There are many rules and regulations concerning when and how much sales tax should be collected in Kansas, and by whom. This can often make it difficult to determine whether you do in fact need to collect sales tax, and if so, how much. Understanding how to determine if you have nexus in the state is the first step in this process, followed by identifying products on which sales tax must be collected, and determining the applicable rate.
Like many states, Kansas has a base sales tax rate set by the state, but cities, counties, and other municipalities can add their own on top of that. The base rate in Kansas is 6.5%, and there are county and municipal rates that can increase to as high as 10.5%, with one address range in Kansas City reaching 11.125% – the highest in the State.
This leads to a substantial variation in the actual rate you will need to collect at, with rates in places like Wichita and Derby coming in relatively low at 7.15% and 7.65% respectively, while the rate in Junction City is 9.4%. Compared to other states, Kansas has one of the more complicated local-level tax rate systems and can vary substantially by location. An updated list of state and local sales/use tax rates can be referenced on the Kansas Department of Revenue website, or you can look up a specific rate using our sales tax calculator.
In Kansas, the sales tax rate at which you will collect is determined by the destination of the product if it’s being shipped or delivered. If you have a physical store, and a customer comes in, purchases a product, and takes it with them on the spot, they will pay the sales tax rate of the city that the store is in. However, if the customer purchases the item in person and then asks for it to be delivered, the applicable sales tax rate will be that of the delivery destination.
The same is true of items purchased online or over the phone that are shipped directly to the customer. In these instances, the sales tax rate that must be applied is that of the destination of the product, with no consideration of where it originates.
When you’re determining whether to collect sales tax in Kansas, you need to consider whether you have a nexus, or a significant presence, in the state, as well as whether the item being sold is subject to sales tax. You have a nexus, and thus a responsibility to collect sales tax, if you:
If you sell items through Amazon and those items are stored in an Amazon Fulfillment Center in Kansas, you will be considered to have a nexus as well. To find out if this applies to you, you can pull an inventory report from Amazon Seller Central to see where your items ship from.
Of course, you also need to determine whether your items are taxable. In general, services are not subject to sales tax in Kansas, but there are exceptions.
It’s also important to note that shipping and handling charges are always taxable in Kansas, even if the items shipped are not, and so the tax should be calculated only after these charges have been added in. It is up to you whether you list shipping and handling separately or include it in the total price of the item, but either way, it must be clearly stated to the customer how these charges are listed and that all applicable taxes have been applied appropriately.
Once you’ve determined that you do have an obligation to collect sales tax in Kansas, you need to register for a Kansas sales tax permit. You can do so by visiting the Kansas Department of Revenue website, or by filing out a paper form and mailing it in. Because the processing of your request and the issuing of the permit can take three to four weeks, it’s recommended that you begin the registration process at least that long before you begin making sales in the state.
Of course, when you’re collecting sales tax, you also must file a tax return. The frequency with which you will be required to file will depend on the total amount of tax you expect to collect annually. These ranges include:
If you exceed the $32,000 total for the year, you’ll receive a letter from the state Department of Revenue requiring you to file with prepaid monthly status, which means you must prepay either half the expected total for the month or the total for the first 15 days by the 25th of the same month. You should only file with this status if you receive a letter from the state explicitly instructing you to do so.
Quarterly: For those with tax liability between $80 and $3,200 per year, the following filing deadlines will apply.
|January – March (Q1)||April 25th|
|April – June (Q2)||July 25th|
|July – September (Q3)||October 25th|
|October – December (Q4)||January 25th|
Monthly: For those with tax liability of more than $3,200 per month, the following filing deadlines will apply.
Annual: For those businesses with liability less than $80 per year, you will file annually by January 25.
The state will impose a penalty of 1% of the total tax due for each month that you’re behind in filing or paying, up to a maximum of 24%. However, there may be more extreme penalties for ongoing or repeat offenses, up to and including possible criminal charges for fraud. Kansas does require that you file zero returns for periods in which you collect no sales tax in the state when you hold a Kansas sales tax permit. You can file your tax return online through the Kansas Department or Revenue website, or you can mail the completed form, and the online filing system also allows you to make your payments at the same time.
There are quite a number of elements to consider when determining your sales tax liability in Kansas. With so many factors to take into account concerning when and how much sales tax you need to collect on your sales in the state, it can be helpful to have a tool designed to guide you through the process. TaxTools is just such a system, and it offers a variety of resources designed to help you keep track of filing deadlines, local tax rates, and tax holidays. It also stays up to date on any changes to tax laws in the state so you don’t have to.
TaxTools also integrates seamlessly with whatever eCommerce platform you use to provide you with up-to-date sales data and payment information so you can be sure your records are accurate and payments are made on time. This is a particularly valuable tool if you sell in multiple states, as it can track the applicable sales tax data for each state accurately and efficiently.