Opinion ID: 2637573
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Heading: kansas' compensating use tax

Text: The Kansas compensating use tax is a tax levied for the privilege of using, storing or consuming within Kansas any tangible personal property. K.S.A. 2002 Supp. 79-3703. Historically, states with a retailer's sales tax have imposed a corollary use tax to enhance revenue, diminish taxpayer avoidance of sales taxes, and equalize the competitive parity of local and out-of-state retailers. National Geographic Society v. Cal. Equalization Bd., 430 U.S. 551, 555, 51 L. Ed. 2d 631, 97 S. Ct. 1386 (1977). In Kansas, [a]ll property purchased or leased within or without this state and subsequently used, stored or consumed in this state is subject to the tax if the property would have been subject to the Kansas retailers' sales tax had the transaction been wholly within Kansas. K.S.A. 2002 Supp. 79-3703. It is prima facie evidence that the property was sold for use in Kansas if the property was sold for delivery in the state. K.S.A. 79-3703a. The purchaser is responsible for payment of the tax. However, given the impracticality of collection from the multitude of individual purchasers, the collection obligation is imposed upon the retailer. Miller Bros. Co. v. Maryland, 347 U.S. 340, 343, 98 L. Ed. 744, 74 S. Ct. 535 (1954). Every retailer doing business in this state and making sales of tangible personal property for use, storage or consumption in this state, not exempted under the provisions of this act, shall at the time of making such sales, whether within or without the state, collect the tax. K.S.A. 79-3705c. K.S.A. 79-3702(h) defines a retailer doing business within [Kansas] that has the duty to collect the tax as: any retailer: (1) [h]aving or maintaining within this state, directly or by a subsidiary, an office, distribution house, sales house, warehouse or other place of business, or any agent or other representative operating within this state under the authority of the retailer or its subsidiary, irrespective of whether such place of business or agent is located here permanently or temporarily, or whether such retailer or subsidiary is admitted to do business within the state. (Emphasis added.) In determining FOE was a retailer doing business in Kansas, BOTA determined the ISR's were agents operating under the authority of FOE. FOE did not cross-appeal those findings.