Kansas: Sales Tax on Discounted Goods

Kansas recently issued an Opinion Letter pertaining to the sales tax of discounted goods. The letter clarifies the sales tax vendors should, or should not, collect on sale items in the state of Kansas.

According to Opinion Letter O-2012-004, dated September 11, 2012, when "a retailer discounts the selling price of goods, sales tax is charged on the amount actually paid by the customer." Sales tax is not charged on the undiscounted, full price of goods.

Delivery charges "when charged on a discounted sale, are added to the discounted price to determine the tax base for the sale and delivery of the goods… ." K.A.R. 92-19-46 states, "any discounts allowed and credited by the retailer are excludable from the selling price. However, all transportation freight, handling, drayage or other similar charges are to be included in the selling price… ." This is true even where the discounted selling price is less than what the retailer paid for the goods.

However, "[r]etailers are required to pay or accrue tax on promotional items they give away if the items are not treated as part of a discounted taxable retail sale." Examples include:

1. "[P]romotional items provided for the purchase of gasoline are subject to Kansas sales tax because gasoline purchased for highway use is not subject to Kansas sales tax."
2. "Kansas sales or use tax must be paid or accrued on seasonal items that a retailer gives to established customers or wholesalers and to products a retailer gives to walk-in customers regardless of whether they buy anything at retail."

Opinion Letter O-2012-004 also refers to promotional deals such as Groupons and "deals-of-the-day," which can range from restaurant meals to vacations. With respect to these, "sales tax is first calculated on the full selling price of the taxable sale. The value of the promotional deal certificate is then applied to the transaction."