Kansas – Taxability of Multistate Direct Mail Transactions

SALT Report 1233 – An opinion letter issued by the Kansas Department of Revenue addresses the sales and use tax and nexus concerns of a Missouri direct mail advertising company. The company solicits Kansas customers to buy direct mail advertising packets that are printed by a Wisconsin printer and then mailed out to Kansas residents.

The Kansas-Missouri state line runs though the Kansas City metropolitan area. The business climate in this area requires companies to leave their home state and engage in business in the other state. The department determined that, like many businesses traveling in and out of the area, the direct mail advertising company has established nexus within Kansas and is required to register with the department and pay and collect sales tax.
Kansas is a member of the Streamlined Sales and Use Tax (SST) Agreement and as a member has agreed to provide uniform treatment of direct mail to their advertisers, customers, and printers. This uniform treatment means Kansas’ requirements should be the same or very similar to the treatment of direct-mail advertising provided by other SSTP member states.
The SSTP direct mail agreement states that tax shall be imposed on, “printed material delivered or distributed by United States mail or other delivery services to a mass audience…and includes tangible personal property supplied directly or indirectly by the purchaser to the direct mail seller.” This definition supersedes nearly every claim a direct-mail advertiser with nexus can make about the State’s authority to tax the advertising company for direct mail it has delivered to Kansas residents.
However, no sales tax should be charged when the direct mail company bills its customers for advertising distributed via direct mail.  Instead, the direct mail company will owe use tax on the cost of the direct mail shipped to Kansas addresses and must self-accrue the tax by using Form ST-31 if the Wisconsin printer does not charge tax.
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