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Pandemic Fuels Sales Tax Registrations, Receipts for Kansas

Posted on Oct. 7, 2020

Increased online purchases resulting from the pandemic and lockdowns have caused a large uptick in sales tax registrations and receipts for Kansas, which has yet to establish a de minimis threshold for remote sales taxes.

At the virtual Midwestern States Association of Tax Administrators Reimagined 2020 Conference on October 6, Kansas Revenue Secretary Mark Burghart told participants that pandemic purchasing has been good for Kansas.

The state imposed collection obligations on remote sellers and marketplace facilitators via August 2019 guidance, rather than through legislation.

A bill that would have imposed a de minimis threshold of $100,000 or required marketplace facilitators to collect sales tax on behalf of sellers was vetoed by Gov. Laura Kelly (D) in March 2019. In 2020, several bills that would have created minimum thresholds or tax obligations on marketplace facilitators were introduced, but were set aside when the pandemic hit.

Burghart said that since the August 2019 guidance, sales tax registrations by out-of-state sellers have increased by approximately 50 percent, including companies making less than $100,000 in sales into the state. Residents under lockdown have made many of their purchases online, which has spurred the increase in tax receipts and registrations.

“This is really a voluntary effort on behalf of the companies that are getting registered,” Burghart said. “The department has done nothing more than issue a notice, which advises companies of their obligation to register with the state of Kansas in light of [South Dakota v. Wayfair Inc.] and in light of the fact that our law that’s been on the books for so many years requires that registration.”

The DOR has maintained that it has the authority to require all remote sellers to remit sales or use taxes under K.S.A. 79-3702, but that it lacks the authority to put a threshold in place.

This year, the state has seen a 20 percent increase in gross tax receipts, which was “pretty easy to get,” Burghart said.

Kansas has now purchased a database of companies that may have tax obligations to the state and is looking at ramping up audit possibilities through direct mail or notices, according to Burghart.

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