State sales tax increase effective today, July 1

Starting today, consumers will be paying for more retail goods and taxable services when they purchase them in the state of Kansas.

As part of the budget package approved by the Legislature in June, the portion of sales tax going to the state of Kansas has increased from 6.15 percent to 6.50?or 35 cents more for every $100 purchase.

The impact? A $100 cartload of groceries will now cost the consumer $106.50 rather than $106.15.

Big deal? Perhaps not, for a one-time purchase. If you buy $100 worth of groceries each week for a year, your annual food budget will increase by $18.20 for the same items.

The impact of the state increase will be felt more keenly felt with big-ticket purchases. Buy a car for $30,000, for example, and your out-of-pocket cost increases by $105.

Of course, almost all places in Kansas charge more than the state sales tax, with the addition of county and city sales taxes.

Marion County, for example, adds a tax of 1.5 cents for every dollar spent, which means the actual minimum sales tax in the county is now 8 percent for purchases made and received here.

In Marion County, a half-cent goes toward paying off the new jail; the rest goes to the county and its cities, according to Jean?ine Bate?man, county treasurer.

Beyond the county tax, four cities in Marion County have initiated a tax assessment for local sales. Hills?boro, Peabody and Florence each charge 1 cent per dollar spent within their city limits; Marion adds 75 cents per $100.

City sales tax revenue usually goes toward local projects. For example, Hills?boro has designated a half-cent for street repairs and a half-cent toward paying off its aquatic center.

Retail businesses

Consumers aren?t the only ones who need to prepare for the rate increase.

Retailers need to adjust what they charge before the start of the business day July 1 to be in compliance.

?For a Main Street business in Hillsboro, it would probably take 5 or 10 minutes,? said Bryce Wichert, a certified public accountant at Accounting & Financial Initiatives, LLC, in Hills?boro.

?It should be a pretty simple procedure,? he said. ?Most programs, either in a cash register or like a Quick Books program, are easy to reprogram.

?If you?re selling in multiple jurisdictions, though, it?s going to be a little more time consuming to get it all changed, just because you have to change each one individually.?

The rate of state and local sales tax applied to a retail sale of goods and taxable services is determined by a series of ?sourcing rules.?

For retailers located within Kansas:

? for non-delivery sales, collect the rate of tax in effect at your place of business

? for all other sales, collect the rate of tax in effect where the customer takes delivery?this is normally the rate of tax in effect at the customer?s shipping address.

For the most part, business owners are on the honor system when it comes to charging the correct sale tax, according to Wichert?unless they get audited.

?Even income-tax failing, it?s 90 percent on the honor system,? he said. ?For income tax there?s some double-checks because the government gets copies of your W2s and 1099s. So they match that up.

?With sales tax, there?s really nobody looking over their shoulder, I suppose,? he said.

Wichert said if it is discovered that a business owner has failed to charge the appropriate amount of sales tax, the owner will be responsible to make up the underpayment with interest, and possibly pay a financial penalty.

?I don?t know what those rates are offhand, but it?s not the end of the world,? he added.