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Kansas: Sales Tax on Discounted Goods

  • Sep 25, 2012 | Gail Cole

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."

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.