Handbook for Non-Beverage Alcohol Users
Division of Alcoholic Beverage Control
Kansas Department of Revenue 109 SW 9th Street
Mills Building, 5th Floor Topeka, Kansas 66612
Phone: 785-296-7015 / Fax: 785-296-7185
Website: www.ksrevenue.gov/abcindex.html
Email: Kdor_abc.email@ks.gov
Please report errors, omissions or suggestions for improvement to this handbook to the Division of Alcoholic Beverage Control by telephone at 785-296-7015, by fax at 785-296-7185 or by email to Kdor_abc.email@ks.gov.
Changes made to this handbook since the previous revision(s) have been highlighted with a light blue background.
Table of Contents
- Introduction:
- Definitions
- Non-Beverage Permit
- Non-Beverage User License
- Qualifications for Licensure
- Additional Requirements for Non-Residents
- Reporting Requirement
- Licensing Bond
Introduction
Any alcohol or wine, whether manufactured in Kansas or imported into Kansas from another state or country, is exempt from the Kansas gallonage tax if the alcohol or wine is being used for any of the following purposes:
- Religious organizations using wine solely and exclusively for sacramental purposes. [Subsection (d) of K.S.A. 41-501]
- Manufacturers of any of the following when they are unfit for beverage purposes:
- Patent and proprietary medicines;
- Medicinal, antiseptic and toilet preparations;
- Flavoring extracts, syrups and food products;
- Scientific, industrial and chemical products; or,
- Scientific, chemical, experimental or mechanical purposes.
- Schools and colleges when used for scientific, chemical, experimental or mechanical purposes. [Subsection (k) of K.S.A. 41-501]
- Hospitals, sanitoria and other institutions caring for the sick. [Subsection (k) of K.S.A. 41-501]
- Laboratories using alcohol for non-beverage purposes.
A user of alcohol or wine for non-beverage purposes must obtain either a permit or a license from the Director of ABC in order to be exempt from the tax.
Religious organizations are not required to obtain a license or permit if the following requirements are met:
- The container of wine must be clearly labeled “Wine to be used exclusively for sacramental purposes”.
- The wine must be shipped or consigned to a bona fide priest, pastor, bishop, rabbi, preacher or minister of the gospel. “Bona fide” is not defined.
[K.A.R. 14-17-2]
Definitions
Alcohol
Means the product of distillation of any fermented liquid, whether rectified or diluted, whatever its origin, and includes synthetic ethyl alcohol but does not include denatured alcohol or wood alcohol. [Subsection (a) of K.S.A. 41-102]
Alcoholic candy
Means any candy or other confectionary product with an alcohol content greater than 0.5% alcohol by volume (for purposes of manufacturing), or 1% alcohol by volume (for purposes of sale at retail). [Subsection (b) of K.S.A. 41-102]
Alcoholic liquor
Means alcohol, alcoholic candy, spirits, wine, beer and every liquid or solid, patented or not, containing alcohol, spirits, wine or beer and capable of being consumed as a beverage by a human being, but shall not include cereal malt beverage. [Subsection (a) of K.S.A. 41-2601, referring to subsection (c) of K.S.A. 41-102]
Wine
Means any alcoholic beverage obtained by the normal alcoholic fermentation of the juice of sound, ripe grapes, fruits, berries or other agricultural products, including such beverages containing added alcohol or spirits or containing sugar added for the purpose of correcting natural deficiencies. The term ‘‘wine’’ shall include hard cider and any other product that is commonly known as a subset of wine. [Subsection (ll) of K.S.A. 41-102]
Non-Beverage Permit
A non-beverage permit allows a school, college, hospital, sanatorium or other institution caring for the sick to make a one-time purchase of alcohol or wine to be used for scientific, chemical, experimental, mechanical or medicinal purposes. [Subsection (k) of K.S.A. 41-501]
Effective January 1, 2021, all applications must be submitted to ABC online at https://www.ksabconline.gov. The permit fee is $2. [Subsection (k) of K.S.A. 41-501]
The permit holder must purchase the alcohol or wine from a manufacturer, distributor, microbrewery, microdistillery or farm winery. At the time of purchase, they must provide two copies of their permit to the seller. [Subsection (k) of K.S.A. 41-501]
No tax is imposed on purchases of alcohol or wine by a Non-Beverage Permit holder.
Within 10 days after the purchase, the permit holder attaches a copy of their invoice to their original permit, then returns it to the ABC. Additional purchases require a new permit.
Non-Beverage User License
A non-beverage user license allows a non-beverage user to make multiple purchases of alcohol or wine without the imposition of any Kansas tax during the term of the license. [K.S.A. 41-309]
A non-beverage user means any manufacturer of products containing alcohol or wine in:
[Subsection (e)(1) of K.S.A. 41-501]
The licensee must purchase the alcohol or wine from a manufacturer or distributor. [K.S.A. 41-309].
All applications must be submitted to ABC online at https://www.ksabconline.gov.The applicant must also post either an escrow or surety bond. There is an additional application fee of $30 for new applicants and $10 for renewals. [Subsection (a) of K.S.A. 41-317] There will also be an additional $20 modernization fee assessed to each application type (initial or renewal). [K.S.A. 41-213] The application and modernization fees are not refundable.
Applicants can pay the licensing fee in full or pay half of the license fee plus the application fee and modernization fee with the application and pay the remaining half of the license fee plus a 10 percent surcharge within one year from the date the license was issued. Note: If the remaining license fee and the 10 percent surcharge are not paid when due, the license will automatically be cancelled.
If the licensee is engaged in the business of manufacturing, compounding or preparing pharmaceutical products or similar preparations or products containing alcohol or wine to be sold in both intrastate and interstate commerce, they may purchase at wholesale from manufacturers or distributors not licensed in Kansas and import alcohol or wine either in barrels, drums, casks or other containers.
The term of the license is two years and must be renewed bi-annually. The license term commences on the date specified on the license. [Subsection (n) of K.S.A. 41-310] At the end of the two-year license term, the license is renewable for another two-year term unless sooner suspended or revoked, as long as the licensee and premises continue to meet the requirements of all relevant laws and regulations. [K.S.A. 41-327]
There are 5 classes of licenses based on the maximum number of gallons of alcohol and wine being purchased annually, as follows:
| License Class | Maximum Quantity of Alcohol or Wine Purchased Annually | Bi-annual License Fee | Bond Amount |
|---|---|---|---|
| 1 | 100 gallons | $ 20 | $ 200 |
| 2 | 1,000 gallons | $ 100 | $ 500 |
| 3 | 5,000 gallons | $ 200 | $ 1,000 |
| 4 | 10,000 gallons | $ 400 | $ 5,000 |
| 5 | in excess of 10,000 gallons | $ 1,000 | $ 10,000 |
[K.S.A. 41-309]
Qualifications for Licensure
Partnerships
Each partner in a partnership must meet the licensing qualifications for person ownership listed below. [Subsection (d)(2) of K.S.A. 41-311]
Corporations
Each officer, director and stockholder of the corporation owning at least 25% of the stock of the corporation must meet all of the licensing qualifications for person ownership listed below, except for citizenship requirements. [Subsection (e) of K.S.A. 41-311]
Every corporation seeking a license shall appoint a citizen of the United States and resident of Kansas as process agent to receive service of process and exercise authority of the corporation. The process agent must be satisfactory to and approved by the Director. [Subsection (a) of K.S.A. 41-313]
Limited Liability Companies (LLCs)
LLCs must meet the same qualifications for licensure as a corporation as set forth in K.S.A. 41-311 and K.S.A. 41-311b. [Subsection (a) of K.S.A. 41-311c] However, persons having more than a 5 percent interest in the ownership of the LLC must meet the qualifications for ownership of a person (see below).
The LLC must submit a copy of its Articles of Organization and its Operating Agreement to the Director in a form and manner as prescribed by the Director. [Subsection (b) of K.S.A. 41-311c]
Every LLC seeking a license shall appoint a citizen of the United States and resident of Kansas as process agent to receive service of process and exercise authority of the LLC. The process agent must be satisfactory to and approved by the Director. [Subsection (a) of K.S.A. 41-313]
Trusts
For trusts to be licensed, each grantor, beneficiary and trustee must meet the licensing qualifications for person ownership listed below. However, a beneficiary does not have to be at least 21 years of age. [Subsection (d)(3) of K.S.A. 41-311]
Persons
U.S. Citizenship.
The person must be a U.S. citizen. [Subsection (a)(1) of K.S.A. 41-311]
For either an initial or renewal license, this requirement does not apply to the person's spouse. [Subsection (a)(12) of K.S.A. 41-311]
Felony conviction.
The person cannot have been convicted of a felony in Kansas or any other state or the United States. [Subsection (a)(2) of K.S.A. 41-311]
For an initial license, this requirement also applies to the person's spouse regardless of when the conviction occurred. [Subsection (a)(12) of K.S.A. 41-311]
For a renewal license, this requirement also applies to the person's spouse, but only if the conviction occurred during the time that the person's spouse was licensed under the Liquor Control Act. [Subsection (a)(13) of K.S.A. 41-311]
Previous liquor license revocation
The person cannot have had a license revoked for cause under the Kansas Liquor Control Act or the Kansas Beer and Cereal Malt Beverage Keg Registration Act or the cereal malt beverage laws of Kansas or any other state. However, a revocation will be disregarded if it occurred more than 10 years ago and was the result of a conviction of a misdemeanor. [Subsection (a)(3) of K.S.A. 41-311]
For an initial license, this requirement applies to the person's spouse. For a renewal license, this requirement does not apply to the person's spouse. [Subsection (a)(12) of K.S.A. 41-311]
Conviction for keeping a house of prostitution.
The person cannot have been convicted of being a keeper of a house of prostitution and cannot have forfeited bond to appear in court to answer charges of being a keeper of a house of prostitution. [Subsection (a)(4) of K.S.A. 41-311]
For an initial license, this requirement also applies to the person's spouse regardless of when the conviction occurred. [Subsection (a)(12) of K.S.A. 41-311]
For a renewal license, this requirement also applies to the person's spouse, but only if the conviction occurred during the time that the person's spouse was licensed under the Liquor Control Act. [Subsection (a)(13) of K.S.A. 41-311]
Conviction for owning a gambling house, pandering or crime opposed to decency or morality.
The person cannot have been convicted of being a proprietor of a gambling house, pandering or any other crime opposed to decency and morality and cannot have forfeited bond to appear in court to answer charges for any of these crimes. This includes both felonies and misdemeanors. [Subsection (a)(5) of K.S.A. 41-311]
"Pandering" is not currently used in the Kansas criminal law. Black's Law Dictionary defines a "panderer" as one who solicits for prostitution. The definition of "pander" includes being a "pimp" or procurer of persons to be prostitutes. Most of these acts are currently prohibited by K.S.A. 21-6419 (selling sexual relations) and 21-6420 (promoting the sale of sexual relations).
Crimes involving morality are defined in subsection (o) of K.A.R. 14-14-1 as including:
- prostitution
- procuring any person
- solicitation of a child under 18 years of age for any immoral act involving sex
- possession or sale of narcotics, marijuana, amphetamines or barbiturates
- rape
- incest
- gambling
- adultery
- bigamy
For an initial license, this requirement also applies to the person's spouse regardless of when the conviction occurred. [Subsection (a)(12) of K.S.A. 41-311]
For a renewal license, this requirement also applies to the person's spouse, but only if the conviction occurred during the time that the person's spouse was licensed under the Liquor Control Act. [Subsection (a)(13) of K.S.A. 41-311]
Age requirement
The person must be at least 21 years of age. [Subsection (a)(6) of K.S.A. 41-311]
For either an initial or renewal license, this requirement does not apply to the person's spouse. [Subsection (a)(12) of K.S.A. 41-311]
Employee of ABC
The person cannot be an employee of the Division of Alcoholic Beverage Control. [Subsection (a)(7) of K.S.A. 41-311] For an initial license, this requirement applies to the person's spouse. For a renewal license, this requirement does not apply to the person's spouse. [Subsection (a)(12) of K.S.A. 41-311]
Law enforcement officer.
The person cannot be a commissioned law enforcement official. [Subsection (a)(7) of K.S.A. 41-311] "Official" is not defined in the statute but is interpreted as being any law enforcement officer or head of a law enforcement agency. Since this subsection does not mention jurisdiction, it is assumed that this restriction applies regardless of whether the law enforcement official is located in the same county, city, etc. as the RLS. [Ruling approved by the director on Jan. 19, 2005.]
Persons not commissioned as law enforcement officers, including non-commissioned correctional facility employees, are not included as “law enforcement officers” for purposes of acquiring a license. [Ruling by the director on July 24, 2012]
This requirement does not apply to the person's spouse. [Subsection (a)(12) of K.S.A. 41-311]
Supervisor of law enforcement officers.
The person cannot hold a position that appoints or supervises any law enforcement officer. However, members of the governing body of a city or county (assume this means city council members and county commissioners) are exempt from this restriction. [Subsection (a)(7) of K.S.A. 41-311] Since this subsection does not mention jurisdiction, it is assumed that this restriction applies regardless of whether the person is located in the same county, city, etc. as the potential licensed premises. [Ruling approved by the director on Jan. 19, 2005.]
This requirement does not apply to the person's spouse. [Subsection (a)(12) of K.S.A. 41-311]
Acting as agent of another.
The person cannot intend to act as an agent for another in operating the licensed business. [Subsection (a)(8) of K.S.A. 41-311]
Treatment of persons with a beneficial interest
Any person who has a beneficial interest in the license will be treated as a partner and therefore must also meet all of the qualifications for ownership that a person is required to meet. A lender will be considered to have a beneficial interest if the terms of repayment of the loan are conditioned upon the manufacturer's receipts or profits from the sale of alcoholic liquor. A lessor will be considered to have a beneficial interest if the amount of rent is based on whole or in part on a percentage of the distributor's receipts or profits from the sale of alcoholic liquor. All financing and lease agreements that exclude alcoholic beverage sales are subject to review and approval by the director. [Subsection (d) of K.A.R. 14-14-2]
Conviction of violating the intoxicating liquor laws
The director may deny an initial license or deny renewal an existing license if the person or the person's spouse has been convicted of violating the intoxicating liquor laws of any state or the United States or has forfeited bond to appear in court on charges of any such violation, within 10 years immediately preceding the date of application for an initial license or for renewal of an existing license. [Subsection (a) of K.S.A. 41-330]
Conviction of violating the Cereal Malt Beverage Act
The director may deny an initial license or deny renewal an existing license if the person or the person's spouse has been convicted of violating the laws of any state relating to CMB, within 10 years immediately preceding the date of application for an initial license or for renewal of an existing license. [Subsection (b) of K.S.A. 41-330]
Interest in manufacturer
No manufacturer licensed in Kansas and no out-of-state manufacturer which distributes alcoholic liquors in Kansas may directly or indirectly own or have any interest in a distributor licensed in Kansas. [K.S.A. 41-704]
Previous finding of hidden beneficial interest
The person cannot, after a hearing before the director, be found to have held an undisclosed beneficial interest in any liquor license which was obtained by means of fraud or any false statement made on the application for such license. [Subsection (a)(15) of K.S.A. 41-311]
Additional Requirements for Non-Residents
Each non-resident applicant for a distributor’s license shall file with the Kansas Secretary of State its written irrevocable consent that any action or garnishment proceeding may be commenced against such applicant in the proper court of any county in Kansas in which the cause of action shall arise or in which the plaintiff may reside by the service of process on the resident agent specified in subsection (a), etc. The Irrevocable Consent to Jurisdiction (ABC-160) is used for this purpose. The secretary of state requires a $35 filing fee for this form and charges $1 for each additional file-stamped copy. A file-stamped copy must be provided by the applicant to ABC. [Subsection (b) of K.S.A. 41-313]
If an applicant is not a resident of Kansas, or has not been a resident of Kansas for at least one year prior to the date of application, the applicant shall be required to do the following:
- Submit to a national criminal history record check and provide the director with a legible set of fingerprints, which the director will submit to the Kansas Bureau of Investigation (KBI) and Federal Bureau of Investigation (FBI);
- Disclose to the director any substantial financial interest in any entity that receives proceeds from the sale of alcoholic beverages; and
- Submit a release allowing the director to have access to the applicant’s financial records to verify ownership and ensure that the applicant is not acting as the agent of another.
If the applicant is a corporation, LLC, partnership or trust, each individual officer, director, stockholder, copartner or trustee shall be required to complete the above as well. [K.S.A. 41-311b]
The president and/or secretary of a corporation organized under the law of any other state or foreign country must sign a resolution stating that he/she has authority to sign the Irrevocable Consent to Jurisdiction form (ABC-160). [Subsection (b) of K.S.A. 41-313] However, ABC will accept signatures of other corporate officers if accompanied by a letter stating (1) why the president and/or secretary are not available to sign the form, and (2) that the officers who do sign the form have authority to do so on behalf of the corporation. [Ruling made by ABC attorney on July 6, 2005.]
Reporting Requirement
At the end of each month, the licensee must complete and file the ABC-837 Kansas Non-Beverage User Monthly Report of Purchases and submit it to the ABC by the 15th day of the following month in which alcohol or wine was purchased.
Licensing Bond
Non-beverage user licensees must post and maintain a licensing bond in one of the following amounts, dependent upon the class of the license:
- Class 1 = $200
- Class 2 = $500
- Class 3 = $1,000
- Class 4 = $5,000
- Class 5 = $10,000
[Subsection (g)(5) of K.S.A. 41-317]
Revised 06/2021
LIQUOR TAX OR LIQUOR BOND QUESTIONS?
Contact the Miscellaneous Tax Segment at 785-368-8222, Option #5 then option #4 or send email to KDOR_Miscellaneous.Tax@KS.GOV