Kansas Sales Tax Handbook

RATE OF SALES TAX:

6.50%

LOCAL & COUNTY MAXIMUM RATES:

4.00%

Hire a Sales Tax Professional:

What Are the Taxable Goods and Services?

The first step in sales tax compliance is determining if the items or services your firm offers are taxable in Kansas.

Traditional Products and Services

Physical property, such as furniture, household appliances, and automobiles, is subject to sales tax in Kansas.

Both medicine and fuel are tax-free.

Some Kansas services are subject to sales tax. View this PDF from the Kansas Department of Revenue Website for a complete list of taxable services.

Digital Products and Services

A digital item or service is anything that is supplied electronically, such as a music downloaded from iTunes or a movie bought from Amazon.

Businesses in Kansas are not required to collect sales tax on the sale of digital products or services.

Kansas, on the other hand, has one exemption to this restriction. Businesses are required to collect sales tax on pre-written computer software offered online.

How to Apply for Kansas Sales Tax

If you have concluded that you must charge sales tax on part or all of the products and services that your company sells, the next step is to apply for a seller’s licence.

This enables your company to collect sales tax on behalf of the municipal and state governments.

You will need the following information to register:

The reason for applying
Tax classification
Name, address, phone number, parent firm, and subsidiaries
Information about the location
Estimated annual sales in Kansas
Other questions concerning your company’s nature (if you work in construction, natural gas, etc.)

A Resale Certificate might help you save money.

When acquiring items for resale, your firm does not have to pay sales tax if you obtain a resale certificate, also known as a reseller’s permit.

Sales Tax Collection

After obtaining your seller’s licence and starting your company, you’ll need to figure out how much sales tax to charge various consumers. It is critical for company owners to collect the right rate of sales tax to avoid penalties and the danger of expensive audits.

When computing sales tax, consider the following types of transactions:

Store Sales Shipping Within-State Sales Outside-State Sales

Retail Sales

For conventional company owners who sell products or services on-site, calculating sales tax is simple: all sales are taxed at the rate determined by the store’s location.

Here’s an illustration of how this situation may look:

Mary is the owner and manager of a bookshop in Wichita, Kansas. Because books are taxable in the state of Kansas, Mary charges a flat 7.5% sales tax on all purchases. This includes the 6.5% Kansas state sales tax and the 1.0% Sedgwick county sales tax.

Sales inside the state

The state of Kansas has a scheme known as destination-based sales taxation. This implies that long-distance transactions inside Kansas are taxed based on the buyer’s address. This regulation applies to sales taxes levied by the state, county, and city.

Consider the following scenario:

Steve operates his own eBay electronics company from his home in Olathe, Kansas. A buyer from Topeka, Kansas discovers Steve’s eBay website and buys a $350 set of headphones. Steve uses the Kansas state tax rate of 6.5%, plus 1.15% for Shawnee county’s tax rate and 1.5% for Topeka’s municipal tax rate, when computing the sales tax for this transaction. The total cost is $382.03 ($32.03 sales tax) at a total sales tax rate of 9.15%.

Out-of-State Purchases

Kansas firms must only pay sales tax on out-of-state transactions if they have a presence in other states.

Nexus indicates that the company has a physical presence in another state.

Common nexus types include:

A physical place, such as an office, retail shop, or warehouse.
An employee who works from home or as a roaming sales representative.
An affiliate marketer
Dropshipping from a third-party vendor.
A temporary physical site, such as a festival or fair booth.

Submit Your Sales Tax Return

You’re ready to submit your sales tax return now that you’ve obtained your Kansas seller’s permit and understand how to charge the correct amount of sales tax to all of your customers. You avoid penalties and fines, be sure to meet all filing dates.

How to File a Claim

Businesses in Kansas are required to file sales tax forms and make sales tax payments online.

How Frequently Should You File?

The frequency with which you must submit is determined by the total amount of sales tax collected by your firm.

Annual filing: If your company receives less than $6.66 in sales tax each month, you should submit returns on an annual basis.
Quarterly filing: If your company receives between $6.66 and $266.66 in sales tax each month, you should choose to submit quarterly returns.
Monthly filing: If your company receives between $266.66 and $2666.66 in sales tax each month, you must submit monthly returns.
Prepaid-monthly filing: If your company receives more than $2666.66 in sales tax per month, you will choose the standard monthly reporting option. The main difference is that the company expects to submit returns every two months.

Deadlines for Filing

The deadline for all Kansas sales tax returns is the 25th of the month, unless it is a weekend or federal holiday, in which case the deadline is postponed to the following working day.

Penalties for Filing Late

Kansas levies a late payment penalty of 1.0% each month up to 24% of the unpaid tax beyond the designated due date.

For any unpaid tax or penalty, the state levies a compounding interest rate of 5.0% per year or 0.42% every month or partial month.