New Sales Tax Law

Watch Systems, in conjunction with Kansas Department of Revenue, has developed an electronic sales tax rate and jurisdiction code locator.  By accessing KDOR’s web site:  www.ksrevenue.org taxpayers can obtain both the applicable sales tax rate and jurisdiction code by entering an address, a zip code, or by latitude & longitude coordinates.  When individuals and businesses use the department’s new sales tax locator technology, they are relieved of liability for inaccurate sales tax rates.

Although proposed changes to the rules are being considered by the 2004 legislature, retailers are still expected to make a good faith effort at collecting sales taxes based on the current system.

The Streamlined Sales Tax Project was passed during the 2003 legislative session and signed into law by the Governor on May 23, 2003.  In an effort to simplify sales tax remittance and collection procedures, several changes had to be made to Kansas’ law. 

The ultimate goal was to allow Kansas to participate in the Streamlined Sales Tax and to collect sales tax from Internet sellers that unfairly compete with Kansas mainstreet businesses.  The end goal was collecting and remitting sales tax in a fair and equitable manner.  It was anticipated that the legislation will ultimately benefit Kansas’ retailers that are competing with the larger Internet and multi-state businesses as well as the general public by collection revenues that are currently lost to the state.

The two major changes are: 

LOCAL USE TAX.  Use tax is charged when a good is purchased out of state and used in Kansas.  Before enactment of the new law, only a state use tax rate was charged, 5.3%.  This change will require businesses or individual who make purchases where sales tax is not charged and bring that item back to Kansas to pay an amount equal to the local option sales tax in the area in addition to the state 5.3% rate.  As of July 1, 2003, a state and local use tax will be charge on all out of state purchases. 

DESTINATION SOURCING.  Kansas will also change its destination sourcing requirements.  The changes require that if a good is purchased over the counter, the sales tax rate of the location of the sale is charged.  If however, the good is shipped to another location, then the sales tax of the location of where the good is shipped is assessed. 

For example, a furniture store is located in Spring Hill and has a customer from Gardner.  If the customer purchased a set of table and chairs and takes the items back to Gardner, the sales tax rate for Spring Hill is charged.  However, if the customer purchases the table and chairs and has the furniture store deliver them to Gardner, the sales tax rate from Gardner will be charged. Technically, this is further compounded by Spring Hill's location straddling the two counties. Deliveries by a business located in one county delivered within the city's other county should be charged the sales tax for the county where the delivery is accepted. 

An electronic “Sales Tax Jurisdiction Code Booklet” (KDOR Publication KS-1700) is currently available.   Until the new data base software is available, the Kansas Department of Revenue is calling this an “interim period” (between now and the end of the year) and their staff has been instructed to be very relaxed in their dealings with retailers and focus on service, not sanctions. 

• A sales tax calculator is available on Kansas Treasurer Lynn Jenkins' Web site, http://kansasstatetreasurer.com.

• The Kansas Revenue Department has a list of city and county sales tax rates on its Web site, www.ksrevenue.org. The local jurisdiction code book is available in the portable document format and as a Microsoft Excel file.

A letter from the Kansas Department of Revenue was sent to retailers in late June and detailed the changes. (109kb pdf)

Senator Karin Brownlee has written a newspaper column regarding this issue (12kb pdf) and a memo to Chamber Members regarding its implementation (7kb pdf.)

The Governor announced Sept. 4, 2003, that she was indefinitely delaying the implementation of the Streamlined Sales Tax Project. An article in the Sept. 5, 2003, Kansas City Star (50kb pdf) details that decision.