Questions and Answers
Property Tax on Leases/Rentals
Kansas Retailers' Sales Tax
Amount Subject to Sales Tax
PROPERTY TAX ON LEASES OR RENTALS 07/11
. . .
Computation of the tax.
Sales tax shall be computed on the total amount of each lease charge billed to the lessee without any deduction for
mandatory insurance, damage waiver fees,
, maintenance, service, repair, pickup, delivery, and other handling charges, administrative charges, late payment charges or penalties, reinstatement fees, late return charges, fuel charges, surcharges, and other charges or expenses whether paid by the lessor or lessee.
Each of these fees or expenses shall be considered to be part of a taxable lease charge
, even when the fee or expense is separately stated on an invoice given to a lessee or when separate contracts are entered into for the rental or lease and for the payment of one or more of these fees or expenses.
of interest, financing, and carrying charges, and any other payment that a lessee makes to reimburse a lessor for the costs or expenses the lessee incurs under the lease,
shall be subject to sales tax whether billed as a separate line-item charge or on a separate invoice
A standard lease clause requires a lessee to reimburse a leasing company for property tax the company pays on property leased to the lessee. The amount a leasing company bills to recover property tax the company pays on the property it owns and leases is part of the "sales or selling price" charged to a lessee under the lease and is subject to Kansas sales tax.
92-19-55b(d); K.S.A. 79-3602(ll) (The tax base for a retail sale cannot be reduced by the amount of taxes imposed on the seller, or by any other seller expense the seller recovers from the buyer.)
The amount is taxable whether it is billed as part of a lump-sum installment charge, added to an installment charge as a separate line-item charge, or billed on a separate invoice.
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