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Business axes for C Subcontractors, and Repairmen

Business Taxes for Contractors, Subcontractors, and RepairmenThis publication will provide assistance in applying kansas retailers sales and compensating use taxes to the construction, remodeling and repair industries specifically, the tax treatment of each component of a project: materials, tools, supplies and labor services. It explains which items and services are taxable, which are exempt , and the rate of tax to collect. Also included are examples on how to complete and electronically file the kansas sales and use tax this guide as a supplement to kansas Department of Revenue's basic sales tax publications, KS-1510, kansas Sales and Compensating Use Tax and KS-1520, kansas Exemption KS-1525(Rev.)

Contractor-retailers may purchase their inventory exempt from sales tax using the Contractor-Retailer Exemption Certificate. The contractor-retailer will then collect sales tax when these items are sold at retail. EXAMPLE: A lumberyard buys lumber and paint directly from a manufacturer using a Kansas Resale Exemption Certificate.

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Transcription of Business axes for C Subcontractors, and Repairmen

1 Business Taxes for Contractors, Subcontractors, and RepairmenThis publication will provide assistance in applying kansas retailers sales and compensating use taxes to the construction, remodeling and repair industries specifically, the tax treatment of each component of a project: materials, tools, supplies and labor services. It explains which items and services are taxable, which are exempt , and the rate of tax to collect. Also included are examples on how to complete and electronically file the kansas sales and use tax this guide as a supplement to kansas Department of Revenue's basic sales tax publications, KS-1510, kansas Sales and Compensating Use Tax and KS-1520, kansas Exemption KS-1525(Rev.)

2 12-21)2If there is a conflict between the law and information found in this publication, the law remains the final authority. Under no circumstances should the contents of this publication be used to set or sustain a technical legal position. A library of current policy information is also available on the kansas Department of Revenue s website at: OF CONTENTSINTRODUCTION .. 3 What is Taxable in kansas ? sales tax StructureDefinitionsCONTRACTOR PURCHASES .. 4 MaterialsToolsMachinery and EquipmentOut-of-State PurchasesLABOR SERVICES .. 5 Residential Labor ServicesOriginal ConstructionTaxable Labor ServicesMaintenance Contracts and WarrantiesLocal sales tax ApplicationContractor s LiabilityRepairmenResale of LaborThird Party InstallersNon-Taxable ServicesEXEMPT PROJECTS.

3 10 exempt CustomersCustomers Who are NOT ExemptSales that are ExemptProject Exemption Certificates (PECs) By Or On Behalf Of Other exempt ProjectsFarm, Ranch, and Feed Lot ProjectADDITIONAL contractor INFORMATION .. 14 contractor Q & A Review of the General RulesContractor Decision MatrixCONTRACTORS RESPONSIBILITIES .. 15 Who Must Register?Nonresident contractor ObligationsHow to RegisterCHARGING AND COLLECTING sales tax .. 17 The Cardinal RuleThe sales tax BaseInvoicing the CustomerREPORTING AND PAYING sales tax .. 18 Paying Tax on Contract Use of InventoryWhich Filing - ST-16 or ST-36 Accelerated Monthly Filing StatusSample Completed sales tax FilingsCOMPENSATING USE TAX.

4 22 What is Compensating Use Tax?Sample Completed Consumers Use Tax FilingHow to Register, Report and Pay Use TaxKANSAS CUSTOMER SERVICE CENTER .. 23 File, Pay and Make Updates ElectronicallyWhat can I do ElectronicallyRequirements to File and PayPay by Credit CardWire TransfersTAXATION RESOURCES AND FORMS .. 24 Taxpayer Assistance CenterWebsite Information Library (PIL)Forms and Exemption Certificates:Agricultural (ST-28F) contractor -Retailer (ST-28W)Integrated Production Machinery & Equipment (ST-201)Multi-Jurisdiction (ST-28M)Request for Project (PR-76)Request for a Project (PR-70b)Sample Project (PR-74)Project Completion Certification (PR-77)Warehouse Machinery and Equipment (ST-203)ASSISTANCE.

5 BACK COVER3 kansas SALES TAXWHAT IS TAXABLE IN kansas ? kansas Retailers sales tax generally applies to: 1) the retail sale, rental, or lease of tangible personal property, and, 2) the sale of labor services to install, apply, repair, service, alter, or maintain tangible personal personal property is goods or merchandise that can be owned or leased, has a physical presence, and can be moved (sometimes with great difficulty). Tangible personal property is different from intangible personal property (stocks and bonds) or real property (land or buildings). sales tax is not imposed on the sale of real or intangible of tangible personal property in the construction and repair industries include: building materials and supplies; plumbing, heating, air conditioning and electrical fixtures or supplies; paint and wallpaper; dirt, rock or sand; flowers, grass, trees and shrubs; repair parts; machinery, equipment and vehicles.

6 As a general rule, all of these items are subject to sales tax when purchased by contractors and services of installing or applying tangible personal property is subject to sales tax (as a general rule). Therefore, the labor fee contractors and subcontractors charge to install or apply the materials is subject to sales tax . The installation of lumber, roofing, siding, electrical and plumbing materials, etc., and the application of paint and wallpaper are examples of installing or applying tangible personal property. Once installed or applied, tangible personal property often becomes a part of real labor charged by Repairmen to repair, service, alter, or maintain tangible personal property is also generally subject to sales tax .

7 Examples include the repair or servicing of bicycles, equipment, furniture, lawnmowers, vehicles and the like. Generally, sales tax is due on labor services even when the tangible personal property is fastened to, connected with, or built into real property, such as the repair of a restaurant s stove, oven, and original construction contracts are two types of real property projects that are exceptions to these general rules of taxability of labor services. This publication will explain the taxable, nontaxable, and exempt labor services using common industry TAX STRUCTUREThe kansas statewide sales (and use) tax rate is In addition to the state sales tax , kansas counties, incorporated cities and special taxing districts may impose a local sales tax .

8 Local sales tax rates currently range from .10% to 3%. The local rate(s) are added to the state rate to arrive at the total sales tax percentage collected by a retailer or is a participating state in the Streamlined sales tax Project and has enacted legislation incorporating the Streamline definitions and tax structure into kansas sales tax law. Since July 1, 2003, the rate of tax charged on retail sales of goods or taxable services has been based on where the customer takes delivery of the property (material, parts) or makes first use of the taxable service. Retailers shipping goods to a kansas customer in another taxing jurisdiction will charge the tax rate in effect at the delivery or ship-to address.

9 Contractors will charge the tax rate in effect at the job site on the taxable labor services portion of the contract, regardless of its Jurisdiction AssistanceTo assist you in collecting the correct sales tax percentage, the Department of Revenue has developed Pub. KS-1700, sales tax Jurisdiction Codes. This publication is an alphabetical listing of all kansas counties, incorporated cities and special taxing jurisdictions, their tax rates and jurisdiction codes for tax reporting, and the effective dates of the tax rate. Since local rates may only be changed at the start of a calendar quarter, Pub. KS-1700 is updated quarterly and those quarterly updates are available on our website at: online sales tax rate locator is also available on our website.

10 The locator provides sales tax rates by street address or zip code. Retailers also have the ability to upload sales tax rates and jurisdiction codes for all of their customers by electronically transmitting their customer s names and addresses to us in a comma delimited means a person or Business , including contractor -retailers, that contract to furnish materials and the labor to install or apply those materials into real property, including buildings and other structures. A contractor expends its labor and skill to convert building materials into real property improvements and sometimes contracts to furnish labor only, using materials provided by the property owner or by another contractor .


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