The Kansas St 28W form is a Retailer/Contractor Exemption Certificate used by contractors and subcontractors in Kansas to purchase certain tangible personal property without paying sales tax. This form certifies that the items purchased are intended for resale or for use in their business operations, thereby qualifying for tax exemption under specific conditions. To ensure compliance and take advantage of these exemptions, it is essential to fill out the form accurately.
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The Kansas St 28W form serves as a Retailer/Contractor Exemption Certificate, which allows certain contractors, subcontractors, and repairmen to purchase tangible personal property without incurring sales and compensating use tax. This form is essential for those who maintain an inventory of goods intended for resale, as it certifies that the purchases are exempt based on specific provisions outlined in Kansas law. To utilize this exemption, the purchaser must provide their valid Kansas Sales Tax Registration Number and complete the form in its entirety. The certificate applies exclusively to items that are intended for resale, such as electrical supplies, lumber, and plumbing materials. However, it is important to note that tools and equipment necessary for performing jobs are considered taxable, as contractors are viewed as the final consumers of these items. Additionally, labor services are not covered under this exemption unless a Project Exemption Certificate is issued. Understanding the stipulations and requirements associated with the Kansas St 28W form is crucial for contractors to ensure compliance with state tax regulations while maximizing their purchasing capabilities.
KANSASDEPARTMENTOFREVENUE
RETAILER/CONTRACTOREXEMPTIONCERTIFICATE
Theundersignedretailer/contractorcertifiesthatthetangiblepersonalpropertypurchasedfrom:
Seller:
_________________________________________________________________________________________________
BusinessName
Address:
Street,RR,orP.O.Box
City
State
Zip+4
isexemptfromKansassalesandcompensatingusetaxforthefollowingreason:
K.S.A. 79-3603(l)(2) provides that a contractor, subcontractor or repairman who maintains an inventory of tangible personalpropertybothforresaleandforusebythemforthepurposeoferectingstructures,orimprovingalteringor repairing real or personal property, shall be deemed a retailer with respect to purchases for and sales from such inventory.
Descriptionoftangiblepersonalpropertyorservicespurchased: ___________________________________
__________________________________________________________________________________________
I hereby certify that I hold a valid Kansas SalesTaxRegistrationNumber: _____________________________________
The undersigned understands and agrees that if the tangible personal property or services are used other than as stated above or for any other purpose that is not exempt from sales or compensating tax, the undersigned purchaser becomes liable for the tax.
Purchaser:_________________________________________________________________________________________________
Address: _________________________________________________________________________________________________
AuthorizedSignature: _____________________________________________________
Date: ___________________
THIS CERTIFICATE MUST BE COMPLETED IN ITS ENTIRETY.
WHOMAYUSE THISEXEMPTION?
Onlythosecontractors,subcontractors,orrepairmenwhomaintainaninventoryofgoodsandmerchandiseandwhoprovidetheirKansas salestaxnumbermayusethiscertificatetopurchasematerialinventoryexemptfromsalestax. Acontractor,subcontractor,orrepairman (suchasacarpenter,electrician,orplumber)whopurchasespartsandmaterialsonajob-by-jobbasisanddoesnotmaintainaninventory is not a retailer/contractor, but a contractor. A contractor may not use this certificate. A contractor is considered to be the final consumer of the materials purchased from a supplier for a job and, therefore, must pay sales tax on them when purchased. For more detailed information on how sales tax applies to the construction industry, consult the Policy Information Library on our web site, www.ksrevenue.org.
WHATPURCHASESAREEXEMPT?
Only goods or merchandise intended for resale (inventory) are exempt. Direct materials that may be purchased using this certificate include (but are not limited to): electrical supplies, lumber, nails, paints, plumbing supplies, screws, sheet rock, stains, varnishes, and wallpaper.
WHATPURCHASESARETAXABLE?
Tools and equipment necessary to perform a job (often considered overhead items) are TAXABLE. Contractors and retailer/contractors are the final users or consumers of any tools used in their trade or business and must pay sales tax on them when purchased. (If purchasedfromanotherstate,aKansascompensatingusetaxwillbedueifasalestaxequaltoatleastthestateandlocalsalestaxrate ineffectwheretheitemwillbeused,storedorconsumerhasnotbeenpaidonthepurchaseprice). Foradditionalinformation onKansas CompensatingUseTaxconsultPublicationKS-1510,whichisavailablefromthedepartment’s web site: www.ksrevenue.org Itemssuch asdrills,drillbits,hammers,nailguns,saws,screwdrivers,toolbeltsandwrenchesaretaxable. Toolsandconstructionequipmentleased or rented for a job are also taxable to the contractor or retailer/contractor unless the customer has furnished a Project Exemption Certifi- cate number.
LABORSERVICES.
This certificate applies ONLY to items of tangible personal property. Taxable labor services performed by a contractor or a retailer/ contractor can only be purchased exempt from sales tax with a Project Exemption Certificate issued by the department or its authorized agent.
ST-28W (Rev. 5/05)
Filling out the Kansas St 28W form is essential for contractors and retailers who wish to purchase inventory without paying sales tax. Once the form is completed, it should be submitted to the seller to validate the tax-exempt status of the purchases.
The Kansas St 28W form is a Retailer/Contractor Exemption Certificate used by contractors, subcontractors, and repairmen in Kansas. This form allows eligible individuals to purchase tangible personal property exempt from sales tax, provided they maintain an inventory for resale. It is crucial for those in the construction industry to understand how to utilize this form correctly to avoid unnecessary tax liabilities.
Only contractors, subcontractors, or repairmen who maintain an inventory of goods and merchandise can use this certificate. They must also provide their Kansas sales tax registration number. If a contractor purchases materials on a job-by-job basis without maintaining an inventory, they cannot use this form. In such cases, they are considered the final consumer and must pay sales tax on those purchases.
Exempt purchases include tangible personal property intended for resale, such as:
These items can be purchased tax-free as long as they are for resale and the form is filled out correctly.
Taxable purchases include tools and equipment necessary for performing a job. Contractors and retailer/contractors are viewed as the final consumers of these items and must pay sales tax upon purchase. Examples of taxable items are:
Additionally, tools and construction equipment that are leased or rented are also taxable unless a Project Exemption Certificate number is provided by the customer.
The Kansas St 28W form applies strictly to tangible personal property. Taxable labor services performed by contractors or retailer/contractors cannot be purchased tax-exempt using this certificate. Instead, a Project Exemption Certificate issued by the department or its authorized agent is required for labor services to be exempt from sales tax.
If the tangible personal property or services purchased using the Kansas St 28W form are used for purposes other than those stated on the form, the purchaser becomes liable for the sales tax. It is essential to use the property in accordance with the exemption criteria to avoid unexpected tax liabilities.
For more detailed information on how sales tax applies to the construction industry, you can consult the Policy Information Library on the Kansas Department of Revenue’s website at www.ksrevenue.org . This resource provides valuable insights into tax regulations, including the use of the Kansas St 28W form and other related topics.
Incomplete Information: Failing to fill out all required fields can lead to delays or rejection. Each section of the form must be completed fully, including seller and purchaser details.
Incorrect Sales Tax Registration Number: Providing an invalid or incorrect Kansas Sales Tax Registration Number can invalidate the exemption. Always double-check this number before submission.
Misunderstanding Exempt Purchases: Some individuals mistakenly believe that all purchases made by contractors are exempt. Only tangible personal property intended for resale qualifies for exemption.
Using the Form for Taxable Items: Many people incorrectly attempt to use the exemption certificate for tools and equipment. Remember, these items are considered taxable and cannot be purchased using this certificate.
Not Signing the Form: A common oversight is neglecting to provide an authorized signature. Without this signature, the form is incomplete and will not be accepted.
Assuming All Contractors Qualify: Not all contractors can use this exemption certificate. Only those maintaining an inventory of goods are eligible, while others are considered final consumers.
The Kansas St 28W form serves as a Retailer/Contractor Exemption Certificate, allowing certain contractors and subcontractors to purchase tangible personal property without paying sales tax, provided they maintain an inventory for resale. When using this form, it is often necessary to accompany it with other related documents to ensure compliance with Kansas tax laws. Below is a list of other forms and documents commonly used alongside the Kansas St 28W form.
Understanding these related forms and documents is vital for contractors and subcontractors operating in Kansas. Properly utilizing the Kansas St 28W form in conjunction with these documents can help ensure compliance with state tax laws and avoid potential liabilities.
The Kansas St 28W form is similar to the IRS Form W-9, which is used by individuals and businesses to provide their taxpayer identification number to others. Just as the St 28W certifies that certain purchases are exempt from sales tax, the W-9 certifies the taxpayer's identification for reporting income to the IRS. Both forms require the individual or business to provide essential identifying information, ensuring that the correct tax treatment is applied. Each form serves as a declaration of the status of the entity filling it out, whether for sales tax exemptions in Kansas or for income reporting purposes at the federal level.
Another document that shares similarities with the Kansas St 28W is the Certificate of Exemption used in many states. This certificate allows buyers to purchase goods without paying sales tax, provided they meet specific criteria. Like the St 28W, this document requires the buyer to declare their eligibility for tax exemption and provide relevant details about their business operations. Both forms aim to streamline the purchasing process for eligible entities while ensuring compliance with tax regulations. The key difference lies in the specific state laws governing the exemptions, which can vary significantly across different jurisdictions.
The Project Exemption Certificate is also comparable to the Kansas St 28W form. This certificate is specifically used in construction projects to exempt certain purchases from sales tax. Just as the St 28W is utilized by contractors maintaining an inventory, the Project Exemption Certificate allows contractors to purchase materials tax-free when working on a designated project. Both documents emphasize the importance of the intended use of the purchased items, ensuring that tax exemptions are only granted when appropriate. The Project Exemption Certificate may require additional documentation related to the specific project, highlighting the nuances in usage between the two forms.
Lastly, the Purchase Order (PO) can be viewed as a document related to the Kansas St 28W. A PO is a formal request to a supplier for the purchase of goods or services, often used in business transactions. While a Purchase Order does not directly provide tax exemption, it may accompany the St 28W when a contractor places an order for exempt items. Both documents facilitate the procurement process, but the St 28W specifically addresses tax obligations. In essence, the Purchase Order serves as the transactional vehicle, while the St 28W ensures that the tax implications are properly managed.
When filling out the Kansas St 28W form, it is essential to follow specific guidelines to ensure accuracy and compliance. Below is a list of actions to take and avoid:
Adhering to these guidelines will help avoid potential tax liabilities and ensure compliance with Kansas tax regulations.
Understanding the Kansas St 28W form is essential for contractors and retailers in Kansas. However, several misconceptions can lead to confusion. Here are five common misunderstandings about this exemption certificate:
This is not true. Only contractors, subcontractors, or repairmen who maintain an inventory of goods and have a valid Kansas sales tax number can use this certificate. Those who purchase materials on a job-by-job basis are considered final consumers and must pay sales tax on their purchases.
This is incorrect. The exemption applies only to tangible personal property intended for resale. Items like tools and equipment used for performing a job are taxable and cannot be purchased tax-exempt using the Kansas St 28W form.
This is a misunderstanding. The Kansas St 28W form applies exclusively to tangible personal property. Taxable labor services require a separate Project Exemption Certificate to be exempt from sales tax.
This is not the case. Only specific goods intended for resale, such as electrical supplies and plumbing materials, are exempt. Other items, especially tools and equipment, are subject to sales tax.
This is misleading. Completing the Kansas St 28W form is mandatory for eligible contractors to claim the exemption. Failure to complete the form in its entirety can lead to tax liability for the purchaser.
By clarifying these misconceptions, contractors and retailers can better navigate the requirements of the Kansas St 28W form and ensure compliance with state tax regulations.
Here are key takeaways regarding the Kansas St 28W form: