Kansas Sales Tax Guide
Chapter 8: Understanding Kansas sales tax rules for shipping & handling
Kansas’ destination-based sales tax laws make selling items complicated in the state. If an item is sold in Kansas, the seller is responsible for paying the sales tax rate for the location in which the item is delivered. This can make the process of calculating taxes a nightmare for businesses that ship to different areas of the state on a regular basis.
Fortunately, sales tax on shipping and handling isn’t quite as complicated. In some states, shipping is exempt from sales tax as long as the business lists it as a separate line item on the invoice. Kansas is not one of those states. If you’re shipping to a destination in the state of Kansas, you’ll be responsible for charging sales tax on the full amount of a purchase including shipping, regardless of the way you itemize it on the invoice.Shipping Taxability
When shipping and handling is charged on taxable items, the entire amount including shipping must be taxed. If, however, a purchase is tax exempt, no tax should be charged at all. In instances where taxable and tax-exempt items are shipped as a bundle, the business should set aside the portion of the shipping cost that is exempt and charge sales tax on the portion that is non-exempt.
Retailers in other states that have nexus in Kansas are subject to Kansas’s Compensating Use Tax, which requires use tax to be paid on items purchased out of state for use in Kansas. This includes the cost of shipping those items. This tax is paid by any non-Kansas business accepting purchases from Kansas residents and is charged at the time of checkout. Kansas residents are obligated to pay use tax on any non-exempt product or service that isn’t already being charged the state’s 6.5 percent sales tax, even if those purchases are made online.Delivery Taxability
Many Kansas businesses offer delivery and/or setup as part of their services. If there is a charge for either of these items, that charge must be taxed at the local sales tax rate where the item will be delivered. If a Kansas business delivers an item to another state, sales tax is not required but if an out-of-state party travels to Kansas to pick the item up, that customer should be taxed at the rate that applies to the pickup area.
If a business delivers products to a Kansas home or business, that business will then have nexus in the state, requiring it to register and pay sales tax for delivery to that area. However, if a customer orders out-of-state products and those products are delivered by a common carrier, such as the postal service or UPS, no sales tax is required, since that business will not have established nexus in that state.Words of Caution
The only words of warning Kansas officials have is to always be aware that shipping and handling are considered part of the purchase price in Kansas.
“Shipping and delivery charges are part of the sales tax base and included in the definition of ‘selling price’ in Kansas,” says Richard Cram, director of the Kansas Department of Revenue. “So they are taxable when the underlying retail sales transaction is taxable.”
While calculating sales tax in Kansas can be difficult due to so many different local rates, the dilemma of whether or not to pay sales tax on shipping is fairly simple. In every case, a business will be required to pay sales tax on shipping, handling, or delivery of non-exempt items to a Kansas address. This tax is due whether a business itemizes the shipping charges separately or includes it as part of the overall cost of the item.