Opinion Letter

Letter Number:O-2007-003
Tax Type:Kansas Retailers' Sales Tax
Brief Description:Services associated with the wholesale of gasoline, diesel fuel and oil.
Keywords:
Approval Date:06/13/2007



Body:
Office of Policy & Research


June 13, 2007

XXXX
XXXX
XXXX Dear XXXX:

Thank you for your recent e-mail. You work for XXXX. It wholesales gasoline, diesel fuel, and oil and provides a variety of services. You list the services and ask whether or not they are taxable when performed in Kansas.

The Kansas sales tax act taxes sales of tangible personal property and sales of certain enumerated services. The enumerated services include the services of installing or applying tangible personal property. The tax is levied regardless of whether the property being installed or applied remains tangible personal property become part of real property. Tax is also levied on the gross receipts from the services of repairing, servicing, altering, or maintaining tangible personal property or property that was once tangible personal property but has become part of real property. On a practical basis, this means that servicing anything that is man made is taxable, regardless of whether it is tangible personal property or fixtures or other man-made article that are attached to or have become part of real property.

The tax base for these taxable services is "gross receipts," which means the selling price or the total amount received from a sale of the services at retail. K.S.A. 2003 Supp. 79-3602(o). K.S.A. 2003 Supp. 79-3602(ll) contains the definition of "sales or selling price": The tax base includes "all costs of transportation to the seller, all taxes imposed on the seller and any other expense of the seller." For service providers, the service provider's ("seller's") expenses often include the cost of transportation to the place where the services are performed, and the cost of meals, lodging, etc., while there or in transit. This means that when a service provider bills a customer, the tax base must include the travel expenses and other travel-related expenses, whether or not they are billed to the consumer as separate line item charges or on separate invoices. These charges are taxable even when the parties agree to have the customer pay the expenses under a separate contract. With this review in mind, I will answer your questions.

While your e-mail lists a number of different jobs, it does not explain who XXXX performs the jobs for. The Kansas legislature has granted broad exemption to many businesses and other entities, such as manufacturers, refineries, municipalities, oil well producers, and others. If a job is exempt, these businesses are required to provide you with an exemption certificate that identifies the Kansas statute under which they are claiming exemption. Accordingly, I will answer your questions as if XXXX is performing the services for fuel stations, and other types of retailers.

Filtration, purification and decontaminating of underground storage tanks
Sampling of products within a customer's location (refinery pipes, power plants, fuel stations, prison systems)
Driving individuals and/or equipment to and from customer location Chemical cleaning at customers location (refinery pipes, power plants, fuel stations, prison systems)
Used oil, oily water, grease trap, grit trap, used filters, used antifreeze, used spill pads (retrieval not resale)
Tank repairs
Tank installation
Tank delivery
Tank lease
Generator fuel analysis.
Lubricants and Oil analysis
Lubricants and Oil delivery
Fuels analysis
Fuel delivery agreement

Date Composed: 06/26/2007 Date Modified: 06/26/2007