Notice

Notice Number:99-10
Tax Type:Dry Cleaning Environmental Surcharge; Dry Cleaning Solvent Fee
Brief Description:1999 Legislative Changes
Keywords:
Approval Date:06/25/1999


Body:
Notice 99-10
1999 Legislative Changes to the Dry Cleaning Environmental Surcharge and Solvent Fee


Senate Bill 132, passed by the 1999 Legislature, amended the Kansas Dry Cleaner Environmental Response Act. This notice summarizes the Dry Cleaning Environmental Surcharge and Solvent Fee and explains the changes that are effective July 1, 1999.

The Dry Cleaning Environmental Surcharge and 1999 Changes

Since its inception in 1995, the dry cleaning environmental surcharge has been 2% of the gross receipts received from dry cleaning or laundry services. Beginning July 1, 1999, the surcharge is increased to 2.5% on the gross receipts from these services. On all orders delivered on and after July 1, 1999, dry cleaning and laundry retailers must charge tax at the increased rate of 2.5%.

Dry cleaning and laundry (other than coin-operated) services are also subject to the Kansas Retailers’ Sales Tax of 4.9% plus any applicable local sales tax. The environmental surcharge is in addition to the sales tax. Dry cleaning and laundry retailers should keep separate records of the environmental surcharge and sales tax, and continue to report these taxes on the separate forms provided to the Department of Revenue.

The environmental surcharge continues to apply to the same services. The surcharge applies to all dry cleaning and laundering services for individual consumers including, but not limited to, shirts, jeans, fatigues and household items. The surcharge also applies to items cleaned with solvents for business customers including, but not limited to, uniforms and tuxedos.

The following services are not subject to the 2.5% environmental surcharge:

Services provided to the public through coin-operated devices;
Laundering and rentals of uniforms, linens, dust control materials and other textiles for commercial purposes that are cleaned without using dry cleaning solvents; and
Services purchased directly by groups exempt from paying sales tax, including but not limited to: federal, state and local governments; elementary and secondary schools; non-profit educational institutions; non-profit hospitals; non-profit blood, tissue and organ banks; non-profit museums and historical societies; and religious organizations.

Sales for resale

Dry cleaning and laundry retailers occasionally make sales for resale to hotels and other businesses registered for the environmental surcharge. Retailers that make such sales must obtain a completed “Dry Cleaning and Laundry Retailer Exemption Certificate,” Form BT/st-28X, from the purchaser certifying that the buyer is registered to collect and remit the environmental surcharge when billing their customer. If a business reselling the dry cleaning or laundry service is not registered to collect the surcharge, the dry cleaning or laundry retailer must collect the surcharge from its customer. The dry cleaning exemption certificate, Form BT/st-28X, is in our Publication KS-1520, “Kansas Exemption Certificates.” This form and publication are available from any of our offices, or may be downloaded from our Internet site at www.ink.org/public/kdor.
.


The Solvent Fee and 1999 Changes

The Kansas Dry Cleaner Environmental Response Act also levies a fee on the purchase or acquisition of dry cleaning solvents. Prior to July 1, 1999, this fee was paid by dry cleaning and laundry retailers to the Kansas Department of Revenue as part of the dry cleaner return, Form DC-1. Two changes were made in the manner in which the solvent fee is to be remitted after July 1, 1999:

1) The solvent fee will be remitted to the department by the distributor rather than by the owner of the dry cleaning facility, and
2) Distributors selling the solvent must obtain the Kansas Department of Health and Environment registration number of the buyer prior to selling the solvent.

Solvent distributors must:
1) register with the Kansas Department of Revenue to collect the solvent fee from their customers, by completing the enclosed application, and
2) remit the solvent fee collected to the Kansas Department of Revenue by completing the solvent fee portion of the “Environmental Surcharge and Solvent Fee” return, Form DC-1.

Solvent Fee Rates

No changes were made to rate schedule for the solvent fee. The solvent fee rate paid by the owner of the dry cleaning facility to the distributor depends on whether the solvent is chlorinated or petroleum-based.

The fee for Perchloroethylene and other chlorinated solvents began in 1995 at $3.50 per gallon, and increases by $.25 on January 1 of each year until it reaches the maximum fee of $5.50 per gallon. Therefore, the fee for Perchloroethylene and other chlorinated solvents for calendar year 1999 is $4.50 per gallon. The rate for purchases of less than one gallon is calculated on the fraction of the gallon purchased. For example, the 1999 fee for a half gallon of chlorinated solvent is one-half of the $4.50, or $2.25.

The fee for a non-chlorinated or petroleum-based solvent is 10% of the rate for chlorinated solvents. Therefore, the 1999 petroleum-based solvent fee is 10% of $4.50, or $0.45 per gallon. Again, the rate on purchases of less than one gallon is calculated on the fraction of the gallon purchased — the 1999 rate for a half gallon of any non-chlorinated dry cleaning solvent is $0.23.

On January 1, 2000, the solvent fee rate for chlorinated solvents will increase to $4.75 per gallon, resulting in a fee rate for petroleum-based solvents of $0.48 per gallon for the year 2000.

Taxpayer Assistance

For assistance with registration, completion of the return, or if you have questions about reporting or paying these taxes, contact one of the department’s offices listed below.

Topeka Assistance
Center
Metropolitan Assistance
Center
Wichita Assistance
Center
(785) 296-0222
(913) 677-0158
(316) 337-6140
Docking State Office Building
Cloverleaf Office Park, Bldg. 3
State Office Building
915 SW Harrison, 1st Floor
6405 Metcalf Ave., Suite 120
230 E. William, Room 7150
Topeka, KS 66612-1588
Overland Park, KS 66202-3928
Wichita, KS 67202-4002


Other Changes to the Dry Cleaner Environmental Response Act

This bill also made changes to the administration of the act by the Kansas Department of Health and Environment (KDHE), including imposition of an annual registration fee, and the addition of administrative remedies for violations. If you have not yet received information on the changes from the Kansas Department of Health and Environment contact the Kansas Department of Health and Environment, Bureau of Environmental Remediation, Forbes Field, Building 740, Topeka, KS 66620-0001, (785) 296-6377 FAX (785) 296-4823. A revised version of the DC-1 will be mailed in time to file your July 1999 return.

Notice 99-10
June 25, 1999




Date Composed: 06/23/1999 Date Modified: 10/09/2001