Sales tax applies to the sale of tangible goods and certain services. This tax is collected by the seller, who then remits it to the state tax authorities, effectively serving as the tax collector.

To determine if you need to collect sales tax in Kansas, consider the following three questions:

1. Do you have a nexus in Kansas?
2. Are you selling taxable goods or services to Kansas residents?
3. Are your buyers required to pay sales tax?

If you answered “yes” to all three, you must register with the state tax authority, collect the appropriate sales tax on each transaction, file returns, and remit the collected taxes to the state.

The obligation to collect sales tax in Kansas depends on having a significant connection with the state, a concept known as nexus. Nexus, which means “to bind or tie” in Latin, determines whether the state has the legal authority to require your business to collect, file, and remit sales tax. Sales tax nexus in all states used to be limited to physical presence, meaning a state could only require a business to register, collect, and remit sales tax if it had a physical presence within the state, such as employees, an office, a retail store, or a warehouse. However, in June 2018, the U.S. Supreme Court overturned this rule in the South Dakota v. Wayfair, Inc. decision. Now, states can tax businesses based on their economic and virtual connections, known as economic nexus.

While physical presence still establishes a sales tax collection obligation in Kansas, out-of-state sellers can now also have sales tax nexus with Kansas through economic activities.