Administrative Allowance for Sales Tax Collection
Issue Overview: Kansas is one of only 18 states that doesn't allow for administrative allowance. Administrative allowance enables a business to retain a pre-determined portion of the total sales tax revenue collected. The point of which is to compensate small businesses for the costs associated with collecting sales tax. Existing law only requires the state to pay out-of-state retailers a 3 percent fee for collecting and remitting sales tax to the state.
NFIB Position: Legislation is needed in Kansas that would result in offsetting some of the significant costs incurred by businesses in serving as collection agents for the state. NFIB/Kansas will continue to advocate for legislation that at a minimum would mirror the 3 percent fee paid to out-of-state retailers.
Issue Status: A bill has been introduced in the House of Representatives that would allow businesses to retain 3 percent of the total sales tax revenue they collect. This 3 percent figure would be applicable for the first $10,000 in revenue collected. The rate between $10,000 and $50,000 would be 1.5 percent.
A hearing has yet to be scheduled on the bill.
What to Do: Contact your state legislators and inform them that you support the administrative allowance concept.
What to Say: Implementing an administrative allowance mechanism would assist small businesses with paying for the costs associated with collecting and remitting sales tax. No longer should businesses be asked to serve as unpaid collection agents for the state of Kansas. The legislation should at the very least, match what Kansas pays out-of-state retailers.
