Kansas – Use of the Multi-Jurisdiction Exemption Certificate

SALT Report 1717 – The Kansas Department of Revenue issued an Opinion Letter regarding a Taxpayer’s acceptance of a Multi-Jurisdiction Exemption Certificate.  The Taxpayer was hired by an out-of-state company to install signs at different locations throughout Kansas. The out-of-state company provided the Taxpayer with a Multi-Jurisdiction Exemption Certificate claiming an exemption from sales tax on the billable charges for sign installation.

Kansas law allows out-of-state retailers, wholesalers, and manufacturers to issue an MJEC to exempt their purchases of tangible personal property that are for resale.  However, Kansas law also dictates that the Multi-Jurisdiction Exemption Certificate can only be used by:

  • Out-of-state businesses that do not have nexus with the state,
  • Businesses that are not registered with the Department as Kansas retailers, and
  • Only for purchases of goods and merchandise

Therefore, the Department determined that because the Taxpayer was hired by the out-of-state company to install signs in Kansas that were purchased by Kansas residents the Taxpayer was acting as an agent for the out-of-state company.  Because of that relationship, the out-of-state company is considered a “retailer doing business in the state” and is required to register with the Department and collect Kansas retailers’ compensating use tax from its Kansas customers.

The Department advised the Taxpayer that the MJEC cannot be used by out-of-state company and that tax should be charged for the sale and installation of signs.

For Further Information:

Kansas Department of Revenue – Opinion Letter O-2012-003