Dec 21, 2015
From KPMG TaxWatch
Recently, in a possible attempt to spread holiday cheer, the Kansas Department of Revenue issued guidance addressing the sales tax treatment of holiday decorating services. In general, unless purchased to resell or rent, the purchase or rental of Christmas decorations will be subject to sales and use tax. Charges for installing Christmas decorations, including wreaths, removable trees, removable lights, garlands, table settings, window decorations, yard decorations, and any other decorations that will or can be removed after the holiday season are likewise subject to sales and use tax. Presumably, the tax treatment does not depend on whether the decorations are promptly removed right after New Year’s or are proudly displayed until Valentine’s Day.
Although the purchase of Christmas trees may be subject to sales tax, on the income tax side, Christmas came early for Kansas Christmas tree growers. This summer the Kansas legislature passed a law that allows the net gain from the sale of Christmas trees grown in Kansas (and held for six years or more) to be subtracted from federal adjusted gross income in arriving at Kansas taxable income. The subtraction modification applies for all tax years beginning after December 31, 2013. According to a notice issued by the Department, the subtraction modification can be claimed on a Schedule S of an amended 2014 income tax return. For more information on the Kansas sales and use tax treatment of Christmas decorating services, please contact Andrea Turner at 816-802-5236.
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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.