Sales Tax Articles
Sales Tax State Activity Update - May 2007
Space: The Final Determination in Kansas Original Construction
In a Private Letter Ruling, the Kansas Office of Policy and Research indicates a contractor installing new walls, flooring and a ceiling inside a 50,000 square foot building did not perform original construction labor exempt from sales tax.
The building originally built fifteen years ago has been primarily used as a warehouse. Kansas law imposes sales tax upon labor charges for installing property, but exempts original construction labor charges.
Original construction, as indicated in the Ruling, may include the addition of an entire floor to the exterior, but not the interior of an existing building.
The ruling also suggests that in order for the labor to qualify as original construction, the addition of an entire room or floor must increase the available space of the building.
The mere subdivision of space from one room to many does not exempt labor charges from sales tax.
In this case, the labor charges did not meet the standards of original construction and are taxable.
This ruling may be viewed on the Kansas Department of Revenue's Policy Information Library.
(Kansas Office of Policy and Research Private Letter Ruling No. P2007-003, 04/05/2007)
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