The State of Exemption Certificates in Kansas
- Feb 13, 2013 | Gail Cole
Tax requirements change, and staying on top of changes can be challenging. To help businesses keep current on the ins and outs of exemption certificates, the Kansas Department of Revenue has released a revised version of "Exemption Certificates." If you do business in Kansas, it's worth a read. Better have a cup of coffee close at hand.
The Cardinal Rule
The booklet begins with "The Cardinal Rule:"
"All retail sales of goods and enumerated taxable services are considered taxable unless specifically exempt."
This is adjoined with the reminder that "Kansas retailers are responsible for collecting the full amount of sales tax due on each sale to the final user or consumer."
Any and all sales must have proof of sales tax collected and remitted or "be accompanied by a Kansas exemption certificate or Form PR-78SSTA."
An exemption certificate is a document that a buyer presents to a retailer when the buyer is exempt from paying sales and use tax on a sale. It explains the reason for the exemption. Buyers are required to give completed exemption certificates to sellers, and sellers are required to keep them on record.
Resale Exemption Certificate Requirements
- Items purchased must be for resale in the usual course of the buyer's business;
- Buyer must have a Kansas sales tax account number (except in drop shipment situations).
Some entities, such as government agencies, public schools, and nonprofit organizations, are simply exempt from paying sales and use tax on goods and services. These tax-exempt entities have their own special certificate.
Some items are exempt from sales tax. These include, but are not limited to:
- Drugs and pharmaceuticals sold to veterinarians.
- Farm machinery and equipment;
- Integrated production machinery and equipment; and
- Medical supplies and equipment purchased by nonprofit nursing homes.
There are many different exemption certificates, including, but not limited to:
- Multi-Jurisdiction Exemption Certificate (ST-28M): for wholesalers and buyers from other states who are not registered in Kansas.
- Blanket Exemption Certificate: use when you have a "recurring business relationship" with a seller.
- Tax Exempt Entity Exemption Certificate.
Businesses must be sure to complete the proper exemption certificate.
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