If you purchase a product to resale in the state of Kansas you can often avoid paying sales tax on your purchases by presenting a Kansas resale certificate at checkout. Always keep in mind that you should only use your resale certificate to buy items you intend to resell or that you intend to use as a component part of an item for resale or incorporated into a service that will be taxed when it is sold. Any other use of a Kansas resale certificate (such as buying office supplies or personal items) is usually considered unlawful.
Here are the rules and regulations for using (and accepting) a resale certificate in Kansas.
How to Use a Kansas Resale Certificate
Kansas law states that you can buy items for resale without paying sales tax as long as you plan to sell the item in the regular course of your business. The Kansas Department of Revenue gives the example that a restaurant owner should not use a resale certificate to buy tires, because tires would not be sold in the regular course of the restaurant owner’s business.
Kansas has different rules for retailers using an exemption certificate depending on if they are registered to collect sales tax in Kansas.
How In-State Retailers Should Use their Kansas Resale Certificate
If you are registered to collect sales tax in the state of Kansas, present the Kansas Resale Exemption Certificate to your vendor when buying items tax free for resale:
How Out-of-State Retailers Use Kansas Resale Certificates
Kansas is very specific about how out-of-state retailers (i.e. retailers not registered to collect sales tax in Kansas) should use a resale certificate.
If you are taking possession of the items yourself (either by buying them in person or having them sent to you), then you should not use a Kansas resale certificate. Instead, you should present your vendor the Kansas Multi-Jurisdiction Exemption Certificate.
If you are drop shipping the items (having a Kansas-based vendor ship items to your Kansas-based buyer) then you can use your resale certificate from the state where you are registered to collect sales tax, or you can use the Kansas Multi-Jurisdiction Exemption Certificate above. Unlike some states, Kansas law doesn’t require that you have a Kansas sales tax permit in order to buy items for resale tax free in Kansas.
Also keep in mind that retailers reserve the right not to accept resale certificates. If that’s the case, you can sometimes recover the sales tax you paid when you bought an item you intended to resell.
Want more info about using a resale certificate in Kansas? The Kansas Department of Revenue has put out an entire booklet to help online sellers properly use their resale certificates.
How to Accept a Kansas Resale Certificate
If your buyer presents you with a resale certificate, you should do the following:
- Ensure the resale certificate is properly filled out – Depending on where your buyer is based, you may receive either the Kansas Resale Exemption Certificate or the Kansas Multi-Jurisdiction Exemption Certificate. Ensure that the buyer has completely filled out the form and signed it. Also keep in mind that a just a Kansas tax ID number is not sufficient to make purchases tax free.
- Ensure that the item your buyer is purchasing would be used in the regular course of their business – A toy store owner should not try to purchase a set of high end china tax free, because they would not sell that item in the regular course of business.
- Verify that your buyer’s sales tax ID is valid – You can verify a Kansas sales tax ID here. If your buyer’s sales tax ID is from another state, use this list of online links to verify sales tax IDs in all U.S. states.
- Keep the resale certificate on file – The Kansas Department of Revenue instructs retailers to keep all sales tax exemption certificates on file for the current year of business plus the last three calendar years.
Want more info about accepting a Kansas resale certificate? The Kansas Department of Revenue has put out an entire booklet to help online sellers properly use their resale certificates.
I hope this post has helped you determine how to use and accept a Kansas resale certificate. If you have questions or something to say, please start the conversation in the comments below!