Kansas marketplace facilitator sales tax law, explained
by May 24, 2024
Please note: This blog was originally published in 2021. It’s since been updated for accuracy and comprehensiveness.
The state of Kansas requires marketplaces to collect sales tax on behalf of sellers on online marketplaces like Amazon or Walmart.
This means that if you sell on a platform like Amazon, then Amazon will collect sales tax from your Kansas buyers on your behalf, and remit it to the state.
But as usual, things can get a little complicated when it comes to e-commerce sales tax.
This post will explain what online sellers need to know about the Kansas marketplace facilitator law, and answer your frequently asked questions.
Overview of the Kansas marketplace facilitator law
Effective July 1, 2021, marketplace facilitators like Amazon or eBay who make or facilitate sales of more than $100,000 to buyers in the state of Kansas are required to collect sales tax on behalf of 3rd party sellers.
Quick facts about the Kansas marketplace facilitator law
- Effective date: July 1, 2021
- Threshold: $100,000 in the previous calendar year
- State law information: Read the governor’s announcement here.
Frequently asked questions about marketplace facilitator laws
What exactly is a marketplace facilitator in Kansas?
Kansas defines a “marketplace seller” as an entity that: “Contracts or otherwise agrees with marketplace sellers to facilitate for consideration, regardless of whether deducted as fees from the transaction, the sale of the marketplace seller’s products or rooms, lodgings or accommodations through a physical or electronic marketplace operated, owned or or otherwise controlled by the person.”
Does this mean I can stop collecting Kansas sales tax?
It depends. Every business’s sales tax situation is unique to that business.
Let’s look at a couple of common scenarios for businesses who have sales tax nexus in Kansas.
Example #1: You only make sales on online marketplaces.
In this example, you only sell on Amazon and Walmart. Because Amazon and Walmart are both now collecting sales tax from buyers on your behalf, you are not required to collect sales tax from your buyers. (However, as a seller with nexus in the state, you will most likely still be required to file periodic sales tax returns. See “Does this mean I can cancel my Kansas sales tax permit?” below.)
Example #2: You sell on online marketplaces and your own online store and/or brick and mortar store.
In this case, you’d still be required to collect sales tax from buyers who purchase from you through your own online store (for example, via your BigCommerce or SalesForce Commerce Cloud store). And you would still be required to collect sales tax from your brick and mortar customers.
Marketplace facilitator laws only cover marketplaces. The state still requires that merchants collect sales tax from buyers via sales channels where the marketplace facilitator laws do not apply.
Does this mean I can cancel my Kansas sales tax permit?
This news is new, and therefore it is not yet clear if marketplace-only sellers can cancel their Kansas sales tax permits.
We recommend contacting the Kansas Department of Revenue or consulting with a vetted sales tax expert before cancelling your Kansas sales tax registration.
Also, it’s important to assess your business before making a decision about cancelling sales tax permits. Are you in a growth stage? Do you plan to expand and think you may have Kansas sales tax collection requirements (such as physical presence or economic nexus) in the future? Then you may want to hang on to your Kansas sales tax permit rather than cancelling it and going through the administrative hassle of registering again in the future. This business decision is up to you.
Do I still need to file a Kansas sales tax return?
If you are registered to collect sales tax in Kansas (i.e. you have an active Kansas sales tax permit) then the state still requires that you file sales tax returns.
If you only make sales via marketplaces, and all of your marketplaces collect sales tax from buyers on your behalf, then you may only be required to file a “zero return.” (This is a return showing that you do not have any sales tax to remit to the state.)
If you no longer have any sales tax to remit to the state of Kansas, we recommend checking directly with the state or a vetted sales tax expert to determine if you can cancel your sales tax registration.
Be cautious here. If you are registered for a sales tax permit and do not file, the state can assess penalties even though you don’t have any sales tax to remit! We have, unfortunately, talked to too many sellers who have found this out the hard way when a tax penalty bill arrives.
What do I do with any Kansas sales tax I have already collected?
If you have already collected Kansas sales tax from buyers, it is vital that you remit that amount to the state. The only way to get in serious criminal trouble in sales tax is to collect sales tax from buyers on the state’s behalf but keep it in your own pocket.
Example:
Let’s say you sell on Amazon and Kansas requires you to file and remit sales tax quarterly. Though Amazon began collecting sales tax on your behalf on July 1, 2021, if you have any sales tax in your bank account that you collected from Q3 2021, you will still need to remit that to the Kansas Department of Revenue or face a penalty.
Does TaxJar handle this for me?
Yes.
TaxJar AutoFile handles Kansas sales tax automatically
TaxJar AutoFile automatically compiles your sales tax data the way the state of Kansas wants it filed. For example, many states, Kansas included, want sellers to break down their sales tax collected interstate (sales originating in Kansas sent to another state) and intrastate (sales made from Kansas to Kansas.)
If a marketplace has collected sales tax on your behalf, TaxJar reports that directly to the state so that the state is aware you have met your sales tax obligations.
If you currently AutoFile your Kansas sales tax returns, you don’t need to do a thing. It’s handled!
TaxJar reports give you all the info you need to file manually
If you prefer to file manually, your TaxJar Reports also reflect what the Kansas Department of Revenue wants to see on your tax return.
Also don’t worry that you will double pay. TaxJar accounts for sales tax collected on your behalf, and only shows you the amount you owe to the state out of your pocket.
Further reading on Kansas sales tax and marketplace facilitator laws:
- TaxJar’s Marketplace Facilitator FAQ
- State by State: Marketplace Facilitator Laws Explained
- Kansas Sales Tax Guide for Businesses
