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Navigate Kansas' 2023 sales tax rules with our guide, focusing on compliance, rates, and business regulations
Sales tax at a glance
Kansas sales tax rates & calculations in 2023
The statewide Kansas sales tax rate is 6.5%. With local taxes added, the total velocity can reach up to 10, depending on the jurisdiction. For example, Wichita has a 1% local tax, so the total sales tax rate is 7.5%.
To calculate Kansas sales tax, multiply the total sales tax rate by the purchase or sale amount. For a $100 sale in Wichita, the sales tax would be $100 x 7.5% = $7.50.
Kansas has over 600 local sales tax jurisdictions, so it's essential to use an automated sales tax calculation system to ensure charging the correct rate.
Recent tax rate changes in Kansas
Since January 1, 2023, Kansas has reduced the tax rate on food items, including groceries, from 6.5% to 4%.
FAQs
How do you calculate Kansas sales tax?
To calculate Kansas sales tax, you must sum up your specific location's state, county, and city rates. Once you have the correct sales tax rate for your area, the sales tax is calculated as follows:
Sales tax = total amount of sale × sales tax rate
This formula applies to the combined state and local tax rates.
What's the difference between destination-based and origin-based sales tax states?
The sales tax is collected in origin-based states based on the seller's location. This means if you are selling in an origin-based state, you charge all customers in that state the same rate, which might include state, county, city, and district tax rates. Examples of origin-based states include Arizona, Illinois, and Texas.
In destination-based states, the sales tax rate is determined by the buyer's location (the destination of the sale). This system can be more complex due to the potential for numerous tax jurisdictions within a state.
For remote sellers, states treat them differently, typically requiring them to charge sales tax at the buyer's location in destination-based states. Some states allow a flat use tax rate for out-of-state retailers.
Is Kansas a streamlined sales tax state?
Yes, the state of Kansas became a full member of Streamlined Sales Tax on October 1, 2005.
Sales tax nexus table in Kansas
FAQs
Do I need a Kansas seller's permit if I’m only a wholesaler?
You do not need a Kansas seller's permit or sales tax license if you only sell tangible personal property wholesale and do not make retail sales.
Do I need a Kansas seller's permit if I only sell temporarily in the state?
Yes, even temporary or seasonal sellers in Kansas need a seller's permit if they meet the sales tax nexus thresholds. There is no exception for temporary sales activity.
What's exempt from sales tax in Kansas
Kansas taxes all retail sales of tangible personal property unless a specific exemption applies. Some exemptions include:
- Food purchased with food stamps
- Sales for resale, ingredient, or component purposes
- Farm machinery and equipment
- Integrated production machinery and equipment
FAQs
Are groceries taxable in Kansas?
Starting January 1, 2023, the state sales tax rate on food and food ingredients has been reduced to 4% from the original rate of 6.5%.
Is clothing taxable in Kansas?
All clothing sales in Kansas are subject to full state and local sales tax. There is no exemption or tax holiday.
Are digital products taxable in Kansas?
Digital products like music, movies, ebooks, and software downloaded in Kansas are subject to state and local sales tax.
Is software-as-a-service (SaaS) taxable in Kansas?
SaaS and other online-hosted software are not subject to Kansas sales tax. Charges for electronically accessing or retrieving information are exempt.
Are services taxable in Kansas?
Kansas does not tax most services. However, any services that involve installing or applying tangible personal property may be taxable.
Excise taxes in Kansas
Kansas collects excise taxes on alcohol, tobacco, motor fuels, and other items at varying rates. Ordinary excise taxes include:
- Liquor drink tax: Beer is taxed at $0.18 per gallon. And an excise tax of $0.30 per gallon is imposed on wine.
- Cigarette and tobacco taxes: $1.29 per pack of 20 cigarettes
- Motor fuels tax: 24c per gallon on Gasoline and 26c per gallon on Diesl
There are no general sales taxes on food or beverages in Kansas. However, various excise taxes may apply to items like liquor or tobacco.
Remote sellers in Kansas
Out-of-state sellers with no physical presence in Kansas may still be required to register, collect, and remit Kansas sales tax if they exceed the $100,000 Kansas sales threshold. This is referred to as economic nexus.
Marketplaces facilitating sales for third-party sellers have a $100,000 sales or 200 transaction threshold to trigger Kansas sales tax collection responsibilities.
Collecting sales tax in Kansas
Any seller that meets the Kansas sales tax nexus thresholds must register for a sales tax permit, collect tax on taxable sales, file returns, and remit the tax to the state.
How to collect sales tax in Kansas if you are not based in Kansas (Out-of-State)
Out-of-state sellers still must register to collect Kansas sales tax if they exceed the $100,000 economic nexus threshold. There is no physical presence requirement—even ecommerce businesses, online service businesses, and remote sellers meeting the threshold are obligated to collect.
The steps to register are:
- Register online for a Kansas sales tax permit
- Begin collecting sales tax on deliveries to Kansas customers
- Separately, state tax on invoices and receipts
- File Kansas sales tax returns on your assigned frequency
- Remit collected sales tax to Kansas
Should you collect sales tax on shipping charges in Kansas?
Yes, Kansas requires sellers to collect sales tax on shipping and delivery charges associated with taxable tangible products. The rule of thumb is that if the product being shipped is taxable, the shipping charge is also taxable regardless of whether it is separately stated.
There is no tax on shipping non-taxable goods. When taxable and non-taxable items are dispatched together in one package, the seller should use a reasonable method to allocate tax to the shipping charge. Standard methods include pro-rating by sales price or weight.
Filing & paying sales taxes in Kansas
Kansas sales tax returns must be filed monthly, quarterly, or annually, depending on the seller's assigned filing frequency. Returns are due on the 25th day of the month following the close of the reporting period.
For example, a retailer filing monthly would have the following due dates:
Monthly: Kansas assigns high-volume sellers to a monthly filing schedule. Returns and payments are due on the 25th of the following month.
Quarterly: Lower-volume sellers file on a quarterly schedule. Returns and payments are due on the 25th of the month after the quarter closes.
Annual: Temporary and seasonal sellers may qualify for annual filing. The return and payment deadline is January 25th of the following year.
Filing penalties in Kansas
The penalty for late filing a Kansas sales tax return is 1% per month up to a maximum of 24%. Failing to pay by the due date incurs a penalty of 0.5% per month up to a maximum of 12%.
Interest accrues monthly on any late payments. The annual interest rate is currently 6%.
Sellers should file and pay in a timely to avoid penalties and interest. Kansas only provides sales tax extensions up to the expected due date. An extension to file does not extend the time to pay taxes owed.
FAQs
What are the Kansas sales tax due dates?
The due dates for filing Kansas sales tax returns vary by filing frequency:
- Monthly filers are due by the 25th of the following month
- Quarterly filers are due on April 25, July 25, October 25, and January 25
- Annual filers are due on January 25
I didn’t collect any Kansas sales tax during this period. Do I still need to file a return?
Yes, even if you did not collect any Kansas sales tax, you still need to file a $0 sales tax return for every filing period. Failing to file can lead to penalties from the state.
Can I get an extension on filing my Kansas sales tax return?
Kansas allows extensions for filing sales tax returns. Request for an extension must be submitted no later than one month after your return or prepayment form and payment due date.
Can I amend a Kansas sales tax return?
To amend a sales tax return in Kansas, use the same type of form initially filed. The amended return must explain the change, identify the amended period, and the location involved. All relevant sections of the document must be completed, and any supporting documentation should be included.
What is the penalty for filing and paying Kansas sales tax late?
The penalty for late filing or payment of sales tax in Kansas is computed at 1% per month on the balance due, with a maximum penalty not exceeding 24% (or a maximum of 10% on field audits). For payments received after the due date but within 60 days of the original due date, the penalty is 10%. If the payment is received after 60 days of the original due date, the penalty is 25%.
What to Expect During a Kansas Sales Tax Audit
In a typical Kansas sales tax audit, the auditor thoroughly reviews your business's records, permits, tax returns, exemptions claimed, and recordkeeping procedures. Common steps include:
- The auditor initially contacts your business to schedule the sales tax audit. It is essential to be responsive to requests to avoid delays.
- She/he then conducts entrance interviews with owners and staff to understand your business processes, sales channels, and how transactions are handled. Being well-prepared for these interviews is vital.
- They select sample periods and pulled transaction details to test if sales tax was charged correctly to customers and later remitted to Kansas. Expanding the scope to more periods is common if issues are found.
- This information is reconciled with gross sales and uses tax paid back to your financial statements, bank records, income tax returns, and other third-party sources. Any unexplained discrepancies typically must be accounted for.
- Determining if additional sales tax is owed based on their exhaustive transaction testing and detailed reconciliation work. Claimed exemptions like resale will be verified.
- The auditor reviews if you properly collected tax on handling, shipping, and delivery charges for taxable items. Overlooking this is a common audit issue.
- Issuing the proposed audit assessment showing tax due plus applicable interest and penalties. Having an experienced tax professional review is highly advisable before contesting findings.
Appealing Audit Findings in Kansas
You can appeal audit findings within 60 days of receiving the final assessment. Common grounds for appeals include:
- Legal interpretation errors regarding what is taxable under Kansas statutes
- Procedural errors by the auditor in testing or making determinations
- Presenting exemption certificates or other records that were unavailable previously
- Contesting interest rates and penalties applied to the assessment
If the results are still unsatisfactory after discussions with the auditor and appeals conferences, the business has 30 days to further appeal to the Kansas Board of Tax Appeals. Legal counsel is critical at this stage.
The appeals process is complex, with strict deadlines, so having qualified representation is critical to achieving the best outcome. The state tax professionals at our firm have handled many audit appeals and achieved significant tax savings for businesses across Kansas.
Sales tax registration in Kansas
Registering for sales tax in Kansas can be done online through the Kansas Customer Service Center. You must provide essential business information and agree to collect and remit tax on Kansas sales.
Out-of-state sellers exceeding the $100,000 economic nexus threshold must also register and collect Kansas sales tax. Using a sales tax automation service can simplify compliance for remote sellers.
There is no fee to obtain a Kansas sales tax permit. Once registered, you must file returns even during periods with no sales. The filing frequency depends on your sales volume.
More Information & Contacts
For questions on Kansas sales tax permits, filing returns, or audits:
- Authority Name: Kansas Department of Revenue
- Phone number: 785-368-8222
- Website: https://www.ksrevenue.gov/
There you have it—a comprehensive guide on Kansas' sales tax laws and rules. Need help filing taxes for your ecommerce store? Get a demo with Numeral now.
