.

Reporting the tax - Most retailers will report the correct amount of state sales tax on their July return if they bill their customers in accordance with the directives set forth above and program the rate increase into their accounting software in a timely manner. The due date of the July return is August 25, 2015. Most retailers can complete their July return that applies the 6.5% state rate in the same way they completed earlier returns.
Some retailers will report some receipts on their July return from customer charges that were correctly invoiced at the 6.15% state rate. These are: (1) retailers that report tax on the cash basis and are reporting cash receipts from credit sales made before July 2015; (2) service providers that invoice customers on a month-to-month basis fixed by the starting date of service, such as utility providers, cable companies, and telecommunications providers; (3) service providers that invoice monthly membership dues based on the starting date of the membership; (4) lease or rental companies that bill installments that start before and ends on or after July 1, 2015; and (5) vendors and subcontractors that honor a form PR-74c, State Rate Increase Exemption Certificate, and charge sales tax at the 6.15% rate for sales made or services rendered on or after July 1, 2015.
These retailers must adjust their July return to avoid paying more sales tax than they charged and collected from their customers at the 6.15% rate. How this is done will be explained in Notice 15-03, Instructions for Reporting Sales Tax Receipts on the Sales Tax Return Filed for July 2015, which will be posted under "2015 State Sales and Use Tax Rate Increase" on the department's home page.

Taxpayer Assistance. Additional copies of this Notice, and other department forms or publications, may be downloaded from our web site, www.ksrevenue.org. If you have questions about this rate increase and how it applies, please contact:
Taxpayer Assistance Center
Kansas Department of Revenue
915 SW Harrison St., 1st Floor
Topeka, KS 66612-1588

Phone: 785-368-8222
Hearing Impaired TTY: 785-296-6461
Fax: 785-291-3614




Date Composed: 06/23/2015 Date Modified: 06/23/2015