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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12691
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Is it legal to charge sales tax on a commission in the state

Customer Question

Is it legal to charge sales tax on a commission in the state of Kansas? We had an RV that a "broker" sold for us. They received a commission and then charged us 7.1 % sales tax on the commission amount. The RV was sold to someone from Oklahoma. We heard prior to the sale that commissions were not allowed to be paid. We are concerned about the transaction.
Submitted: 2 years ago.
Category: Tax
Expert:  Lane replied 2 years ago.
Hi,
NO sales taxes are only to be charged on tangible personal property, not on commissions.
Commissions ARE, however, allowed, but not a sales tax UPON them.
If you'll go here:
http://www.ksrevenue.org/pdf/pub1510.pdf
You'll see something interesting; Unless you buy a used vehicle and REGISTER it in Kansas there should be no sales tax on the sale itself.
See this from page 4:
"Motor Vehicles and Trailers. The sale or exchange of
motor vehicles is a taxable transaction. When you buy a
car, truck, or other vehicle from a registered dealer, you
must pay the sales tax to the dealer. When you buy a motor
vehicle or trailer from an individual, you must pay the sales
tax to the county treasurer upon registration"
The buyers here likely paid their own sales tax upon registration in Oklahoma.
So there should have been no sales tax on the sale of the property and there should have been no nsales tax on the commission.
The commission itself, however, is allowed.
See this from page 14
"If you receive property from another to sell on
consignment, you are the retailer and are responsible for
the tax collection rather than the owner of the consigned
merchandise. This is true regardless of how you receive
your fee or commission. "
Let me know if you have questions...
lane
On page 4, you'll see the following for sales that are EXEMPT from sales tax:
Let me know if I've understood your question correctly.