Sales Tax Guidelines for Fabricators (EDU-27)

Date Issued: 5/31/05

Tax Types: Sales and Use Tax

Department of Revenue guidelines are intended to help you become more familiar with Kansas tax laws and your rights and responsibilities under them. While every attempt is made to provide you with information that is consistent with the Kansas tax statutes, regulations, and court decisions, nothing in this publication supersedes, alters, or otherwise changes any provision of the Kansas tax laws. Department guidelines are not legal rulings and any information that is inconsistent with Kansas tax laws is not binding on either the department or the taxpayer. Not every potential tax situation is covered in these guidelines. If you have any questions about how Kansas sales and use tax laws apply to your business, please visit the department's Policy Information Library on our web site,, or call the department's Taxpayer Assistance Center at 785-368-8222.

Application of this publication.

This publication explains how Kansas sales and use taxes apply to custom fabricators that make "made-to-order" or "custom-made" goods and to other retail businesses that account for sales and use tax in the same way as custom fabricators. Custom-made goods can include clothing, boots, furniture, curtains, draperies, slipcovers, jewelry, and signs, among other things. Businesses that are treated like fabricators include artists, copy and duplicating services, desktop publishers, photographers, and taxidermists. If you engage in any of these retail activities, this publication explains your accounting duties under Kansas law.

Some construction contractors fabricate or manufacture building components that they install at a construction site. These components include pre-engineered roof and floor trusses, pre-fabricated wall panels, pre-fabricated stairs, pre-cast concrete floors or walls, doors, windows, elevators and escalators, prefabricated cabinets, heating and air-conditioning ducts, and other like products. Taxation of these businesses is discussed in the Guidelines for Contractor-Fabricators and Contractor-Manufacturers. These guidelines discuss mixed contracts in more detail than this publication.

This publication does not apply to modular or manufactured homes or to prefabricated homes or buildings. How sales tax applies to transactions involving these homes is set forth in Revenue Ruling 19-2004-1.

This publication should be read with other department publications that apply to your business. These may include the Sales Tax Guidelines for Businesses that Sell and Service Appliances and Electronic Products, the Sales Tax Guidelines for Contractor-Fabricators and Contractor-Manufacturers, and the Sales Tax Guidelines for Contractors and Contractor-Retailers. Other materials that you'll need to review are the information guides and other publications listed at the end of these guidelines that pertain to your business.

Effective date for this publication.

The guidelines in this publication shall take effect on July 1, 2005. These guidelines supersede and revoke all prior department letters, information guides, and other publications that discuss the issues that are addressed here.


Before you begin to do business in Kansas, you must register with the department of revenue. You can do this by visiting the KSBusinessCenter at and following the appropriate instructions. This web site is a partnership between the Kansas Department of Revenue, the Kansas Secretary of State's Office, the Information Network of Kansas, and several other business-oriented state agencies. The goal for the site is to provide a central location where Kansas businesses can electronically file all of the reports required by Kansas law. While the web site is under development, it already contains a great deal of useful information for new businesses.

You can also register by submitting a completed Business Tax Application Form (CR-16) to the department. Form CR-16 with instructions is published in the Business Tax Application Booklet, Publication KS-1216. You can obtain a copy of Publication KS-1216 from our website at or by calling the department's forms request line at 1-785-296-4937. Both resident and nonresident contractors who do work in Kansas must register.

Whichever way you register, you must complete the application form with care since the information you provide will determine how the department registers your business for state tax purposes. Depending on how your accounts are set up, you may be required to file sales and use tax returns either annually, quarterly, or monthly. If you are not approved to file your sales and use tax returns electronically, the department will routinely mail you a tax return that is printed with your business name and mailing address, your account number, the tax type being reported, the reporting period, and the due date. You must file a return even if you don't receive one in the mail. You can request a blank return by calling the forms request line at 1-785-296-4937 or you can download one from our web site at You must file a timely return for each reporting period, including those when you're reporting zero tax.

Glossary --- As used in this publication:

Mixed contract means a single contract that calls for the performance of construction services and for the retail sale of tangible personal property. A business that enters into a mixed contract is treated as the consumer of the construction materials that it uses on the project and as the retailer of the goods that it sells under the contract. The tangible personal property being installed or sold at retail can include fabricated or manufactured goods.

Retailer includes a person or business that fabricates products for its customers.

Sales or selling price is defined at K.S.A. 2004 Supp. 79-3602(ll) to mean "the total amount of consideration . . . for which personal property or services are sold . . . ." The definition provides that no deductions are allowed for, among other things:

  • the cost of materials used, labor or service cost, interest, losses, all costs of transportation to the seller, all taxes imposed on the seller and any other expense of the seller;
  • delivery charges; and
  • installation charges.

Set-up services include placing certain articles in working order at the customer's home or business by assembling them, locating and fixing them in place, plugging or wiring them into existing electrical services, and so forth. Taxable set-up charges include those for appliances, electronic products, and certain products that are listed in the section of the Contractor-Retailer Guidelines entitled Transactions that are treated as retail sales with set-up services. Some of the listed transactions can involve the sale and set up of fabricated articles.

Sourcing means determining the tax situs of a transaction. The tax situs determines which local tax applies to sales made and services performed in Kansas.

Tax base means the dollar amount on which sales tax is computed. It is the amount that is multiplied by the sales tax rate to yield the amount of sales tax due from the customer. The tax base for retail sales is the sales or selling price of the goods or services being provided.


Overview: Tax base for fabricator retail sales. A business that produces an article of tangible personal property to the special order of a customer is a retailer. When a business fabricates an article for a customer, a retail sale takes place when the fabricated article is delivered to and accepted by the customer. When the article is delivered to a buyer in Kansas, the fabricator is required to collect state and local Kansas sales or use tax on the "sales or selling price" of the fabricated article. This is the total amount charged to the buyer by the fabricator, including any shipping or delivery charges. Local tax is sitused to the location of delivery.

The statutory definition of "sales or selling price" prohibits a fabricator from deducting any costs or expenses from the tax base of its retail sales. K.S.A. 2004 Supp. 79-3602(ll). Nondeductible costs and expenses include the fabricator's production and fabrication costs, material costs, design costs, insurance, licenses, profit, travel expenses, meal expenses, mileage, and all other overhead expenses. These expenses may not be: (A) deducted from the selling price; (B) stated as a separate, untaxed line-item charge on the customer billing; or (C) contracted for separately with the buyer when the expenses are an integral part of the article's design, fabrication, and sale. This means that sales tax applies to the total amount charged for a fabricated article, including shipping or delivery charges. Taxable retail sales include those where the custom-made article is fabricated from materials furnished by the customer.

Sourcing rules for sales of fabricated articles. Under destination-based sourcing rules, local sales tax is sourced to the location where delivery is made to the buyer or buyer's agent in Kansas. This includes Kansas deliveries to an out-of-state resident who enters Kansas, takes possession of a fabricated article here, and then returns home.

A fabricator should not collect Kansas tax when it delivers a fabricated article to a buyer or the buyer's agent in another state. Kansas sales tax laws treats delivery as being made in another state when the ship-to address is outside Kansas and delivery is made by: (A) a vehicle operated by the fabricator or its agent; (B) the United State Postal Service; (C) a common carrier; or (D) a contract carrier paid for by the fabricator. While Kansas taxes do not apply to fabricated articles shipped or delivered by a Kansas seller to a buyer in another state, the state of delivery may require the Kansas seller to register and collect its tax on sales made there.

Purchases of materials by fabricators. A fabricator should claim either a resale exemption or an ingredient or component part exemption when it buys materials to make into custom-made articles. A fabricator does this by providing its vendor with a completed exemption certificate. A fabricator must pay sales tax when it buys tools and equipment for use to fabricate custom-made articles, unless the business engages in what is commonly regarded as an industrial manufacturing or processing operation. A business that fabricates articles to the special order of its customers, but does not utilize an assembly-line type operation to do the fabrication, is not a manufacturing or processing business. These businesses may not claim the integrated production exemption. Typically, a business that has an integrated production operation buys materials in bulk, utilizes automated machinery that acts upon the materials, moves the materials from one processing operation to the next, and completes the automated process with equipment that packages the goods for sale and distribution. K.S.A. 2004 Supp. 79-3606(kk)(3); See Sales Tax Guidelines for Contractor-Fabricators and Contractor-Manufacturers.

Sales plus set up or installation of fabricated articles. Fabricators sometimes agree to deliver and install the articles they fabricate at the buyer's home or business. Some businesses manufacture building components off site, haul the components to a construction site, and install them as required by a construction contract. Fabricators and manufacturers that agree to set up or install their products need to carefully review: (1) the Sales Tax Guidelines for Contractor-Fabricators and Contractor-Retailers, and (2) the section in the Contractor-Retailer Guidelines entitled Transactions that are treated as retail sales with set up. This material explains the tax accounting these businesses should use.

Articles fabricated at the job site. Some contractors haul equipment to the job site that they use in forming metal roofing or gutters and downspouts from rolls of steel or aluminum. Other contractors use similar equipment at the job site to form steel 2x4's for use in framing. Contractors sometimes use portable mixers to make concrete at the job site.

For these businesses, the fabrication done at the job site is an integral part of performing their construction contracts. These businesses are treated as contractors. See Contractor Guidelines: Articles fabricated at the job site. As contractors, these businesses are required to pay sales tax at the time they take delivery of the rolls of steel or aluminum. They are also required to pay sales or use tax on the equipment they buy and use to form the articles that they install. Contractors may not claim the integrated plant exemption extended in K.S.A. 2004 Supp. 79-3606(kk) when they buy their equipment.

Carpenters sometimes fabricate articles at their shop and then install the articles at the job site. These carpenters are treated like any other contractor. This means they should pay sales tax on their purchases and collect tax on their taxable services as explained in the Contractor Guidelines. See also Sales Tax Guidelines for Contractor-Fabricators and Contractor-Retailers.

Tax treatment synopsis for fabricators.

(1) Copy and duplicating services. Copy and duplicating service providers are treated as businesses that fabricate tangible personal property. A copy and duplicating business should claim resale exemption when it buys paper, ink, binders, and other material that become a component part of the copies it sells and collect sale tax on the full selling price when delivery is made in Kansas. Copy machines and other equipment sold to copy services are taxable.

(2) Desktop publishing companies. Desktop publishers produce professionally designed and presented documents, according to specified design and presentation requirements, using desktop publishing software. Desktop publishers should collect sales tax on the full selling price charged to their customers when delivery is made in Kansas. They should claim resale exemption when buying paper, ink, binders, and other materials that become a component part of the product being published. As with other fabricators, desktop publishers may not deduct design costs, travel time, or other overhead costs from the selling price charged to the customer. A desktop publisher's purchases of desktop publishing software, computers, printing machines, and other equipment are taxable.

(3) Dental laboratories. Dental laboratories fabricate crowns, bridges, and other dental appliances to the special order of a dentist for placement in a patient as a prosthetic device. Materials that become an ingredient or component part of a crown, bridge, or other dental appliance that is to be sold to a dentist, may be purchased tax exempt even though the retail sale of the dental appliance is considered to be the exempt sale of a prosthetic device. Equipment and tools sold to a dental laboratory for use in fabricating crowns, bridges, or other dental appliances are taxable.

(4) Drapery and drapery hardware. Businesses that contract to custom make draperies and curtains are fabricators. The value added by the fabrication services is subject to tax. Businesses that sew draperies to fulfill custom orders should claim resale exemption when they buy drapery materials and collect sales tax on the full selling price billed to the customer. When a contract for custom-made draperies requires hanging them at the buyer's residence or business, sales tax should be charged on the entire amount billed to the customer, including the charges for delivering and hanging the draperies. Local tax should be sourced to the customer's residence or business.

The department has determined that the sale and installation of drapery rods or other drapery hardware shall be treated as a retail sale plus set up and not as a construction contract. This means that sales and installation of drapery rods or other drapery hardware are fully taxable even when the hardware is installed at a residence or during the original construction of a building. Accordingly, a drapery business is required to collect sales tax on the entire amount it charges to a customer when it fabricates draperies, installs drapery hardware, and hangs the drapes that it fabricated. The drapery business should claim a resale exemption when it buys drapery hardware.

(5) Meat cutting and butchering services. Businesses that provide meat cutting and butchering services are treated as fabricators, since they produce meat cuts and packaged meats from animals or from animal quarters and halves. These businesses are required to collect state and local sales tax on the full selling price charged to the customer when delivery is made in Kansas. This rule applies whether the meat being cut is owned by the customer or the business. These businesses may claim a resale exemption when they buy containers, twine, tape, and wrapping paper to use to wrap meat cuts and other products that they sell at retail. Purchases of equipment used by these businesses are taxable.

(6) Photographers. Photographers are treated as fabricating tangible personal property for retail sale. Photographers should claim resale exemption when buying photographic paper and other materials that become a component part of the photographs they sell. They should collect sales tax on the full selling price when tangible personal property, including photographs, are delivered to customers in Kansas. A photographer's purchases of cameras, other photographic equipment, and equipment used for printing and developing are taxable. See Q & A: How does sales tax apply to photographers and photofinishers?

(7) Signs. Custom sign makers are treated like fabricators. The value added by the fabrication of the sign is subject to tax. Sign makers should claim resale exemption when they buy materials to fabricate a sign from and collect the sales tax on the full selling price billed to their customer for the sign, including charges for setting it in place, bolting it down, and wiring it to existing services. Many other questions that sign makers have are answered by K.A.R. 92-19-18a.

Sign makers sometimes contract to construct a base or make other improvements to real property to support the sign they are fabricating. This is a mixed contract. When a sign maker enters into a mixed contract, the sign fabricator shall charge tax on the entire amount unless the retail sale of the fabricated sign is shown as a separate line item charge that is being taxed on the customer billing. When the billing under a mixed contract contains a separate line item charge for the fabricated sign, the sign maker should determine the tax due on the construction part of the contract by applying the rules for Mixed Contracts that are set forth in the Sales Tax Guidelines for Businesses that Sell and Service Appliances and Electronic Products.

(8) Tailors and seamstresses. Custom tailors and seamstresses are retailers. Persons who alter and mend clothing or who otherwise work as tailors or seamstresses should claim resale exemption when they buy buttons, fasteners, material, thread, zippers, and other things that become component parts of their products. They shall collect sales tax on the full selling price charged to their customers. Tailors and seamstresses may accept a resale exemption certificate for their services and for the materials they provide when they perform services for dry cleaners, clothing stores, and other similar retailers. The dry cleaners, clothing stores, or other retailers that present the resale exemption certificate are required to charge sales tax on the full amount billed to their customers, which will include the cost for the repair or alteration services plus any mark up that the retailer adds. Purchases of sewing machines, mangles, and other equipment by tailors and seamstresses are subject to Kansas sales tax.

(9) Taxidermists. Taxidermists are treated as fabricating new articles of tangible personal property for their customers. Taxidermists should claim resale exemption when they buy forms, thread, glass eyes, and other material that become part of the finished animal display. Taxidermists should collect sales tax on the full selling price charged to the customer when delivery is made in Kansas. Purchases of equipment used in taxidermy are subject to Kansas tax.

Other publications.

The following publications are available free from the Kansas Department of Revenue. Obtain your copy by visiting our web site at, or by calling our voice mail Forms Request Line at 785-296-4937. While the Department of Revenue has discontinued printing some of these publications, all of them are available on our web site.

  • Sales Tax Guidelines for Contractor and Contractor-Retailers
  • Sales Tax Guidelines Businesses that Sell and Service Appliances and Electronic Products
  • Sales Tax Guidelines for Contractor-Fabricators and Contractor-Retailers
  • Pub. KS-1216, Kansas Business Tax Application
  • Pub. KS-1500, North American Industry Classification System
  • Pub. KS-1510, Kansas Sales and Compensating Use Tax
  • Pub. KS-1520, Kansas Exemption Certificates
  • Pub. KS-1526, Kansas Sales and Use Tax for Motor Vehicle Transactions
  • Pub. KS-1527, Sales and Use Tax for Kansas Political Subdivisions
  • Pub. KS-1540, Kansas Business Taxes for Hotels, Motels & Restaurants
  • Pub. KS-1550, Sales and Use Tax for the Agricultural Industry
  • Pub. KS-1560, Tax Guide for Schools and Educational Institutions
  • Pub. KS-1700, Sales Tax Jurisdiction Code Booklet
  • KW-100, Kansas Withholding Tax Guide

Taxpayer Assistance. If you have questions about this publication, please contact the Taxpayer Assistance Center at 785-368-8222. Our fax number is 785-291-3614. Additional copies of department publications are available by calling the department's forms request line at 785-296-4937 or by download from our website: The number for the department's hearing impaired TTY is 785-296-6461.

Rev. 05/31/2005