SALES TAX TUESDAY 2018: Kansas

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Dumb…that’s all I can say of my planned itinerary… last week I left Omaha just in the nick of time as I headed down Interstate 29 to Kansas City before a winter storm hit Nebraska. But this week… the Thanksgiving storm was across most of Kansas. 

Unlike back home in Oklahoma where major snow storms are few and far between, Kansas is right where the cold air and the warm moist air meet during many a winter (or early winter) day. When they do, the warm air rides up over the cold and the precipitation falls as snow, heavy wet snow.

As a result of the all too common heavy snows, Kansas has snow removal road equipment designed to keep their highways open under ‘normal winter storm’ conditions… especially those Kansas turnpikes. After all, you got to keep those ‘toll revenues’ rolling in, they might even be as important as ‘sales tax.’

Problem was, as I mentioned a moment ago, this ‘blizzard’ was across much of Kansas, especially along Interstate 70 between Kansas City and the Kansas-Colorado border. 

But before I get too far in this road trip, I have to remind you that this Sales Tax Tuesday 2018 feature is one in a series that Insightful Accountant, in cooperation with Avalara, the ‘sales tax people,’ is bringing you about sales tax in each and every state tax jurisdiction in the United States. This year, unlike our 2015 series, we are taking significantly longer to explore in our Sales Tax RV as a result of the ‘breaking news’ features related to sales tax that have taken place during 2018. That also means that I drive slower in this RV since I have officially reached 'senior' status during the intervening three-years.

Focusing on this trip, and the snow storm ahead, I know from past experience (I even wrote about it in my 2015 STT Kansas segment) there are areas of Interstate 70 that the Kansas State Police simply close due to snow drifts and blowing snow…. they even have ‘gates’ they simply lock in place across the roadways when conditions warrant. That is especially true in the western half of the state… the places that are still ‘wide open range,’ wheat fields and western lore. It seems once you get west of Highway 81 things are not so different today than they were way back when, but we are not there quite yet. However, I am still a long way from Highway 81 because Kansas is one big nearly 83,000 square mile rectangle.

As I reach Platte City, northwest of Kansas City, along Interstate 29, I am going to take a detour to the west and soon find myself crossing over the Missouri River into Leavenworth, which is home of the largest Federal Penitentiary in the U.S. It's also the home of historic Fort Leavenworth which was a major stop for wagon trains and settlers headed west from their starting-off point of Independence, Missouri. Fort Leavenworth was built in 1827 and was ‘the major’ supply base by which the American West was settled. The photograph at right shows the barracks back in 1858.

It is still the oldest active Army Installation west of Washington, DC, and is also home of the oldest permanent settlement in Kansas. During the Civil War, the fort also served as a rescue encampment for many escaped slaves from Missouri and other slave states. Today, Fort Leavenworth is home of the U.S. Army Combined Arms Center providing leadership development and battle command training.

At Topeka, I am getting off I-70 and heading west on Highway 24, I want to see more than just ‘highway’ no matter what the weather. This route takes me through some of the ‘days ride north’ of the main railroad line. Eventually I come to Stockton, Kansas which today has fewer than 1500 residents even though it’s the county seat of Rooks County.

Back in 1872, it was founded by ‘stockmen’ who dealt in cattle and found it a good spot to corral their herds along the trail up the valley of the South Solomon River. From here they could service both Fort Kearney to the north in Nebraska, and Fort Hays (Kansas) to the south. This local cattle trade was enough to keep the town going until 1885 when the railroad arrived, and Stockton became a major rail-head where cattle were sent east to meet the growing demand for beef in places like Chicago, Buffalo and Boston.

I turn south at Stockton down Highway 183, following the old cattle trail as I work my way back to Interstate 70. In 1865, the Union Army established Fort Fletcher near what is today Hays, Kansas (at the intersection of H-183 and I-70). The fort was near a location where the Arapaho, Kowa and Pawnee tribes met, and was situated along the ‘Smoky Hill Trail’ servicing stagecoaches that carried both mail and gold.

A year after construction, the fort was renamed to Fort Hays in honor of General Alexander Hays. A year after that the Army relocated Fort Hays to a site where the Kansas Pacific Railroad was anticipated to cross Big Creek. About that same time, land began being colonized and platted as ‘Hays City.’ More than 2000 people were living in the area by the time the western terminus of the railroad was set in Hays.

Hays City became an infamous ‘old west’ town with gunfights in the streets, saloon shootings, lynchings and burials in its own version of ‘Boot Hill’ cemetery. Such notable figures as General George Armstrong Custer, Buffalo Bill Cody, Wild Bill Hickok and Calamity Jane all lived in Hays at one time or another. 

Fort Hays was closed in 1889 and the land was donated to the State of Kansas for educational purposes. A research facility for Kansas Agricultural College was established and would later become Fort Hays State University. Today, the portion of the original fort that still stands is operated as a historical park by the Kansas Historical Society.

Hays is the largest city in Northwestern Kansas with a population in excess of 21,000. The agricultural (including ranching) and energy production (oil and gas fields) serve as the major economic focus for the community. It also serves as the cultural, educational, and health care focal point for much of northwestern Kansas.

Getting back on Interstate 70 we are heading slowly in this snow toward the west. As I said, many of these towns are not much larger than they were back when 'the west was the wild west.' Despite the towns having been rebuilt with brick and mortar, concrete sidewalks and blacktop streets their layouts are essentially the same as when they were frame buildings, boardwalks and muddy trails with stage coach ruts and horse tracks.

Eventually we reach one of those places where I was telling you about where they simply ‘close the Interstate Highway’ due to horrific winter weather. So we are stopping to see if we can find a place to park our RV and hook-up to some electricity so we don't freeze to death.

On July 2, 1867, a detachment of the 2nd Cavalry, led by Second Lieutenant Lyman Kidder, was killed while on patrol by either Cheyenne and/or Sioux tribal warriors. A few years later, settlers along the Beaver Creek, not far from the massacre site, sought to build a new town destined to become the county seat after more than 2 years of shouting, protests, votes, debates, legal rulings by the Kansas Supreme Court, and an armed group who seized county records from nearby Eustis.

The new county seat had been named ‘Goodland’ after Goodland, Indiana apparently because several railroad men working in the town had come from its Indiana namesake. By the way, historic Eustis is now marked by a small area south of the railroad tracks near the eastern edge of Goodland. Goodland is another western Kansas community that was not only built as, but survived because it was, a railroad town. By the time the picture at the right was taken, the town had become home to grain elevators that loaded grain-car after railroad grain-car full of Kansas wheat, so much so that the town became known as ‘the Golden Buckle of the Kansas Wheat Belt.’ Back in the 1890’s, Goodland was home to about 1000 settlers, today fewer than 4500 people live there.

Well we have found a place to park in amongst the other RVs and Semi-tractor/trailers. It’s one of those places where the hotels have had RV electric hookups installed because they know storms like this hit every year. I mean, Goodland is a town where every bit of lodging packs-in extra snacks and soft drinks, and Hostess this-n-thats, along with blankets and pillows and socks and gloves by the end of October. They then anxiously await the road shut downs so that everyone who was on the highway is now looking for a place to ‘camp in place.’ The rooms are long since filled at resort-like-rates due to limited availability with hotel-motel tax and sales tax as the 'tax man prescribes.' This is a place where they are charging for every little thing a stranded tourist needs and collecting the sales tax that goes right along with it.

Of course, Goodland is not only ‘blizzard central’ in the winter but is also one of the places that storm chasers hang out during thunderstorm season. You know, I am talking about those guys in the odd-looking vehicles with ‘whirligigs’ on their roofs, maybe a ‘big dish’ in their truck-bed, or a van full of college kids with knuckles clinched into their seats as they speed toward near death or at least a rush to get to the nearest bathroom, not nearly so calm as the guy standing in the photo below. "Hasn't he ever heard of flying barns, tractors or cows?"

These western Kansas towns make out like bandits during storm seasons because everyone is stopping for munchies, a quick meal, and maybe a hot shower after 3 days in the chase vehicle. But let's face it, Kansas has been known for their twisters for a good long time.

Who can forget the tornado that carried Dorothy and Toto from their Kansas farm house "off to see the Wizard of Oz" in the story that was originally titled 'From Kansas to Fairyland' by L. Frank Baum. Yes, ‘somewhere over the rainbow’ the Kansas ‘tax man’ is smiling about every penny of sales tax revenues that twisters bring to Kansas coffers. "Sorry Dorothy, but we are still in Kansas... anymore..."

You see, all that storm chasing business is just about as good for the roadside stops as a major winter blizzard. Traveling on roads in Kansas, even the non-toll roads is akin to paying Kansas Sales Tax every mile along the way, or so it seems. Not only do you pay sales tax when you stop at a road-side convenience store or gas station for a ‘Big Gulp’ and a bag of snacks, or for your box of McNuggets, but when it comes time to stop for the night, the hotel/motel will also be collecting sales taxes along with other hotel/motel and transient guest taxes depending upon 900 local taxing jurisdictions. You may think that your money has been sucked right out of your pockets by the tornado you stopped to watch, when it really was the Kansas Department of Revenue that picked your pocket.

Kansas also has what seems like a ‘sales tax meter hooked to your car’s odometer’ because there are so many turnpikes in Kansas (all the best roads are turnpikes) it feels like you are paying tax for every mile along the way. A few years back I was doing a lot of work in Kansas City, and even with my Ktag to speed up my trips through the toll-stations, and give a small discount over cash tolls, it still seemed that I might have been better off flying first class than driving between OKC and KC.

Well all I can say is, "Dumb… this is one dumb itinerary, sure enough we may not be the only ones stuck in the snow in this parking lot in Western Kansas, but we will certainly complain like we are."

And speaking of complaining, it's time to look at the 'good, the bad and the ugly' of Kansas Sales Tax.

Kansas Sales Tax Facts:

  • Sales and Use tax is managed by the Kansas Department of Revenue.
  • Kansas is a full member of the SST.
  • Kansas has more than 900 different sales tax jurisdictions; that's what we said folks, more than 900 taxing jurisdictons.
  • The current state sales tax rate is 6.5%, but the total sales tax can range as high as 9.8% when including local jurisdictions. The average sales tax collected is 8.62%, making Kansas the 9th highest average sales tax rate overall.
  • Local taxes can be imposed for a variety of reasons in Kansas including: city, county, county entertainment, health care service funds, public improvement districts, transient guest taxes, and transportation development taxes.
  • Kansas sales tax applies to all retail sales, rentals or leases of tangible personal property as well as labor services to install, apply, repair, service, alter, or maintain tangible personal property, and also admission to any entertainment, amusement, or recreation places within Kansas.
  • Kansas taxes clothing, sports equipment, pre-written software (maintenance contracts associated), food (prepared or otherwise), most drugs and medical related items without a prescription.
  • Kansas does not tax custom software (maintenance contracts associated), digital goods, most drugs and medical related items with a prescription.
  • Kansas has exemption certificates including but not limited to resale, schools, production, agriculture, railroads, veterinarian, and laundry services.
  • Consult the official Kansas 'taxability' information guides if you have questions concerning specific items, services, or exemptions that may apply.
  • Kansas sales tax is sourced at the destination address.
  • Some common nexus creating activities are: place of business, employees (including independent contractors, agents, or representatives), sales solicitation, delivery, installation, repairs, services, or taking orders.
  • When registering with the state everyone must file monthly, and may be put on a less frequent filing schedule based on review by the Kansas Department of Revenue every June.

Kansas Sales Tax References:

So, I just have one question for you. "Would you rather dig yourself out from 900 inches of snow, or would you like to dig yourself out from 900 sales tax issues created by having to manually track 900 sales tax jurisdiction changes in the state of Kansas?" The reality is, you are either stuck in a big pile of snow, or your are stuck in a big pile of sales tax updates if you are trying to manually manage your sales tax on your own. 

Avalara provides solutions for sales tax automation, including tax calculation. They will handle those 900 jurisdictional updates in the background, you will simply be confident that the correct rates are being applied. They will also manage exemption certificate management, returns processing and 1099 filing and reporting.

Sales tax automation via AvaTax allows businesses to be fully sales tax compliant without sacrificing productivity. With Avalara, you won't be 'out in the cold' when the Kansas DOR tax man comes a knocking... no, you will be 'as warm as a bug in a rug' when it comes to Sales Tax compliance.

It's like putting on your heavy coat in the coffee shop to walk out to your RV and finding that all the snow has already melted away because your RV magically turned on the defroster and got you ready to roll-in the pull-out and drive on down the road to Burlington, Colorado.  "On the Road Again..."