Session of 2023
SENATE BILL No. 21
By Committee on Assessment and Taxation
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AN ACT concerning sales taxation; relating to exemptions; providing an
exemption for sales of certain school supplies during an annual sales
tax holiday.
Be it enacted by the Legislature of the State of Kansas:
Section 1. (a) On and after July 1, 2024, the following shall be
exempt from the tax imposed under the Kansas retailers' sales tax act: All
sales of any school supplies, school instructional materials or school art
supplies having a sales price of $100 or less per item during a two-day
period beginning at 12:01 a.m. on the first Friday in August and ending at
midnight on the Saturday following. Only items priced below the price
threshold established in this subsection shall be exempt from taxation
pursuant to this subsection. There shall be no exemption pursuant to this
subsection for only a portion of the price of an individual item. The seller
of items specified in this subsection is not required to obtain an exemption
certificate from the purchaser of such items as provided pursuant to K.S.A.
79-3692, and amendments thereto, during the period of time specified in
this subsection.
(b) As used in this section:
(1) "Eligible property" means an item of a type, such as school
supplies, that qualifies for the sales tax exemption as provided in this
section;
(2) "layaway sale" means a transaction in which property is set aside
for future delivery to a customer who makes a deposit, agrees to pay the
balance of the purchase over a period of time and, at the end of the
payment period, receives the property. An order is accepted for layaway by
the seller, when the seller removes the property from normal inventory or
clearly identifies the property as sold to the purchaser;
(3) "rain check" means the seller allows a customer to purchase an
item at a certain price at a later time because the particular item was out of
stock;
(4) "school art supply" means an item commonly used by a student in
a course of study for artwork. The following is an all-inclusive list: Clay
and glazes; paints, acrylic, tempera and oil; paintbrushes for artwork;
sketch and drawing pads; and watercolors;
(5) "school instructional material" means written material commonly
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used by a student in a course of study as a reference and to learn the
subject being taught. The following is an all-inclusive list: Reference
books; reference maps and globes; textbooks; and workbooks; and
(6) "school supply" means an item commonly used by a student in a
course of study. The following is an all-inclusive list: Binders; book bags;
calculators; cellophane tape; blackboard chalk; compasses; composition
books; crayons; erasers; folders, expandable, pocket, plastic and manila;
glue, paste and paste sticks; highlighters; index cards; index card boxes;
legal pads; lunch boxes; markers; notebooks; paper; loose leaf ruled
notebook paper, copy paper, graph paper, tracing paper, manila paper,
colored paper, poster board and construction paper; pencil boxes and other
school supply boxes; pencil sharpeners; pencils; pens; protractors; rulers;
scissors; and writing tablets.
(c) The secretary of revenue shall provide notice of the exemption
period to retailers at least 60 days prior to the first day of the calendar
quarter in which the exemption period established in this section
commences.
(d) The following procedures shall be used in administering the
exemption provided in this section:
(1) A sale of eligible property under a layaway sale qualifies for the
exemption if:
(A) Final payment on a layaway order is made by, and the property is
given to, the purchaser during the exemption period; or
(B) the purchaser selects the property and the retailer accepts the
order for the item during the exemption period for immediate delivery
upon full payment, even if delivery is made after the exemption period;
(2) there shall be no change during the period of exemption for the
handling of a bundled sale as treated for sales tax purposes at times other
than the exemption period;
(3) a discount by the seller reduces the sales price of the property and
the discounted sales price determines whether the sales price is within the
price threshold provided in subsection (a). A coupon that reduces the sales
price is treated as a discount if the seller is not reimbursed for the coupon
amount by a third party. If a discount applies to the total amount paid by a
purchaser rather than to the sales price of a particular item and the
purchaser has purchased both eligible property and taxable property, the
seller should allocate the discount based on the total sales prices of the
taxable property compared to the total sales prices of all property sold in
that same transaction;
(4) articles that are normally sold as a single unit must continue to be
sold in that manner. Such articles cannot be priced separately and sold as
individual items in order to obtain the exemption;
(5) a rain check allows a customer to purchase an item at a certain
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price at a later time because the particular item was out of stock. Eligible
property that customers purchase during the exemption period with use of
a rain check will qualify for the exemption regardless of when the rain
check was issued. Issuance of a rain check during the exemption period
shall not qualify eligible property for the exemption if the property is
actually purchased after the exemption period;
(6) the procedure for an exchange in regards to an exemption is as
follows:
(A) If a customer purchases an item of eligible property during the
exemption period, but later exchanges the item for a similar eligible item,
even if a different size, different color or other feature, no additional tax is
due even if the exchange is made after the exemption period;
(B) if a customer purchases an item of eligible property during the
exemption period, but after the exemption period has ended, the customer
returns the item and receives credit on the purchase of a different item, the
appropriate sales tax is due on the sale of the new item; and
(C) if a customer purchases an item of eligible property before the
exemption period, but during the exemption period the customer returns
the item and receives credit on the purchase of a different item of eligible
property, no sales tax is due on the sale of the new item if the new item is
purchased during the exemption period;
(7) delivery charges, including shipping, handling and service
charges, are part of the sales price of eligible property unless such delivery
charges are excluded from the definition of "sales or selling price" in
K.S.A. 79-3602, and amendments thereto. For the purpose of determining
the price threshold, if all the property in a shipment qualifies as eligible
property and the sales price for each item in the shipment is within the
price threshold, then the seller does not have to allocate the delivery,
handling or service charge to determine if the price threshold is exceeded.
The shipment will be considered a sale of eligible products. If the
shipment includes eligible property and taxable property, including an
eligible item with a sales price in excess of the price threshold, the seller
should allocate the delivery charge, unless excluded from the "sales or
selling price," by using:
(A) A percentage based on the total sales prices of the taxable
property compared to the total sales prices of all property in the shipment;
or
(B) a percentage based on the total weight of the taxable property
compared to the total weight of all property in the shipment; and
(C) the seller must tax the percentage of the delivery charge allocated
to the taxable property but does not have to tax the percentage allocated to
the eligible property;
(8) for the purpose of an exemption, eligible property qualifies for the
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exemption if:
(A) The item is both delivered to and paid for by the customer during
the exemption period; or
(B) the customer orders and pays for the item and the seller accepts
the order during the exemption period for immediate shipment, even if
delivery is made after the exemption period. The seller accepts an order
when the seller has taken action to fill the order for immediate shipment.
Actions to fill an order include placement of an in date stamp on a mail
order or assignment of an order number to a telephone order. An order is
for immediate shipment when the customer does not request delayed
shipment. An order is for immediate shipment, notwithstanding that the
shipment may be delayed because of a backlog of orders or because stock
is currently unavailable to, or on back order by, the seller;
(9) for a 60-day period immediately after the exemption period, when
a customer returns an item that would qualify for the exemption, no credit
for or refund of sales tax shall be given unless the customer provides a
receipt or invoice that shows tax was paid, or the seller has sufficient
documentation to show that tax was paid on the specific item. This 60-day
period is set solely for the purpose of designating a time period during
which the customer must provide documentation that shows that sales tax
was paid on returned merchandise. The 60-day period is not intended to
change a seller's policy on the time period during which the seller will
accept returns; and
(10) the time zone of the seller's location determines the authorized
time period for the exemption period when the purchaser is located in one
time zone and a seller is located in another.
(e) The provisions of this section shall be a part of and supplemental
to the Kansas retailers' sales tax act.
Sec. 2. This act shall take effect and be in force from and after its
publication in the statute book.
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