Kansas vacation rental tax guide

Airbnb and Vrbo have changed the way vacationers travel, with many guests choosing to rent private homes rather than book hotels. With a bounty of popular destinations including Kansas City, Wichita, and Dodge City, the Sunflower State offers prospective short-term rental hosts the opportunity to bring in extra income.

But new income opportunities bring new tax implications. Like hotel and B&B stays, short-term rentals in Kansas may be subject to tax. Vacation rental hosts are required to collect applicable taxes from guests and remit them to the proper authorities.

Failure to comply with state and local tax laws can result in fines and interest penalties. These may not catch up with you in the short term, but the sharing economy is under increased scrutiny, so it’s important to address compliance before tax authorities address it for you. 

Avalara MyLodgeTax has put together this guide to help you comply with Kansas short-term rental tax laws. For more information on the tax rates and jurisdictions that apply to your rental’s specific location, use our lodging tax lookup tool.

No short-term vacation rental tax guide is a substitute for professional tax advice. Consider this an asset to help you understand and prioritize your vacation rental questions and concerns. Questions pertaining to specific situations or out-of-the-ordinary conditions are best solved with a certified tax professional familiar with Kansas tax laws.

When you start operating a short-term rental, you might not have experience with lodging taxes, but you’re probably familiar with income tax. It’s important to understand the difference between the two.

Income tax is reported and paid annually to the federal government and many state governments on “taxable” income, which is income after allowed expense deductions. You pay this tax directly to the government.

Lodging tax on a short-term rental is a percentage of the cost of your guest’s stay that’s added to the price on the bill. The guest pays the tax, but you’re responsible for collecting and paying it to the proper tax authority.

What’s the definition of “short-term rental” in Kansas?

In Kansas, state and local sales tax is collected on the rental of rooms by hotels, which are defined as lodging units with at least four sleeping rooms available for rent to the general public. 

Sales tax also applies to the rental of rooms by “accommodations brokers,” which are defined as having an inventory of two or more rooms in one or more locations for rent. An accommodation broker’s receipts are subject to sales tax regardless of the length of stay.

County or city transient guest taxes may also apply, depending on the rental location. Transient guest tax applies to rental establishments with more than two bedrooms. Accommodations brokers must collect any applicable transient guest tax on their sleeping room rentals, even though they may only have two or more rooms. Transient guest tax is not collected on rooms rented for more than 29 consecutive days or more to the same person or entity.

“Marketplace facilitators,” which include marketplaces such as Airbnb and Vrbo, must collect sales and transient guest tax for stays of less than 29 consecutive days for accommodations that do not meet the definition for hotel rooms.

Who’s required to collect and file taxes on short-term rentals in Kansas?

Depending on the number of rooms you have to rent, you may be responsible for collecting, filing, and remitting short-term rental taxes to Kansas tax authorities. 

Location is key to compliance

The location of your rental is a crucial piece of information for short-term rental tax compliance. Your address determines which tax jurisdictions you’re required to report to, which taxes you need to collect, and the appropriate tax rates.

Use our lodging tax lookup tool to get a rate report specific to your Kansas rental’s address. The report includes the estimated total tax rate to collect from guests, number of required registrations, number and frequency of returns per year, and minimum number of rented days to qualify as a taxable stay.

It should be noted that tax rates and the rules governing them change frequently. Please consider your tax rate report to be informative rather than authoritative.

Before you can begin collecting taxes on your short-term rental in Kansas, you’re legally required to register with the Kansas Department of Revenue. You can register online to receive an account number and a Certificate of Registration.

Depending on your jurisdiction, you may be required to register with your local tax authority and file local lodging tax returns in addition to state registration and filing.

Do I need to form an LLC?

In Kansas, you don’t need to form an LLC to register with tax authorities.

Local short-term rental regulations

Short-term rental operators in Kansas should be aware of the local regulations that apply to them, including rules covering:

• Legality
  
• Permits, licenses, and registration
• Zoning
• Advertising
• Neighborhood notification
• Building and housing standards

Homeowner associations (HOAs), condominium communities, co-ops, and landlords may also have specific rules regarding vacation rentals. It’s your responsibility to be aware of short-term rental policies that apply to your property.

Once you’ve registered with tax authorities, you’re ready to start collecting lodging taxes, which you’ll add to your guest’s bill when they pay for their stay.

Which taxes apply to Kansas short-term rentals?

In Kansas, a number of different lodging taxes may apply to your short-term rental, depending on your location. These can include:

Tax rates

Before you can begin collecting short-term rental taxes, you need to know the correct rate to charge. Rates can and do change frequently, so it’s critical to make sure you have the latest rate to avoid over- or undercharging your guests and running into compliance issues. 

Our lodging tax lookup tool can give you a rate report specific to your Kansas address. The report includes the estimated total tax rate to collect from guests, required registrations, frequency of returns per year, and minimum number of rented days to qualify as a taxable stay.

What charges are taxable?

In Kansas, all charges for accommodations that are part of the normal room fee charged upon check-in, as well as no-show fees, are subject to sales and transient guest tax. This includes items such as cleaning fees, pet fees, rollaway bed fees, extra person fees, etc. Laundry services and dry cleaning are also subject to sales tax, as are any retail sales the host makes to guests.

However, fees that are refundable, such as damage deposits, are generally not subject to lodging taxes unless the host keeps the deposit. Other fees that are not subject to sales tax include those for safes or security boxes, shuttles or transportation, returned checks, parking, fax, and internet and computer fees.

What happens when my short-term rental marketplace (such as Airbnb or Vrbo) collects taxes for me? 

Before collecting any short-term rental taxes from your guests, you need to be aware of whether any taxes have already been collected for you. In Kansas, short-term rental marketplaces are required to collect lodging taxes from guests when accommodations are paid for — as long as the accommodation does not meet the definition of a “hotel.”

Marketplaces may not collect locally administered short-term rental taxes on your behalf.

If taxes aren’t being collected for you, you’re responsible for collecting and remitting them to state tax authorities.

Are guests ever exempt from taxes?

There are situations in which you aren’t required to collect lodging taxes in Kansas. For example, a guest who rents for more than 28 days is exempt from transient guest tax, although not from sales tax.

In Kansas, purchases of accommodations by U.S. and Kansas governments and their agencies and other exempt organizations are exempt from sales tax if the room charge is billed directly to the exempt buyer.

“Indirect” rentals of sleeping rooms to rural volunteer fire departments and federal government employees are also exempt from sales tax when the room rental is made in association with the performance of official duties, regardless of method of payment.

After you’ve collected taxes from your guests, it’s time to file your tax returns with the Kansas Department of Revenue. In Kansas, you can file returns and pay the tax amount due online.

Take the time to double-check your returns prior to submitting. Simple mistakes such as typos, missing signatures, and incorrect tax information can lead to unwanted delays.

When do I need to file my returns?

You’ll be assigned a filing frequency and due dates when you register with the tax authority. For filing with the Kansas Department of Revenue, state sales tax due dates are as follows:

I didn’t rent my property during this filing period. Am I still required to file a tax return for my short-term rental with the Kansas Department of Revenue?

Yes. Short-term rental operators registered with the Kansas Department of Revenue are required to file returns each assigned filing period, regardless of whether you had any short-term rental income or collected lodging taxes. Such returns are commonly known as “zero dollar returns.” Local tax authorities may have their own requirements.

Are there penalties for filing taxes late?

Whether you choose to offer short-term rentals through a marketplace like Airbnb or Vrbo or directly to guests, you open the door to tax liability at the state and local level. As tax revenue is a major source of local funding, tax authorities are becoming more aggressive in their efforts to identify individuals and businesses not in compliance with tax laws. Failure to register with tax authorities and file short-term rental tax returns in Kansas on time may result in late fees, interest payments, and in extreme cases, legal action.

I’ve been offering short-term rentals without collecting lodging tax. What options do I have?

If you’re already operating a short-term rental but not collecting short-term rental taxes, you may be in violation of Kansas tax laws. Take the time to review your legal responsibility (with a tax professional, if necessary) and understand the risk of continuing to not collect tax.

Short-term rental hosts in Kansas may be able to take advantage of a voluntary disclosure agreement (VDA). A VDA offers an opportunity for hosts to proactively disclose prior period tax liabilities in accordance with a binding agreement with the Kansas Department of Revenue. VDAs are offered to encourage cooperation with state tax laws and may result in some or all penalty and interest payments being waived.

Are there options for outsourcing lodging tax filing?

Yes. Numerous short-term rental hosts in Kansas file several state and local lodging tax returns every year. For many, filing solutions such as MyLodgeTax can relieve this burden.