A provision in Kansas's new sports authority law eliminates sales tax on materials and services used to build sports facilities—but most retail suppliers don't know it exists.
Most Kansas retailers and suppliers have no idea that HB2466, the bill authorizing the Kansas Sports Authority Act and STAR bond projects, contains a provision that fundamentally changes how sales tax applies to a specific category of construction work. That provision is worth understanding, especially if your business sells materials, equipment, machinery, or services to contractors working on sports facility projects.
Under new Section 5(c)(3) of HB2466 (found on Page 5), contractors and suppliers selling materials, machinery, equipment, or services for the construction or equipping of authority sports facilities are exempt from all state and local sales and use taxes. This is a full exemption—not a reduced rate or a partial credit, but a complete removal of sales tax liability.
The exemption operates through an exemption certificate system. The Kansas Sports Authority obtains an exemption certificate from the state and furnishes it to contractors. Contractors then pass the certificate number to all suppliers in their chain—manufacturers, wholesalers, distributors, and retailers. Each supplier in the chain uses that certificate number to eliminate their sales tax liability on those specific sales.
If you sell to contractors or suppliers working on sports facility construction projects authorized under this act, you need to know how to process these exemption certificates. The exemption applies across the entire supply chain, meaning it's not just the primary contractor who avoids sales tax—it flows through to every vendor providing materials or services for that project.
For retailers and distributors, this means you'll need procedures in place to accept, verify, and document exemption certificates. You'll also need to understand which projects and which purchases qualify. Not all construction is covered—only work on sports facilities authorized under the Kansas Sports Authority Act qualifies.
The exemption became effective upon publication in the Kansas Register. It remains in effect until the Kansas Sports Authority repays all bonds in full. Once bond repayment is complete, the exemption automatically terminates. This means the tax treatment of these projects is temporary and tied directly to the financing structure.
For your business, this creates both an opportunity and a compliance requirement. You may see increased sales volume to projects using these exemption certificates, but you must properly document and process each one to avoid tax liability on your end.
If your business supplies materials or services to construction contractors in Kansas, review your sales tax procedures now. Make sure your team knows how to accept and process exemption certificates for sports facility projects. Keep clear records of which sales used exemption certificates and which projects they applied to. If you're unsure whether a specific project qualifies, contact the Kansas Sports Authority or your tax advisor before processing the sale.
The Kansas Retailers Association and other trade groups have published detailed guidance on managing sales tax exemptions in construction contexts. A free, business-specific summary of HB2466's tax provisions is available through most Kansas retail and construction trade associations.