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The Kansas Department of Revenue issued Notice 19-04 “Sales Tax Requirements for Retailers Doing Business in Kansas” on August 1, 2019, providing guidance to remote sellers and marketplace providers doing business in Kansas. The notice is the result of the Kansas legislature’s failure to pass a bill containing economic nexus provisions that the Kansas Governor, Laura Kelly would sign.
The basis for the notice is the U.S. Supreme Court’s opinion in South Dakota v. Wayfair, Inc. et al and its ramifications with Kansas law. Due to the Court’s opinion, the Department indicated that all remote sellers and marketplace providers making retail sales in Kansas are responsible for registering and collecting the sales and/or use tax.
Specifically, the notice references K.S.A. 79-3702(h)(1) which states in part:
“(F) any retailer who has any other contact with this state that would allow this state to require the retailer to collect and remit tax under the provisions of the constitution and laws of the United States.”
Like South Dakota, Kansas is a member of the Streamlined Sales and Use Tax Agreement. However, unlike South Dakota and other states that have enacted economic nexus provisions, the notice does not provide an economic threshold or safe harbor for small sellers before nexus is established. South Dakota’s small seller safe harbor appeared to be a significant factor in the Court’s opinion as it provided some protection from undue burdens on interstate commerce which the Kansas notice does not provide.
To be compliant with the notice, remote sellers making sales into Kansas, who are not currently registered with its Department of Revenue, are required to register and begin collecting and remitting sales and/or use tax by October 1, 2019. The Department indicated that they will not enforce the statutory requirements to remote sellers prior to the October deadline.
Marketplace providers, however, are encouraged by the notice to contact the Department regarding a possible voluntary disclosure. Thus, it appears as though the Department may go back to the date of the Wayfair opinion to impose collection responsibilities on marketplace providers.
In the meantime, remote sellers making sales into Kansas will have to decide whether to comply or not, with Department of Revenue Notice 19-04 by October 1, 2019.
Should you have any questions, please do not hesitate to contact your state and local tax professional.
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