The Kansas Department of Revenue recently released a public notice1 that provided additional guidance on recent legislation passed during the 2022 Kansas Legislative Session2 that created an exclusion for delivery charges from the sales tax base. The new legislation amended the K.S.A. 79-3602(II) definition of “sales or selling price” to remove delivery fees charged by retailers or service providers and correctly notated on an invoice or other appropriate selling document from the definition.
Historically, when retailers or service providers calculated the gross receipts from the sale of tangible personal property or taxable services, delivery fees were included in the calculation. However, effective July 1, 2023, delivery fees separately stated on an invoice, bill of sale, or similar document provided to a purchaser are no longer subject to Kansas sales tax as they should no longer be included in the sales or selling price used to determine the amount of a taxable sale.
To qualify for the exclusion from the sales tax calculation, delivery fees separately stated on an invoice, bill of sale, or similar document must clearly be denominated as charges for delivery, transmission, or transportation, according to the Department of Revenue’s public notice. Amounts for these types of charges can include, but are not limited to, shipping, postage, handling, crating, packing, and transportation.3 Charges not clearly denominated as delivery, transmission, or transportation fees will be included in the calculation of sales tax.
The retailer or service provider must always maintain records of the delivery fees and charges for inspection by the Kansas Director of Taxation or authorized representative. The delivery charges must be a true representation of the reasonable cost of delivery used by the retailer or service provider.
(1) Kansas Revenue Department Public Notice No. 23-02, 06/22/2023
(2) 2022 Legislative Session House Bill 2136
(3) K.S.A. 79-3602(i)