Should you collect sales tax in Kansas?
Sales tax is levied on the retail sale of tangible personal property to your customers. However, you will collect the sales tax if you determine the nexus in Kansas. A nexus is a presence that may come physically or economically.
A physical nexus is typically created when your business has a store, warehouse, or office location in Kansas. An economic nexus is intertwined when you cross paths with threshold limits as already stipulated by the state. These thresholds are based on revenue.
Let’s explore if your business has a Physical nexus in Kansas.
A physical nexus is integrated when your business is engaged in the following in Kansas:
- Stock in a warehouse in Kansas.
- Maintaining, occupying, or using a place of business or an office in Kansas.
- Employing or retaining any contractor, including an agent, representative, or salesman, by whatever name called, engaged in activities relating to establishing a market in the state.
- I have a distribution place in Kansas.
- Employees working in the state.
Is it constituting an Economic nexus in Kansas?
You are required to comply and register under sales tax rules if your retail business sales in Kansas exceed $100,000 during the current or previous calendar year.
Marketplace sellers will constitute an economic nexus if their sales in the state exceed $100,000. For more detailed guidance on economic nexus, kindly read through the guidance issued by the Kansas Department of Revenue.
How can you Register for Sales tax in Kansas?
To get the sales tax permit, you need to apply online. Alternatively, you can submit the licensing application using the sales tax registration form and send it to their mailing address.
Additionally, before applying for a new tax account number, make sure you have the following information handy:
- FEIN and Social Security numbers of all officers, partners, or owners.
- Address details (physical and mailing).
- Business incorporation dates in Kansas.
- Contact information.
- Nature of business.
- Estimated annual sales.
Is your product or services liable to Sales tax in Kansas?
Tangible Property: In Kansas, sales tax is mostly levied on the retail sale of tangible personal goods, such as toys, furniture, and giftware, etc.
Services: Many services are subject to tax in Kansas such as maintenance, installation, linen, repair, uniform, pest control treatments etc. For more information, click here.
Digital Product: Kansas does not charge sales tax on digital products such as software, streaming services, e-books, etc. Official guidance can be accessed at this link.
SAAS: Software as a service (SaaS) enables consumers to use cloud services over an internet connection. In Kansas, there is no tax on it. The Kansas Revenue Department website has more about the taxability of software and digital goods.
The state provides certain exemptions from the sales tax levy, such as food for home consumption, prescription drugs, newspapers/ magazines, manufacturing equipment, etc. To see what exemptions are covered, please click here.
You can read further by visiting the department website to know exactly what’s included in your list of items bound to pay sales tax.
How should you collect and calculate state taxes in Kansas?
It might take enormous work to accurately collect and calculate sales tax to be sent to the state, particularly if you are not situated in Kansas. In Kansas, sales taxes are destination-based, meaning that if you sell tangible goods to customers who are based in Kansas, you must collect sales taxes.
However, there are complexities involved where you have a business nexus even if you are not located in the state. Any default may lead to serious concerns, penalties, or fines by the state. That is what TaxDo is here for you! Our specialized sales tax calculator and professional services will make your job super easy and lighten your compliance burden and you can focus on other important business aspects.
Kansas has a base sales tax rate of 6.5%, followed by local tax rates that vary based on the cities and municipalities. You may visit the sales tax rates page on the Kansas Revenue Department website.
Below is the simple formula you can use to calculate your sales tax collection on each merchandise sold:
Sales Tax collectible = Sale value * (6.5% plus local tax rate)
Do you need to collect sales tax on Shipping Charges?
Shipping costs may be included in the selling price of the goods sold or specified separately on the sale invoice sent to the buyer. In any event, as of July 1, 2023, shipping costs are not taxable in Kansas. This link will take you to the official guidance issued by the state on shipping charges.
How should you file sales tax in Kansas?
There are multiple options available to you for reporting your sales tax.
E-file: You can e-file your return by visiting the Kansas Department of Revenue website.
File by Mail or In-person: Complete Form ST-16 (single jurisdiction) or Form ST-36 and mail it to their address or submit it in person.
Payments must also be remitted online along with return. The state accepts payments through checks, EFT, credit cards, etc. For more details, click here.
Filing frequencies and due dates
Based on your reported sales tax or estimated taxable sales, the Kansas Department of Revenue assigns you a filing frequency, which can be Monthly, Quarterly, or Yearly. According to your filing frequency, the due date for filing sales tax would be the 25th Day of the month following the relevant reporting period.
Note: If the due date is a holiday or weekend, the next business day would be considered the final due date. This link will take you to the official website of the Kansas Revenue Department, where you can see what the state has to say about sales tax filing due dates.
Are there any fines or penalties for default in filing or paying sales tax?
The state levies a penalty of 1% per month up to a maximum of 24% of the tax due if you default in filing the sales tax by the due date. The penalty for failure to pay the tax is 0.5% per month, subject to a maximum of 12% of the tax due. Additionally, interest is payable on late payments at 6%. Go through the comprehensive guide of penalties and interest issues by the Kansas Department of Revenue.
However, assigning your tax burden to TaxDo would not result in you paying any penalty or interest. We will adhere to the due dates.