Kansas – Taxability of Electricity and Lights Used in Warehouses

SALT Report 1669 – The Kansas Department of Revenue issued a private letter ruling regarding the taxability of interior lights and fans used in a Taxpayer’s manufacturing plant and warehouse. The Department also addressed the taxability of electricity consumed by the lights and fans.
Kansas provides two types of exemptions for plants and warehouses:
  • The integrated plant exemption, and
  • The consumed-in-production exemption
However, under K.S.A. 79-3606(kk)(5) “[m]achinery and equipment used as an integral or essential part of an integrated production operation shall not include machinery or equipment used for general plant heating or cooling” and, “K.A.R. 92-19-20(a), states that an “exemption for electricity is not allowed when the electricity is used for heating, cooling and lighting buildings or business premises.”
Based on the above regulations the Department determined that the Taxpayer could not claim either exemption because these items were not an integral part of the integrated production operation and the regulations specifically exclude electricity used to control temperature and light buildings. Therefore, the Taxpayer’s purchases of lights, fans and electricity are taxable.
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