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Tuesday, August 30, 2011

Investigation into K-State’s online merchandise store sales intensifies

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A state investigation continues into whether Kansas State University’s online merchandise store is skirting sales tax law, and now some state legislators also are beginning to question KSU’s online practices.

In early August, the Journal-World reported that purchases made by Kansas residents at the “K-State Official Online Store” were not being charged any sales taxes. On Monday, a KSU spokeswoman confirmed that the Kansas Department of Revenue has inquired about the issue and that the university has put the state in contact with the Florida-based vendor that runs the K-State website.

“The university is a citizen of the state, and we want to make sure that we follow all the laws that we are supposed to,” said Sue Peterson, director of governmental relations in the office of KSU’s president.

But the university is stopping short of pledging it will charge sales taxes in the future. The university hasn’t ruled out that there is a loophole in state law that would allow KSU’s online store to not charge sales tax. That’s because the site is run by a Florida company, Team Fan Shop, that has no bricks-and-mortar retail presence in Kansas. Out-of-state retailers who make online sales in Kansas generally aren’t required to charge sales taxes.

A spokesman with the Kansas Department of Revenue, though, confirmed Monday that his office has made a ruling that a university’s online store — regardless of whether it is run by an out-of-state vendor — is a Kansas business for taxation purposes.

“It is our position that they would have to pay the tax,” Cram said of universities in general. “We wouldn’t care where the online store was run from.”

Cram said he wasn’t able to comment on any specifics of the Kansas State matter because state law prohibits the department from publicly discussing open investigations.

As of Monday, however, the site was still not charging sales taxes.

“I can tell you that we have taken follow-up action, but that can take some time,” Cram said.

The issue is beginning to raise questions with some state legislators in the Manhattan area.

“Just off the top of my head, it doesn’t seem right, it doesn’t seem acceptable,” said Sen. Roger Reitz, R-Manhattan.

Reitz said the fact that a state entity isn’t charging sales tax when Kansas-based retailers are forced to charge sales tax for the same merchandise creates a perception problem.

“I think what is good for the goose is good for the gander,” Reitz said. “This sort of thing should be looked at and really have some questions asked.”

Other legislators said they also may want to bring the issue up, depending on how the matter is resolved with the Kansas Department of Revenue.

“I would hope the university and the people who are doing this would be aware of what they’re doing,” said Rep. Vern Swanson, R-Clay Center. “In the back of mind, I’m thinking they rely a lot on state finances.”

Private retailers who sell K-State merchandise online have expressed concern about the lack of taxes charged on the K-State site.

“I would expect a resolution that involves Kansas State charging a sales tax,” said Aaron Liebert, CEO of the Kansas Sampler, which charges sales tax on online sales. “It probably is a gray area, but it really isn’t that gray. A public institution that sells merchandise ought to charge sales taxes like the rest of us.”

It is unclear whether Florida-based Team Fan Shop will contest the state’s ruling that sales taxes must be charged on merchandise sales. It also was unclear whether Kansas State University would direct Team Fan Shop to not contest the state’s ruling.

“The university is in a position to say that it will follow Kansas law,” Peterson said.

A representative from Team Fan Shop did not return a phone call on Monday seeking comment. The company specializes in running online stores for universities and professional sports teams. It wasn’t immediately clear whether Team Fan Shop charges sales tax at any of the approximately 65 university and conference online stores that it operates. During the past year, Team Fan Shop made $130,000 in sales on the K-State site. But it has agreements with other universities that likely are producing much larger sales and could be producing larger tax liabilities, if sales taxes aren’t being charged. The company operates the online stores of the University of Oklahoma, the University of Nebraska, the University of Alabama, Ohio State University and several other powerhouse footballs schools.

Kansas University, which had about $708,000 in sales last year at its online store, uses a different vendor and charges sales tax on its site.

Comments

jayhawkinmullen 3 years, 1 month ago

I can only hope that this article leads to world peace.

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phogthedog 3 years, 1 month ago

The biggest joke in this article is Kansas legislators threatening KSU by reminding them of the state dollars they receive. Seriously???? State support for the university is cut every year (all Regents institutions, not just KSU). It won't be long before state universities are supported more by research dollars and outside funds.

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actorman 3 years, 1 month ago

I knew KU was more popular than KSUck, and I realize we're only talking about two online sites here, but $708,000 in merchandise sales compared to $130,000??? Wow, that's a pretty gigantic difference.

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Einstein 3 years, 1 month ago

I noticed the troll ahperscoach or whatever he goes by, didn't comment on this story, one that sheds a negative light on his real school. Interesting.

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Saguaro_Jayhawk 3 years, 1 month ago

Who is "Cram"? Did not notice a reference to his/her first name.

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oldalum 3 years, 1 month ago

I couldn't find it either, but from what it says I'm guessing Cram is the source from the Dept of Revenue.

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DrPepper 3 years, 1 month ago

I bet the KSU sales at the site have jumped since this news came out. Free advertising for a tax-free sale that could end at anytime. I expect more KSU gear walking the streets this fall.

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chalky 3 years, 1 month ago

The fact that KSU and computer were mentioned in an article together is a stunner.

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Topcitykid10 3 years, 1 month ago

Farmers are still using dial up, it takes longer for the orders to go through

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Geekinout 3 years, 1 month ago

Nothing like seeing a bunch of farm boys buying and wearing the color purple.

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DrPepper 3 years, 1 month ago

Why must farmers be bashed? I, personally, like to eat. I have neither the time, space, or knowledge to grow the food myself.

Ag-related undergrads at KSU are only ~11% of the student population anyway.

The reasons to poke fun at KSU are endless (mascot, final fours, etc.) so there is no need to stick with 3rd-grade farmer jokes.

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jayhawkinmullen 3 years, 1 month ago

A farmer a chicken and a pig are all on a late night stroll when......well you know how it ends.

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Pitthawk34 3 years, 1 month ago

Please finish the story...I wont be able to sleep without the ending.

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omari1911 3 years, 1 month ago

I like eating too... which is why my food money will end up in one of three pockets - those of ConAgra, ADM or Monsanto. Anyway...

MATH 650 at KSU: One horse costs $1000, one pig costs $200, and one chicken costs only $10. A farmer buys 28 animals for $8500. He bought twice as many pigs as horses. How many of each animal did he buy?

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texashawk10 3 years, 1 month ago

You're gonna make everyone work to figure out the answer, NOT COOL!!!!!! Anyways it's 12 pigs ($2400), 10 chickens ($100), and 6 horses ($6000). It really did take me about a minute to figure that one out.

Can't someone come up with a good animal husbandry joke about KState anyway like in Manhattan, KS, their definition of safe sex is marking the sheep that kick. Oh wait, that was on one of the Missouri shirts.

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nckujayhawk 3 years, 1 month ago

Why not keep all of the jobs, money, and other resources in the state of Kansas. The tax revenue will help support education and athletics. The state of Kansas should try harder to retain its money, and people, and invest in Kansas and Kansans. Stop sending jobs, people and money to places like Florida or North Carolina. Give people who watch TV a reason to in state and provide better markets for TV contracts.

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