Sales Tax Due on Gross Receipts from Operation of Mobile Point-of-Sale Device in Kansas

Kansas has issued a private letter ruling discussing the sales and use tax treatment of transactions involving a mobile point-of-sale device. The taxpayer’s device was used for order placement, order add-ons, checkout/payment, customer satisfaction as well as to grant customers access to premium content, such as news, videos, sports, educational items and games, for a fee which is to be paid on their bill. The Kansas Department of Revenue found that the device was a coin-operated device for sales and use tax purposes. As a result, sales tax was due on the gross receipts from its operation pursuant to Kansas tax code, which requires that tax be paid upon the gross receipts from the operation of any coin-operated device dispensing or providing tangible personal property, amusement or other services except laundry services, whether automatic or manually operated. The department also found that the device was included in the definition of “coin operated device” under Kansas sales tax regulations since it provides “amusement and diversion” to customers in the form of news, videos, sports, educational items and games. The department also stated that there are no specified requirements on whether you pay before, during, or after to gain access to this content in order for it to be classified as a “coin-operated device.”(Private Letter Ruling No. P-2015-004, Kansas Department of Revenue, November 3, 2015)

Posted on May 11, 2016