Session of 1998
HOUSE BILL No. 2643
By Committee on Taxation
1-16
9
AN ACT enacting the sales tax relief and
reform act of 1998; amending
10 K.S.A. 79-3602,
79-3603, 79-3606, 79-3634, 79-3635 and 79-3640 and
11 repealing the existing
sections.
12
13 Be it enacted by the Legislature of the
State of Kansas:
14 Section 1. K.S.A. 79-3602 is
hereby amended to read as follows:
15 79-3602. (a) ``Persons'' means any
individual, firm, copartnership, joint
16 adventure, association, corporation, estate
or trust, receiver or trustee, or
17 any group or combination acting as a unit,
and the plural as well as the
18 singular number; and shall specifically
mean any city or other political
19 subdivision of the state of Kansas engaging
in a business or providing a
20 service specifically taxable under the
provisions of this act.
21 (b) ``Director'' means the
state director of taxation.
22 (c) ``Sale'' or ``sales''
means the exchange of tangible personal prop-
23 erty, as well as the sale thereof for
money, and every transaction, condi-
24 tional or otherwise, for a consideration,
constituting a sale, including the
25 sale or furnishing of electrical energy,
gas, water, services or entertain-
26 ment taxable under the terms of this act
and including, except as provided
27 in the following provision, the sale of the
use of tangible personal property
28 by way of a lease, license to use or the
rental thereof regardless of the
29 method by which the title, possession or
right to use the tangible personal
30 property is transferred. The term ``sale''
or ``sales'' shall not mean the sale
31 of the use of any tangible personal
property used as a dwelling by way of
32 a lease or rental thereof for a term of
more than 28 consecutive days.
33 (d) ``Retailer'' means a
person regularly engaged in the business of
34 selling tangible personal property at
retail or furnishing electrical energy,
35 gas, water, services or entertainment, and
selling only to the user or con-
36 sumer and not for resale.
37 (e) ``Retail sale'' or ``sale
at retail'' means all sales made within the
38 state of tangible personal property or
electrical energy, gas, water, services
39 or entertainment for use or consumption and
not for resale.
40 (f) ``Tangible personal
property'' means corporeal personal property.
41 Such term shall include any computer
software program which is not a
42 custom computer software program, as
described by subsection (s) of
43 K.S.A. 79-3603, and amendments thereto.
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1 (g) ``Selling price''
means the total cost to the consumer exclusive of
2 discounts allowed and credited, but
including freight and transportation
3 charges from retailer to
consumer.
4 (h) ``Gross receipts''
means the total selling price or the amount re-
5 ceived as defined in this act, in
money, credits, property or other consid-
6 eration valued in money from sales at
retail within this state; and em-
7 braced within the provisions of this
act. The taxpayer, may take credit in
8 the report of gross receipts for: (1)
An amount equal to the selling price
9 of property returned by the purchaser
when the full sale price thereof,
10 including the tax collected, is refunded in
cash or by credit; (2) an amount
11 equal to the allowance given for the
trade-in of property.
12 (i) ``Taxpayer'' means any
person obligated to account to the director
13 for taxes collected under the terms of this
act.
14 (j) ``Isolated or occasional
sale'' means the nonrecurring sale of tan-
15 gible personal property, or services
taxable hereunder by a person not
16 engaged at the time of such sale in the
business of selling such property
17 or services. Any religious organization
which makes a nonrecurring sale
18 of tangible personal property acquired for
the purpose of resale shall be
19 deemed to be not engaged at the time of
such sale in the business of
20 selling such property. Such term shall
include: (1) Any sale by a bank,
21 savings and loan institution, credit union
or any finance company licensed
22 under the provisions of the Kansas uniform
consumer credit code of tan-
23 gible personal property which has been
repossessed by any such entity;
24 and (2) any sale of tangible personal
property made by an auctioneer or
25 agent on behalf of not more than two
principals or households if such
26 sale is nonrecurring and any such principal
or household is not engaged
27 at the time of such sale in the business of
selling tangible personal prop-
28 erty.
29 (k) ``Service'' means those
services described in and taxed under the
30 provisions of K.S.A. 79-3603 and amendments
thereto.
31 (l) ``Ingredient or component
part'' means tangible personal property
32 which is necessary or essential to, and
which is actually used in and be-
33 comes an integral and material part of
tangible personal property or serv-
34 ices produced, manufactured or compounded
for sale by the producer,
35 manufacturer or compounder in its regular
course of business. The fol-
36 lowing items of tangible personal property
are hereby declared to be
37 ingredients or component parts, but the
listing of such property shall not
38 be deemed to be exclusive nor shall such
listing be construed to be a
39 restriction upon, or an indication of, the
type or types of property to be
40 included within the definition of
``ingredient or component part'' as
41 herein set forth:
42 (1) Containers, labels and
shipping cases used in the distribution of
43 property produced, manufactured or
compounded for sale which are not
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1 to be returned to the producer,
manufacturer or compounder for reuse.
2 (2) Containers, labels,
shipping cases, paper bags, drinking straws,
3 paper plates, paper cups, twine and
wrapping paper used in the distri-
4 bution and sale of property taxable
under the provisions of this act by
5 wholesalers and retailers and which
is not to be returned to such whole-
6 saler or retailer for reuse.
7 (3) Seeds and seedlings
for the production of plants and plant prod-
8 ucts produced for resale.
9 (4) Paper and ink used
in the publication of newspapers.
10 (5) Fertilizer used in the
production of plants and plant products
11 produced for resale.
12 (6) Feed for animals, fowl
and aquatic plants and animals, the primary
13 purpose of which is use in agriculture or
aquaculture, as defined in K.S.A.
14 47-1901, and amendments thereto, the
production of food for human
15 consumption, the production of animal,
dairy, poultry or aquatic plant
16 and animal products, fiber, fur, or the
production of offspring for use for
17 any such purpose or purposes.
18 (m) ``Property which is
consumed'' means tangible personal property
19 which is essential or necessary to and
which is used in the actual process
20 of and ;mmediately
consumed, depleted or dissipated within one year
in
21 (1) the production, manufacture,
processing, mining, drilling, refining or
22 compounding of tangible personal property,
(2) the providing of services
23 or (3) the irrigation of crops, for sale in
the regular course of business,
24 and which is not reusable for such purpose.
The following ;tems of tan-
25 gible personal property are hereby
declared to be ``consumed'' but the
26 listing of such property shall not
be deemed to be exclusive nor shall such
27 listing be construed to be a
restriction upon or an indication of, the type
28 or types of property to be included
within the definition of ``property
29 which is consumed'' as herein set
forth is a listing of tangible personal
30 property which, by way of illustration
but not of limitation, qualify as
31 property which is consumed:
32 (A) Insecticides, herbicides,
germicides, pesticides, fungicides, fu-
33 migants, antibiotics, biologicals,
pharmaceuticals, vitamins and chemicals
34 for use in commercial or agricultural
production, processing or storage of
35 fruit, vegetables, feeds, seeds, grains,
animals or animal products whether
36 fed, injected, applied, combined with or
otherwise used; and
37 (B) electricity, gas and
water; and
38 (C) petroleum products,
lubricants, chemicals, solvents, sorbents, re-
39 agents and catalyst.
40 (n) ``Political subdivision''
means any municipality, agency or subdi-
41 vision of the state which is, or shall
hereafter be, authorized to levy taxes
42 upon tangible property within the state or
which certifies a levy to a
43 municipality, agency or subdivision of the
state which is, or shall hereafter
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1 be, authorized to levy taxes upon
tangible property within the state. Such
2 term also shall include any public
building commission, housing, airport,
3 port, metropolitan transit or similar
authority established pursuant to law.
4 (o) ``Municipal
corporation'' means any city incorporated under the
5 laws of Kansas.
6 (p) ``Quasi-municipal
corporation'' means any county, township,
7 school district, drainage district or
any other governmental subdivision in
8 the state of Kansas having authority
to receive or hold moneys or funds.
9 (q) ``Nonprofit blood
bank'' means any nonprofit place, organization,
10 institution or establishment that is
operated wholly or in part for the
11 purpose of obtaining, storing, processing,
preparing for transfusing, fur-
12 nishing, donating or distributing human
blood or parts or fractions of
13 single blood units or products derived from
single blood units, whether
14 or not any remuneration is paid therefor,
or whether such procedures are
15 done for direct therapeutic use or for
storage for future use of such prod-
16 ucts.
17 (r) ``Contractor,
subcontractor or repairman'' means a person who
18 agrees to furnish and install tangible
personal property or install tangible
19 personal property at a specified price. A
person who maintains an inven-
20 tory of tangible personal property which
enables such person to furnish
21 and install the tangible personal property
or install the tangible personal
22 property shall not be deemed a contractor,
subcontractor or repairman
23 but shall be deemed a retailer.
24 Sec. 2. K.S.A. 79-3603 is
hereby amended to read as follows: 79-
25 3603. For the privilege of engaging in the
business of selling tangible
26 personal property at retail in this state
or rendering or furnishing any of
27 the services taxable under this act, there
is hereby levied and there shall
28 be collected and paid a tax at the rate of
4.9%:
29 (a) The gross receipts
received from the sale of tangible personal
30 property at retail within this state;
31 (b) (1) the gross receipts
from intrastate telephone or telegraph serv-
32 ices and (2) the gross receipts received
from the sale of interstate tele-
33 phone or telegraph services, which (A)
originate within this state and
34 terminate outside the state and are billed
to a customer's telephone num-
35 ber or account in this state; or (B)
originate outside this state and ter-
36 minate within this state and are billed to
a customer's telephone number
37 or account in this state except that the
sale of interstate telephone or
38 telegraph service does not include: (A) Any
interstate incoming or out-
39 going wide area telephone service or wide
area transmission type service
40 which entitles the subscriber to make or
receive an unlimited number of
41 communications to or from persons having
telephone service in a speci-
42 fied area which is outside the state in
which the station provided this
43 service is located; (B) any interstate
private communications service to
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1 the persons contracting for the
receipt of that service that entitles the
2 purchaser to exclusive or priority
use of a communications channel or
3 group of channels between exchanges;
(C) any value-added nonvoice
4 service in which computer processing
applications are used to act on the
5 form, content, code or protocol of
the information to be transmitted; (D)
6 any telecommunication service to a
provider of telecommunication serv-
7 ices which will be used to render
telecommunications services, including
8 carrier access services; or (E) any
service or transaction defined in this
9 section among entities classified as
members of an affiliated group as
10 provided by federal law (U.S.C. Section
1504);
11 (c) the gross receipts from
the sale or furnishing of gas, water, elec-
12 tricity and heat, which sale is not
otherwise exempt from taxation under
13 the provisions of this act, and whether
furnished by municipally or pri-
14 vately owned utilities;
15 (d) the gross receipts from
the sale of meals or drinks furnished at
16 any private club, drinking establishment,
catered event, restaurant, eating
17 house, dining car, hotel, drugstore or
other place where meals or drinks
18 are regularly sold to the public;
19 (e) the gross receipts from
the sale of admissions to any place pro-
20 viding amusement, entertainment or
recreation services including admis-
21 sions to state, county, district and local
fairs, but such tax shall not be
22 levied and collected upon the gross
receipts received from sales of ad-
23 missions to any cultural and historical
event which occurs triennially;
24 (f) the gross receipts from
the operation of any coin-operated device
25 dispensing or providing tangible personal
property, amusement or other
26 services except laundry services, whether
automatic or manually operated;
27 (g) the gross receipts from
the service of renting of rooms by hotels,
28 as defined by K.S.A. 36-501 and amendments
thereto, or by accommo-
29 dation brokers, as defined by K.S.A.
12-1692, and amendments thereto;
30 (h) the gross receipts from
the service of renting or leasing of tangible
31 personal property except such tax
shall not apply to the renting or leasing
32 of machinery, equipment or other
personal property owned by a city and
33 purchased from the proceeds of
industrial revenue bonds issued prior to
34 July 1, 1973, in accordance with
the provisions of K.S.A. 12-1740 through
35 12-1749, and amendments thereto,
and any city or lessee renting or leas-
36 ing such machinery, equipment or
other personal property purchased
37 with the proceeds of such bonds who
shall have paid a tax under the
38 provisions of this section upon
sales made prior to July 1, 1973, shall be
39 entitled to a refund from the sales
tax refund fund of all taxes paid
40 thereon;
41 (i) the gross receipts from
the rendering of dry cleaning, pressing,
42 dyeing and laundry services except laundry
services rendered through a
43 coin-operated device whether automatic or
manually operated;
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1 (j) the gross receipts
from the rendering of the services of washing
2 and washing and waxing of
vehicles;
3 (k) the gross receipts
from cable, community antennae and other sub-
4 scriber radio and television
services;
5 (l) the gross receipts
received from the sales of tangible personal
6 property to all contractors,
subcontractors or repairmen of materials and
7 supplies for use by them in erecting
structures for others, or building on,
8 or otherwise improving, altering, or
repairing real or personal property
9 of others;
10 (m) the gross receipts
received from fees and charges by public and
11 private clubs, drinking establishments,
organizations and businesses for
12 participation in sports, games and other
recreational activities, but such
13 tax shall not be levied and collected upon
the gross receipts received from:
14 (1) Fees and charges by any political
subdivision, by any organization
15 exempt from property taxation pursuant
to paragraph ninth of K.S.A. 79-
16 201, and amendments thereto, or
by any youth recreation organization
17 exclusively providing services to persons
18 years of age or younger which
18 is exempt from federal income taxation
pursuant to section 501(c)(3) of
19 the federal internal revenue code of 1986,
for participation in sports,
20 games and other recreational activities;
and (2) entry fees and charges for
21 participation in a special event or
tournament sanctioned by a national
22 sporting association to which spectators
are charged an admission which
23 is taxable pursuant to subsection (e);
24 (n) the gross receipts
received from dues charged by public and pri-
25 vate clubs, drinking establishments,
organizations and businesses, pay-
26 ment of which entitles a member to the use
of facilities for recreation or
27 entertainment, but such tax shall not be
levied and collected upon the
28 gross receipts received from dues
charged by any organization exempt
29 from property taxation pursuant to
paragraph ninth of K.S.A. 79-201,
30 and amendments thereto;
31 (o) the gross receipts
received from the isolated or occasional sale of
32 motor vehicles or trailers but not
including: (1) The transfer of motor
33 vehicles or trailers by a person to a
corporation solely in exchange for
34 stock securities in such corporation; or
(2) the transfer of motor vehicles
35 or trailers by one corporation to another
when all of the assets of such
36 corporation are transferred to such other
corporation; or (3) the sale of
37 motor vehicles or trailers which are
subject to taxation pursuant to the
38 provisions of K.S.A. 79-5101 et seq., and
amendments thereto, by an
39 immediate family member to another
immediate family member. For the
40 purposes of clause (3), immediate family
member means lineal ascendants
41 or descendants, and their spouses. In
determining the base for computing
42 the tax on such isolated or occasional
sale, the fair market value of any
43 motor vehicle or trailer traded in by the
purchaser to the seller may be
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1 deducted from the selling price;
2 (p) the gross receipts
received for the service of installing or applying
3 tangible personal property which when
installed or applied is not being
4 held for sale in the regular course
of business, and whether or not such
5 tangible personal property when
installed or applied remains tangible
6 personal property or becomes a part
of real estate, except that no tax shall
7 be imposed upon the service of
installing or applying tangible personal
8 property in connection with the
original construction of a building or
9 facility or the construction,
reconstruction, restoration, replacement or
10 repair of a bridge or highway.
11 For the purposes of this
subsection:
12 (1) ``Original construction''
shall mean the first or initial construction
13 of a new building or facility. The term
``original construction'' shall include
14 the addition of an entire room or floor to
any existing building or facility,
15 the completion of any unfinished portion of
any existing building or fa-
16 cility and the restoration, reconstruction
or replacement of a building or
17 facility damaged or destroyed by fire,
flood, tornado, lightning, explosion
18 or earthquake, but such term shall not
include replacement, remodeling,
19 restoration, renovation or reconstruction
under any other circumstances;
20 (2) ``building'' shall mean
only those enclosures within which individ-
21 uals customarily live or are employed, or
which are customarily used to
22 house machinery, equipment or other
property, and including the land
23 improvements immediately surrounding such
building; and
24 (3) ``facility'' shall mean a
mill, plant, refinery, oil or gas well, water
25 well, feedlot or any conveyance,
transmission or distribution line of any
26 cooperative, nonprofit, membership
corporation organized under or sub-
27 ject to the provisions of K.S.A. 17-4601 et
seq., and amendments thereto,
28 or of any municipal or quasi-municipal
corporation, including the land
29 improvements immediately surrounding such
facility;
30 (q) the gross receipts
received for the service of repairing, servicing,
31 altering or maintaining tangible personal
property, except computer soft-
32 ware described in subsection (s), which
when such services are rendered
33 is not being held for sale in the regular
course of business, and whether
34 or not any tangible personal property is
transferred in connection there-
35 with. The tax imposed by this subsection
shall be applicable to the services
36 of repairing, servicing, altering or
maintaining an item of tangible personal
37 property which has been and is fastened to,
connected with or built into
38 real property;
39 (r) the gross receipts from
fees or charges made under service or
40 maintenance agreement contracts for
services, charges for the providing
41 of which are taxable under the provisions
of subsection (p) or (q);
42 (s) the gross receipts
received from the sale of computer software,
43 and the sale of the services of modifying,
altering, updating or maintaining
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1 computer software. As used in this
subsection, ``computer software''
2 means information and directions
loaded into a computer which dictate
3 different functions to be performed
by the computer. Computer software
4 includes any canned or prewritten
program which is held or existing for
5 general or repeated sale, even if the
program was originally developed
6 for a single end user as custom
computer software. The sale of computer
7 software or services does not
include: (1) The initial sale of any custom
8 computer program which is originally
developed for the exclusive use of
9 a single end user; or (2) those
services rendered in the modification of
10 computer software when the modification is
developed exclusively for a
11 single end user only to the extent of the
modification and only to the
12 extent that the actual amount charged for
the modification is separately
13 stated on invoices, statements and other
billing documents provided to
14 the end user. The services of modification,
alteration, updating and main-
15 tenance of computer software shall only
include the modification, alter-
16 ation, updating and maintenance of computer
software taxable under this
17 subsection whether or not the services are
actually provided; and
18 (t) the gross receipts
received for telephone answering services, in-
19 cluding mobile phone services, beeper
services and other similar services.
20 Sec. 3. K.S.A. 79-3606 is
hereby amended to read as follows: 79-
21 3606. The following shall be exempt from
the tax imposed by this act:
22 (a) All sales of
motor-vehicle fuel or other articles upon which a sales
23 or excise tax has been paid, not subject to
refund, under the laws of this
24 state except cigarettes as defined by
K.S.A. 79-3301 and amendments
25 thereto, cereal malt beverages and malt
products as defined by K.S.A. 79-
26 3817 and amendments thereto, including
wort, liquid malt, malt syrup
27 and malt extract, which is not subject to
taxation under the provisions of
28 K.S.A. 79-41a02 and amendments thereto, and
motor vehicles as defined
29 by K.S.A. 79-1017 and amendments
thereto;
30 (b) all sales of tangible
personal property or service, including the
31 renting and leasing of tangible personal
property, purchased directly by
32 the state of Kansas, a political
subdivision thereof, other than a school or
33 educational institution, or purchased by a
public or private nonprofit hos-
34 pital or nonprofit blood, tissue or organ
bank and used exclusively for
35 state, political subdivision, hospital or
nonprofit blood, tissue or organ
36 bank purposes, except when: (1) Such state
or hospital is engaged or
37 proposes to engage in any business
specifically taxable under the provi-
38 sions of this act and such items of
tangible personal property or service
39 are used or proposed to be used in such
business, or (2) such political
40 subdivision is engaged or proposes to
engage in the business of furnishing
41 gas, water, electricity or heat to others
and such items of personal prop-
42 erty or service are used or proposed to be
used in such business;
43 (c) all sales of tangible
personal property or services, including the
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1 renting and leasing of tangible
personal property, purchased directly by
2 a public or private elementary or
secondary school or public or private
3 nonprofit educational institution and
used primarily by such school or
4 institution for nonsectarian programs
and activities provided or sponsored
5 by such school or institution or in
the erection, repair or enlargement of
6 buildings to be used for such
purposes. The exemption herein provided
7 shall not apply to erection,
construction, repair, enlargement or equip-
8 ment of buildings used primarily for
human habitation;
9 (d) all sales of
tangible personal property or services purchased by a
10 contractor for the purpose of constructing,
equipping, reconstructing,
11 maintaining, repairing, enlarging,
furnishing or remodeling facilities for
12 any public or private nonprofit hospital,
public or private elementary or
13 secondary school or a public or private
nonprofit educational institution,
14 which would be exempt from taxation under
the provisions of this act if
15 purchased directly by such hospital, school
or educational institution; and
16 all sales of tangible personal property or
services purchased by a contrac-
17 tor for the purpose of constructing,
equipping, reconstructing, maintain-
18 ing, repairing, enlarging, furnishing or
remodeling facilities for any polit-
19 ical subdivision of the state, the total
cost of which is paid from funds of
20 such political subdivision and which would
be exempt from taxation under
21 the provisions of this act if purchased
directly by such political subdivision.
22 Nothing in this subsection or in the
provisions of K.S.A. 12-3418 and
23 amendments thereto, shall be deemed to
exempt the purchase of any
24 construction machinery, equipment or tools
used in the constructing,
25 equipping, reconstructing, maintaining,
repairing, enlarging, furnishing
26 or remodeling facilities for any political
subdivision of the state. As used
27 in this subsection, K.S.A. 12-3418 and
79-3640, and amendments thereto,
28 ``funds of a political subdivision'' shall
mean general tax revenues, the
29 proceeds of any bonds and gifts or
grants-in-aid. Gifts shall not mean
30 funds used for the purpose of constructing,
equipping, reconstructing,
31 repairing, enlarging, furnishing or
remodeling facilities which are to be
32 leased to the donor. When any political
subdivision of the state, public or
33 private nonprofit hospital, public or
private elementary or secondary
34 school or public or private nonprofit
educational institution shall contract
35 for the purpose of constructing, equipping,
reconstructing, maintaining,
36 repairing, enlarging, furnishing or
remodeling facilities, it shall obtain
37 from the state and furnish to the
contractor an exemption certificate for
38 the project involved, and the contractor
may purchase materials for in-
39 corporation in such project. The contractor
shall furnish the number of
40 such certificate to all suppliers from whom
such purchases are made, and
41 such suppliers shall execute invoices
covering the same bearing the num-
42 ber of such certificate. Upon completion of
the project the contractor
43 shall furnish to the political subdivision,
hospital, school or educational
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1 institution concerned a sworn
statement, on a form to be provided by the
2 director of taxation, that all
purchases so made were entitled to exemption
3 under this subsection. As an
alternative to the foregoing procedure, any
4 such contracting entity may apply to
the secretary of revenue for agent
5 status for the sole purpose of
issuing and furnishing project exemption
6 certificates to contractors pursuant
to rules and regulations adopted by
7 the secretary establishing conditions
and standards for the granting and
8 maintaining of such status. All
invoices shall be held by the contractor for
9 a period of five years and shall be
subject to audit by the director of
10 taxation. If any materials purchased under
such a certificate are found
11 not to have been incorporated in the
building or other project or not to
12 have been returned for credit or the sales
or compensating tax otherwise
13 imposed upon such materials which will not
be so incorporated in the
14 building or other project reported and paid
by such contractor to the
15 director of taxation not later than the
20th day of the month following
16 the close of the month in which it shall be
determined that such materials
17 will not be used for the purpose for which
such certificate was issued, the
18 political subdivision, hospital, school or
educational institution concerned
19 shall be liable for tax on all materials
purchased for the project, and upon
20 payment thereof it may recover the same
from the contractor together
21 with reasonable attorney fees. Any
contractor or any agent, employee or
22 subcontractor thereof, who shall use or
otherwise dispose of any materials
23 purchased under such a certificate for any
purpose other than that for
24 which such a certificate is issued without
the payment of the sales or
25 compensating tax otherwise imposed upon
such materials, shall be guilty
26 of a misdemeanor and, upon conviction
therefor, shall be subject to the
27 penalties provided for in subsection (g) of
K.S.A. 79-3615, and amend-
28 ments thereto;
29 (e) all sales of tangible
personal property or services purchased by a
30 contractor for the erection, repair or
enlargement of buildings or other
31 projects for the government of the United
States, its agencies or instru-
32 mentalities, which would be exempt from
taxation if purchased directly
33 by the government of the United States, its
agencies or instrumentalities.
34 When the government of the United States,
its agencies or instrumen-
35 talities shall contract for the erection,
repair, or enlargement of any build-
36 ing or other project, it shall obtain from
the state and furnish to the
37 contractor an exemption certificate for the
project involved, and the con-
38 tractor may purchase materials for
incorporation in such project. The
39 contractor shall furnish the number of such
certificates to all suppliers
40 from whom such purchases are made, and such
suppliers shall execute
41 invoices covering the same bearing the
number of such certificate. Upon
42 completion of the project the contractor
shall furnish to the government
43 of the United States, its agencies or
instrumentalities concerned a sworn
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1 statement, on a form to be provided
by the director of taxation, that all
2 purchases so made were entitled to
exemption under this subsection. As
3 an alternative to the foregoing
procedure, any such contracting entity may
4 apply to the secretary of revenue for
agent status for the sole purpose of
5 issuing and furnishing project
exemption certificates to contractors pur-
6 suant to rules and regulations
adopted by the secretary establishing con-
7 ditions and standards for the
granting and maintaining of such status. All
8 invoices shall be held by the
contractor for a period of five years and shall
9 be subject to audit by the director
of taxation. Any contractor or any agent,
10 employee or subcontractor thereof, who
shall use or otherwise dispose of
11 any materials purchased under such a
certificate for any purpose other
12 than that for which such a certificate is
issued without the payment of
13 the sales or compensating tax otherwise
imposed upon such materials,
14 shall be guilty of a misdemeanor and, upon
conviction therefor, shall be
15 subject to the penalties provided for in
subsection (g) of K.S.A. 79-3615
16 and amendments thereto;
17 (f) tangible personal
property purchased by a railroad or public utility
18 for consumption or movement directly and
immediately in interstate
19 commerce, and services for the
installation or application thereof;
20 (g) sales of aircraft
including remanufactured and modified aircraft,
21 sales of aircraft repair, modification and
replacement parts and sales of
22 services employed in the remanufacture,
modification and repair of air-
23 craft sold to persons using such aircraft
and aircraft repair, modification
24 and replacement parts as certified or
licensed carriers of persons or prop-
25 erty in interstate or foreign commerce
under authority of the laws of the
26 United States or any foreign government or
sold to any foreign govern-
27 ment or agency or instrumentality of such
foreign government and all
28 sales of aircraft, aircraft parts,
replacement parts and services employed
29 in the remanufacture, modification and
repair of aircraft for use outside
30 of the United States;
31 (h) all rentals of
nonsectarian textbooks by public or private elemen-
32 tary or secondary schools;
33 (i) the lease or rental of
all films, records, tapes, or any type of sound
34 or picture transcriptions used by motion
picture exhibitors;
35 (j) meals served without
charge or food used in the preparation of
36 such meals to employees of any restaurant,
eating house, dining car, hotel,
37 drugstore or other place where meals or
drinks are regularly sold to the
38 public if such employees' duties are
related to the furnishing or sale of
39 such meals or drinks;
40 (k) any motor vehicle,
semitrailer or pole trailer, as such terms are
41 defined by K.S.A. 8-126 and amendments
thereto, or aircraft sold and
42 delivered in this state to a bona fide
resident of another state, which motor
43 vehicle, semitrailer, pole trailer or
aircraft is not to be registered or based
HB 2643
12
1 in this state and which vehicle,
semitrailer, pole trailer or aircraft will not
2 remain in this state more than 10
days;
3 (l) all isolated or
occasional sales of tangible personal property, serv-
4 ices, substances or things, except
isolated or occasional sale of motor
5 vehicles specifically taxed under the
provisions of subsection (o) of K.S.A.
6 79-3603 and amendments thereto;
7 (m) all sales of
tangible personal property which become an ingre-
8 dient or component part of tangible
personal property or services pro-
9 duced, manufactured or compounded for
ultimate sale at retail within or
10 without the state of Kansas; and any such
producer, manufacturer or
11 compounder may obtain from the director of
taxation and furnish to the
12 supplier an exemption certificate number
for tangible personal property
13 for use as an ingredient or component part
of the property or services
14 produced, manufactured or compounded;
15 (n) all sales of tangible
personal property which is consumed in the
16 production, manufacture, processing,
mining, drilling, refining or com-
17 pounding of tangible personal property, the
treating of by-products or
18 wastes derived from any such production
process, the providing of serv-
19 ices or the irrigation of crops for
ultimate sale at retail within or without
20 the state of Kansas; and any purchaser of
such property may obtain from
21 the director of taxation and furnish to the
supplier an exemption certifi-
22 cate number for tangible personal property
for consumption in such pro-
23 duction, manufacture, processing, mining,
drilling, refining, compound-
24 ing, treating, irrigation and in providing
such services;
25 (o) all sales of animals,
fowl and aquatic plants and animals, the pri-
26 mary purpose of which is use in agriculture
or aquaculture, as defined in
27 K.S.A. 47-1901, and amendments thereto, the
production of food for
28 human consumption, the production of
animal, dairy, poultry or aquatic
29 plant and animal products, fiber or fur, or
the production of offspring for
30 use for any such purpose or purposes;
31 (p) all sales of drugs, as
defined by K.S.A. 65-1626 and amendments
32 thereto, dispensed pursuant to a
prescription order, as defined by K.S.A.
33 65-1626 and amendments thereto, by a
licensed practitioner;
34 (q) all sales of insulin
dispensed by a person licensed by the state
35 board of pharmacy to a person for treatment
of diabetes at the direction
36 of a person licensed to practice medicine
by the board of healing arts;
37 (r) all sales of prosthetic
and orthopedic appliances prescribed in
38 writing by a person licensed to practice
the healing arts, dentistry or
39 optometry. For the purposes of this
subsection, the term prosthetic and
40 orthopedic appliances means any apparatus,
instrument, device, or equip-
41 ment used to replace or substitute for any
missing part of the body; used
42 to alleviate the malfunction of any part of
the body; or used to assist any
43 disabled person in leading a normal life by
facilitating such person's mo-
HB 2643
13
1 bility; such term shall include
accessories attached or to be attached to
2 motor vehicles, but such term shall
not include motor vehicles or personal
3 property which when installed becomes
a fixture to real property;
4 (s) all sales of
tangible personal property or services purchased di-
5 rectly by a groundwater management
district organized or operating un-
6 der the authority of K.S.A. 82a-1020
et seq. and amendments thereto,
7 which property or services are used
in the operation or maintenance of
8 the district;
9 (t) all sales of farm
machinery and equipment or aquaculture ma-
10 chinery and equipment, repair and
replacement parts therefor and serv-
11 ices performed in the repair and
maintenance of such machinery and
12 equipment. For the purposes of this
subsection the term ``farm machinery
13 and equipment or aquaculture machinery and
equipment'' shall include
14 machinery and equipment used in the
operation of Christmas tree farm-
15 ing but shall not include any passenger
vehicle, truck, truck tractor, trailer,
16 semitrailer or pole trailer, other than a
farm trailer, as such terms are
17 defined by K.S.A. 8-126 and amendments
thereto. Each purchaser of
18 farm machinery and equipment or aquaculture
machinery and equipment
19 exempted herein must certify in writing on
the copy of the invoice or
20 sales ticket to be retained by the seller
that the farm machinery and
21 equipment or aquaculture machinery and
equipment purchased will be
22 used only in farming, ranching or
aquaculture production. Farming or
23 ranching shall include the operation of a
feedlot and farm and ranch work
24 for hire and the operation of a
nursery;
25 (u) all leases or rentals of
tangible personal property used as a dwell-
26 ing if such tangible personal property is
leased or rented for a period of
27 more than 28 consecutive days;
28 (v) all sales of food
products to any contractor for use in preparing
29 meals for delivery to homebound elderly
persons over 60 years of age and
30 to homebound disabled persons or to be
served at a group-sitting at a
31 location outside of the home to otherwise
homebound elderly persons
32 over 60 years of age and to otherwise
homebound disabled persons, as
33 all or part of any food service project
funded in whole or in part by
34 government or as part of a private
nonprofit food service project available
35 to all such elderly or disabled persons
residing within an area of service
36 designated by the private nonprofit
organization, and all sales of food
37 products for use in preparing meals for
consumption by indigent or home-
38 less individuals whether or not such meals
are consumed at a place des-
39 ignated for such purpose;
40 (w) all sales of natural gas,
electricity, heat and water delivered
41 through mains, lines or pipes: (1) To
residential premises for noncom-
42 mercial use by the occupant of such
premises; (2) for agricultural use and
43 also, for such use, all sales of propane
gas; (3) for use in the severing of
HB 2643
14
1 oil; and (4) to any property which is
exempt from property taxation pur-
2 suant to K.S.A. 79-201b Second
through Sixth. As used in this paragraph,
3 ``severing'' shall have the meaning
ascribed thereto by subsection (k) of
4 K.S.A. 79-4216, and amendments
thereto;
5 (x) all sales of
propane gas, LP-gas, coal, wood and other fuel sources
6 for the production of heat or
lighting for noncommercial use of an oc-
7 cupant of residential premises;
8 (y) all sales of
materials and services used in the repairing, servicing,
9 altering, maintaining, manufacturing,
remanufacturing, or modification of
10 railroad rolling stock for use in
interstate or foreign commerce under
11 authority of the laws of the United
States;
12 (z) all sales of tangible
personal property and services purchased di-
13 rectly by a port authority or by a
contractor therefor as provided by the
14 provisions of K.S.A. 12-3418 and amendments
thereto;
15 (aa) all sales of materials
and services applied to equipment which is
16 transported into the state from without the
state for repair, service, al-
17 teration, maintenance, remanufacture or
modification and which is sub-
18 sequently transported outside the state for
use in the transmission of
19 liquids or natural gas by means of pipeline
in interstate or foreign com-
20 merce under authority of the laws of the
United States;
21 (bb) all sales of used mobile
homes or manufactured homes. As used
22 in this subsection: (1) ``Mobile homes''
and ``manufactured homes'' shall
23 have the meanings ascribed thereto by
K.S.A. 58-4202 and amendments
24 thereto; and (2) ``sales of used mobile
homes or manufactured homes''
25 means sales other than the original retail
sale thereof;
26 (cc) all sales of tangible
personal property or services purchased for
27 the purpose of and in conjunction with
constructing, reconstructing, en-
28 larging or remodeling a business or retail
business which meets the
29 requirements established in K.S.A.
74-50,115 and amendments thereto,
30 and the sale and installation of machinery
and equipment purchased for
31 installation at any such business or retail
business. When a person shall
32 contract for the construction,
reconstruction, enlargement or remodeling
33 of any such business or retail business,
such person shall obtain from the
34 state and furnish to the contractor an
exemption certificate for the project
35 involved, and the contractor may purchase
materials, machinery and
36 equipment for incorporation in such
project. The contractor shall furnish
37 the number of such certificates to all
suppliers from whom such purchases
38 are made, and such suppliers shall execute
invoices covering the same
39 bearing the number of such certificate.
Upon completion of the project
40 the contractor shall furnish to the owner
of the business or retail business
41 a sworn statement, on a form to be provided
by the director of taxation,
42 that all purchases so made were entitled to
exemption under this subsec-
43 tion. All invoices shall be held by the
contractor for a period of five years
HB 2643
15
1 and shall be subject to audit by the
director of taxation. Any contractor
2 or any agent, employee or
subcontractor thereof, who shall use or oth-
3 erwise dispose of any materials,
machinery or equipment purchased un-
4 der such a certificate for any
purpose other than that for which such a
5 certificate is issued without the
payment of the sales or compensating tax
6 otherwise imposed thereon, shall be
guilty of a misdemeanor and, upon
7 conviction therefor, shall be subject
to the penalties provided for in sub-
8 section (g) of K.S.A. 79-3615 and
amendments thereto. As used in this
9 subsection, ``business'' and ``retail
business'' have the meanings respec-
10 tively ascribed thereto by K.S.A. 74-50,114
and amendments thereto;
11 (dd) all sales of tangible
personal property purchased with food
12 stamps issued by the United States
department of agriculture;
13 (ee) all sales of lottery
tickets and shares made as part of a lottery
14 operated by the state of Kansas;
15 (ff) on and after July 1,
1988, all sales of new mobile homes or man-
16 ufactured homes to the extent of 40% of the
gross receipts, determined
17 without regard to any trade-in allowance,
received from such sale. As used
18 in this subsection, ``mobile homes'' and
``manufactured homes'' shall have
19 the meanings ascribed thereto by K.S.A.
58-4202 and amendments
20 thereto;
21 (gg) all sales of tangible
personal property purchased in accordance
22 with vouchers issued pursuant to the
federal special supplemental food
23 program for women, infants and
children;
24 (hh) all sales of medical
supplies and equipment purchased directly
25 by a nonprofit skilled nursing home or
nonprofit intermediate nursing
26 care home, as defined by K.S.A. 39-923, and
amendments thereto, for
27 the purpose of providing medical services
to residents thereof. This ex-
28 emption shall not apply to tangible
personal property customarily used
29 for human habitation purposes;
30 (ii) all sales of tangible
personal property purchased directly by a non-
31 profit organization for nonsectarian
comprehensive multidiscipline youth
32 development programs and activities
provided or sponsored by such or-
33 ganization. This exemption shall not apply
to tangible personal property
34 customarily used for human habitation
purposes;
35 (jj) all sales of tangible
personal property or services, including the
36 renting and leasing of tangible personal
property, purchased directly on
37 behalf of a community-based mental
retardation facility or mental health
38 center organized pursuant to K.S.A. 19-4001
et seq., and amendments
39 thereto, and licensed in accordance with
the provisions of K.S.A. 75-
40 3307b and amendments thereto. This
exemption shall not apply to tan-
41 gible personal property customarily used
for human habitation purposes;
42 (kk) on and after
January 1, 1989, (1)(A) all sales of machinery
and
43 equipment which are used
directly and primarily for the purposes of
HB 2643
16
1 manufacturing, assembling,
processing, finishing, storing, warehousing or
2 distributing articles of
tangible personal property in this state intended
3 for resale in
this state as a part of an integrated production operation
by
4 a manufacturing or processing plant
or facility or a storage, warehousing
5 or distribution
facility: as a part of a mining and production
operation at
6 a mining site;
7 (B) all sales of
installation, repair and maintenance services per-
8 formed on such machinery and
equipment; and
9 (C) all sales of
repair and replacement parts and accessories pur-
10 chased for such machinery and
equipment.
11 (1) For purposes of
this subsection, machinery and equipment shall
12 be deemed to be used directly and
primarily in the manufacture, assem-
13 blage, processing, finishing,
storing, warehousing or distributing of tan-
14 gible personal property where such
machinery and equipment is used
15 during a manufacturing, assembling,
processing or finishing, storing,
16 warehousing or distributing
operation:
17 (A) To effect a
direct and immediate physical change upon the tangible
18 personal property;
19 (B) to guide or
measure a direct and immediate physical change upon
20 such property where such function
is an integral and essential part of
21 tuning, verifying or aligning the
component parts of such property;
22 (C) to test or
measure such property where such function is an in-
23 tegral part of the production flow
or function;
24 (D) to transport,
convey or handle such property during the manu-
25 facturing, processing, storing,
warehousing or distribution operation at
26 the plant or facility;
or
27 (E) to place such
property in the container, package or wrapping in
28 which such property is normally
sold or transported.
29 (2) For purposes of
this subsection ``machinery and equipment used
30 directly and primarily'' shall
include, but not be limited to:
31 (A) Mechanical
machines or major components thereof contributing
32 to a manufacturing, assembling or
finishing process;
33 (B) molds and dies
that determine the physical characteristics of the
34 finished product or its packaging
material;
35 (C) testing equipment
to determine the quality of the finished prod-
36 uct;
37 (D) computers and
related peripheral equipment that directly control
38 or measure the manufacturing
process or which are utilized for engi-
39 neering of the finished product;
and
40 (E) computers and
related peripheral equipment utilized for research
41 and development and product
design.
42 (3) ``Machinery and
equipment used directly and primarily'' shall not
43 include:
HB 2643
17
1 (A) Hand
tools;
2 (B) machinery,
equipment and tools used in maintaining and repair-
3 ing any type of machinery and
equipment;
4 (C)
transportation equipment not used in the manufacturing,
assem-
5 bling, processing,
furnishing, storing, warehousing or distributing
process
6 at the plant or
facility;
7 (D) office
machines and equipment including computers and related
8 peripheral equipment not
directly and primarily used in controlling or
9 measuring the manufacturing
process;
10 (E) furniture and
buildings; and
11 (F) machinery and
equipment used in administrative, accounting,
12 sales or other such activities of
the business;
13 (2) For purposes of this
subsection:
14 (A) ``Integrated
production operation'' means an integrated series of
15 operations engaged in by a manufacturing
business, including electric
16 generation plants, to transform or
convert tangible personal property by
17 physical, chemical or other means into a
different form, composition, or
18 character from that in which it
originally existed. The scope of an inte-
19 grated production operation includes
operations done at the plant or fa-
20 cility to handle, store and treat raw
materials in preparation of any pro-
21 duction line operations, production line
operations, post production
22 handling, storage, warehousing and
distribution operations, and waste,
23 pollution and environmental control
operations;
24 (B) ``production line''
means the assemblage of machinery and equip-
25 ment at a manufacturing or processing
plant or facility where the actual
26 transformation of tangible personal
property occurs, beginning with the
27 first manufacturing or processing
operation and continuing through any
28 packaging of the finished product for
transportation or sale;
29 (C) ``manufacturing or
processing plant or facility'' means a single,
30 fixed location owned or controlled by a
manufacturing business that con-
31 sists of one or more buildings or
structures in a contiguous area where
32 integrated production operations are
conducted to manufacture or pro-
33 cess tangible personal property for
resale or to generate electricity for
34 resale;
35 (D) ``mining and
production operation'' means all operations that are
36 part of an integrated series of
operations that are performed at a mining
37 site by a mining business: (i) To
extract raw materials that occur naturally;
38 (ii) to crush, grind, mill, screen,
wash, dry, separate or otherwise treat or
39 prepare the raw materials being
extracted; (iii) to handle, convey, trans-
40 port or store such materials; and (iv)
to treat waste and pollution that
41 result from such operations;
42 (E) ``mining site'' means
a single, fixed location owned or controlled
43 by a mining business where minerals,
coal, rock, sand or gravel is ex-
HB 2643
18
1 tracted, and where milling,
crushing, screening or other preparation, pro-
2 duction or storage activities are
done to the extracted material. Mining
3 site includes underground mines,
strip mines, quarries, sand pits, gravel
4 pits and other similar sites where
the extraction of minerals, coal, rock
5 sand or gravel occurs;
6 (F) ``manufacturing
or mining business'' shall include: (i) All manu-
7 facturing and processing
businesses classified under the standard indus-
8 trial classification codes, major
groups 20 through 39, and all mining
9 businesses classified under major
groups 10, 12 and 14; and (ii) businesses
10 that are substantially similar to those
identified in the listed major groups,
11 including electric generation plants.
``Manufacturing business'' shall be
12 limited to those businesses that are
commonly regarded as manufacturers
13 or processors and shall not include
nonindustrial businesses whose op-
14 erations are predominately retail and
that manufacture or process tan-
15 gible personal property as an incidental
part of conducting the retail busi-
16 ness;
17 (G) ``repair and
replacement parts and accessories'' means all parts
18 that have been assigned a specific or
generic part number by the manu-
19 facturer of the exempt machinery or
equipment, dies, jigs, molds, patterns
20 and other such accessories that are
attached to exempt machinery or that
21 are otherwise used in production, short
lived replaceable parts that can
22 be readily detached from exempt
machinery or equipment, such as belts,
23 drill bits, grinding wheels, cutting
bars, saws and other replacement parts
24 for production equipment, including
refractory brick and other refractory
25 items for kiln equipment used in
production operations; and
26 (H) ``predominantly'' or
``primarily'' means more than 50%.
27 (3) For purposes of this
subsection, machinery and equipment shall
28 be deemed to be used as part of an
integrated production operation when
29 used in a production or mining
operation:
30 (A) To receive, transport,
convey, handle, treat or store raw materials
31 in preparation of placement on the
production line;
32 (B) to transport, convey,
handle or store the property undergoing
33 manufacturing or processing at any point
from the beginning of the pro-
34 duction line through any warehousing or
distribution operation of the
35 final product that occurs at the plant
or facility;
36 (C) to act upon or effect
a direct physical change to the property
37 undergoing manufacturing or
processing;
38 (D) to guide, physically
control or direct the movement of property
39 undergoing manufacturing or
processing;
40 (E) to test or measure raw
materials, the property undergoing man-
41 ufacturing or processing or the finished
product at any site at the location
42 of the plant or facility, including
laboratories;
43 (F) to record the flow of
property undergoing manufacturing or pro-
HB 2643
19
1 cessing;
2 (G) to produce
energy for, lubricate, control the operating of or oth-
3 erwise enable the functioning of
other production machinery and equip-
4 ment and the continuation of
production operations;
5 (H) to package the
property being manufactured or processed in a
6 container or wrapping in which
such property is normally sold or trans-
7 ported;
8 (I) to transmit or
transport electricity, coke, gas, water, steam or sim-
9 ilar substances used in production
operations from the point of generation,
10 if produced by the manufacturer or
processor, to production operations
11 or from the point where the substance
enters the site of the plant or
12 facility, if purchased by the
manufacturer or processor, to production
13 operations;
14 (J) to cool, heat, filter,
refine or otherwise treat water, steam, acid,
15 oil, solvents or other substances that
are used in production operations;
16 (K) to provide and control
an environment required to maintain cer-
17 tain levels of air quality, humidity or
temperature in special and limited
18 areas of the plant or facility, where
such regulation of temperature or
19 humidity is part of and essential to the
production process;
20 (L) to treat, transport or
store waste or other by-products of produc-
21 tion operations at the plant or
facility;
22 (M) to control pollution
at the plant, facility or at the mining cite
23 where the pollution is produced by the
manufacturing, processing or min-
24 ing operations; or
25 (N) to extract minerals,
coal, rock, sand or gravel, to mill, crush,
26 screen, wash or otherwise prepare or
produce such raw materials, and to
27 transport, convey or handle such raw
materials at a mining or processing
28 site.
29 (4) ``Machinery and
equipment used as part of an integrated produc-
30 tion operation or as part of a mining
and production operation'' shall
31 include: (A) Computers and related
peripheral equipment that directly
32 control or measure production operations
or which are utilized for engi-
33 neering of the finished product or for
research or development and prod-
34 uct design; and (B) materials sold for
the purpose of fabricating exempt
35 production equipment or parts for or
accessories to such equipment, in-
36 cluding special foundations for exempt
machinery and equipment. An ex-
37 emption claim for such purchases shall
be jointly signed by the manufac-
38 turer or processor and the fabricator,
if the fabricator purchases such
39 material.
40 (5) ``Machinery and
equipment used as a part of an integrated pro-
41 duction operation or as part of a mining
and production operation'' shall
42 not include:
43 (A) Machinery and
equipment used for nonproduction purposes, in-
HB 2643
20
1 cluding, but not limited to,
machinery and equipment used for plant se-
2 curity, fire prevention, first
aid, accounting, administration, record keep-
3 ing, advertising, marketing, sales
or other related activities, plant cleaning
4 and plant communications;
5 (B) machinery,
equipment and tools used in maintaining and repair-
6 ing any type of machinery and
equipment;
7 (C) transportation
equipment not primarily used in a production,
8 warehousing or material handling
operation at the plant or facility;
9 (D) office machines
and equipment including computers and related
10 peripheral equipment not directly and
primarily used in controlling or
11 measuring the manufacturing
process;
12 (E) furniture and other
furnishings;
13 (F) buildings and
materials and other property that is intended to
14 become a structural part of a building
or any other part of real estate that
15 is not otherwise exempted;
16 (G) machinery and
equipment used for general plant heating, cooling
17 and lighting;
18 (H) motor vehicles that
are registered for highway use; and
19 (I) employee clothing,
including special protective clothing and safety
20 equipment.
21 (ll) all sales of educational
materials purchased for distribution to the
22 public at no charge by a nonprofit
corporation organized for the purpose
23 of encouraging, fostering and conducting
programs for the improvement
24 of public health;
25 (mm) all sales of seeds and
tree seedlings; fertilizers, insecticides,
26 herbicides, germicides, pesticides and
fungicides; and services, purchased
27 and used for the purpose of producing
plants in order to prevent soil
28 erosion on land devoted to agricultural
use;
29 (nn) except as otherwise
provided in this act, all sales of services ren-
30 dered by an advertising agency or licensed
broadcast station or any mem-
31 ber, agent or employee thereof;
32 (oo) all sales of tangible
personal property purchased by a community
33 action group or agency for the exclusive
purpose of repairing or weath-
34 erizing housing occupied by low income
individuals;
35 (pp) all sales of drill bits
and explosives actually utilized in the explo-
36 ration and production of oil or gas;
37 (qq) all sales of tangible
personal property and services purchased by
38 a nonprofit museum or historical society or
any combination thereof, in-
39 cluding a nonprofit organization which is
organized for the purpose of
40 stimulating public interest in the
exploration of space by providing edu-
41 cational information, exhibits and
experiences, which is exempt from fed-
42 eral income taxation pursuant to section
501(c)(3) of the federal internal
43 revenue code of 1986;
HB 2643
21
1 (rr) all sales of
tangible personal property which will admit the pur-
2 chaser thereof to any annual event
sponsored by a nonprofit organization
3 which is exempt from federal income
taxation pursuant to section
4 501(c)(3) of the federal internal
revenue code of 1986;
5 (ss) all sales of
tangible personal property and services purchased by
6 a public broadcasting station
licensed by the federal communications
7 commission as a noncommercial
educational television or radio station;
8 (tt) all sales of
tangible personal property and services purchased by
9 or on behalf of a not-for-profit
corporation which is exempt from federal
10 income taxation pursuant to section
501(c)(3) of the federal internal rev-
11 enue code of 1986, for the sole purpose of
constructing a Kansas Korean
12 War memorial;
13 (uu) all sales of tangible
personal property and services purchased by
14 or on behalf of any rural volunteer
fire-fighting organization for use ex-
15 clusively in the performance of its duties
and functions;
16 (vv) all sales of tangible
personal property purchased by any of the
17 following organizations which are exempt
from federal income taxation
18 pursuant to section 501 (c)(3) of the
federal internal revenue code of
19 1986, for the following purposes, and all
sales of any such property by or
20 on behalf of any such organization for any
such purpose:
21 (1) The American Heart
Association, Kansas Affiliate, Inc. for the
22 purposes of providing education, training,
certification in emergency car-
23 diac care, research and other related
services to reduce disability and
24 death from cardiovascular diseases and
stroke;
25 (2) the Kansas Alliance for
the Mentally Ill, Inc. for the purpose of
26 advocacy for persons with mental illness
and to education, research and
27 support for their families;
28 (3) the Kansas Mental Illness
Awareness Council for the purposes of
29 advocacy for persons who are mentally ill
and to education, research and
30 support for them and their families;
31 (4) the American Diabetes
Association Kansas Affiliate, Inc. for the
32 purpose of eliminating diabetes through
medical research, public edu-
33 cation focusing on disease prevention and
education, patient education
34 including information on coping with
diabetes, and professional education
35 and training;
36 (5) the American Lung
Association of Kansas, Inc. for the purpose of
37 eliminating all lung diseases through
medical research, public education
38 including information on coping with lung
diseases, professional educa-
39 tion and training related to lung disease
and other related services to
40 reduce the incidence of disability and
death due to lung disease;
41 (6) the Kansas chapters of
the Alzheimer's Disease and Related Dis-
42 orders Association, Inc. for the purpose of
providing assistance and sup-
43 port to persons in Kansas with Alzheimer's
disease, and their families and
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22
1 caregivers; and
2 (ww) all sales of
tangible personal property purchased by the Habitat
3 for Humanities
Humanity for the exclusive use of being incorporated
4 within a housing project constructed
by such organization;
5 (xx) all sales of
material handling equipment, racking systems and
6 other similar machinery and
equipment that is used for the handling,
7 movement and storage of tangible
personal property in a warehouse or
8 distribution facility in this
state; all sales of installation, repair and main-
9 tenance services performed on such
machinery and equipment; and all
10 sales of repair and replacement parts
for such machinery and equipment.
11 For purposes of this subsection, a
warehouse or distribution facility means
12 a single, fixed location that consists
of buildings or structures in a contig-
13 uous area where storage or distribution
operations are conducted that are
14 separate and apart from the business's
retail operations, if any, and which
15 do not otherwise qualify for exemption
as occurring at a manufacturing
16 or processing plant or facility or at a
mining site. A warehouse or distri-
17 bution facility shall not include
locations where storage or distribution
18 operations are conducted as an adjunct
to the business's retail operations;
19 (yy) all sales of tangible
personal property and services that are ap-
20 plied to or performed on tangible
personal property that is shipped into
21 the state from without the state for
repair, service, alteration, mainte-
22 nance, remanufacture or modification and
which is subsequently shipped
23 outside the state for use outside the
state. For this subsection to apply,
24 shipment must be by mail, common
carrier, or by a private carrier that
25 is operating under a contract
carriage;
26 (zz) all sales of tangible
personal property by members of the Girl
27 Scouts of America the purpose of which
is to finance their activities and
28 programs;
29 (aaa) all sales of
tangible personal property and services purchased
30 by a parent-teacher association or
organization, and all sales of tangible
31 personal property by or on behalf of
such association or organization; and
32 (bbb) all sales of
machinery and equipment purchased by over-the-
33 air, free access radio or television
station which is used directly and pri-
34 marily for the purpose of producing a
broadcast signal or is such that the
35 failure of the machinery or equipment to
operate would cause broadcast-
36 ing to cease. For purposes of this
subsection, machinery and equipment
37 shall include, but not be limited to,
that required by rules and regulations
38 of the federal communications
commission, and all sales of electricity
39 which are essential or necessary for the
purpose of producing a broadcast
40 signal or is such that the failure of
the electricity would cause broadcasting
41 to cease.
42 Sec. 4. On and after October
16, 1998, K.S.A. 79-3634 is hereby
43 amended to read as follows: 79-3634. The
right to file a claim for a refund
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23
1 under K.S.A. 79-3620
and 79-3632 ;ø 79-3639 shall be personal to
the
2 claimant and shall not
survive his or her death, but such right et seq.
may
3 be exercised on behalf of a claimant
by his or her legal guardian, conser-
4 vator or attorney-in-fact. When a
claimant dies after having filed a timely
5 claim the amount thereof shall be
disbursed to another member of the
6 household as determined by the
director of taxation. If the claimant was
7 the only member of his or her
household, the claim may be paid to his
8 or her executor or administrator, but
if neither is appointed and qualified,
9 the amount of the claim may be paid
upon a claim duly made to any heir
10 at law. In the absence of any such claim
within two (2) years of the filing
11 of the claim, the amount of the claim shall
escheat to the state. When a
12 person who would otherwise be entitled
to file a claim under the provi-
13 sions of this act dies prior to filing
such claim, another member of such
14 person's household may file such claim
in the name of such decedent,
15 subject to the deadline prescribed by
K.S.A. 79-4505, and amendments
16 thereto, and the director shall pay the
amount to which the decedent
17 would have been entitled to such person
filing the claim. If the decedent
18 was the only member of his or her
household, the decedent's executor or
19 administrator may file such claim in the
name of the decedent, and the
20 claim shall be paid to said executor or
administrator. In the event that
21 neither an executor or administrator is
appointed and qualified, such
22 claim may be made by any heir at law and
the claim shall be payable to
23 such heir at law. Any of the foregoing
provisions shall be applicable in
24 any case where the decedent dies in the
calendar year preceding the year
25 in which a claim may be made under the
provisions of this act, if such
26 decedent was a resident of or domiciled
in this state during the entire part
27 of such year that such decedent was
living. Where decedent's death occurs
28 during the calendar year preceding the
year in which a claim may be
29 made hereunder, the amount of the claim
that would have been allowable
30 if the decedent had been a resident of
or domiciled in this state the entire
31 calendar year of his or her death shall
be reduced in a proportionate
32 amount equal to a fraction of the claim
otherwise allowable, the numerator
33 of which fraction is the number of
months in such calendar year following
34 the month of decedent's death and the
denominator of which is 12.
35 Sec. 5. On and after October
16, 1998, K.S.A. 79-3635 is hereby
36 amended to read as follows: 79-3635. (a) A
claimant shall be entitled to
37 a refund of retailers' sales taxes paid
upon food during the calendar year
38 1986 1997 and each
year thereafter in the amount hereinafter provided.
39 For households having a household income of
less than $5,000, a refund
40 in the amount of $40
$80 shall be allowed for the head of household and
41 a refund of $30 $60
shall be allowed for each additional member of the
42 household. For households having a
household income of at least $5,000
43 but less than $10,000, a refund in the
amount of $30 $60 shall be allowed
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24
1 for the head of household and a
refund of $25 $50 shall be allowed for
2 each additional member of the
household. For households having a
3 household income of at least $10,000
but not more than $13,000 $15,000,
4 a refund in the amount of
$20 $40 shall be allowed for the head of
house-
5 hold and a refund of
$15 $30 shall be allowed for each
additional member
6 of the household. For households
having a household income of at least
7 $15,000 but not more than $20,000,
a refund in the amount of $30 shall
8 be allowed for the head of the
household and a refund of $20 shall be
9 allowed for each additional member
of the household. For households
10 having a household income of at least
$20,000 but not more than $25,000,
11 a refund in the amount of $20 shall be
allowed for the head of household
12 and a refund of $10 shall be allowed for
each additional member of the
13 household. All such claims shall be
paid from the sales tax refund fund
14 upon warrants of the director of accounts
and reports pursuant to vouch-
15 ers approved by the director of taxation or
by a person or persons des-
16 ignated by the director, except that no
warrant shall be drawn in an
17 amount less than $5.
18 (b) A head of household shall
make application for refunds for all
19 members of the same household upon a common
form provided for the
20 making of joint claims. All claims paid to
members of the same household
21 shall be paid as a joint claim by means of
a single warrant.
22 (c) No claim for a refund of
taxes under the provisions of K.S.A.
23 79-3620 and 79-3632
;ø 79-3639 et seq. shall be paid or
allowed unless
24 such claim is actually filed with and in
the possession of the department
25 of revenue on or before
October April 15 of the year next
succeeding the
26 year in which said
such taxes were paid. The director of taxation may: (1)
27 Extend the time for filing any claim under
the provisions of this act when
28 good cause exists therefor; or (2) accept a
claim filed after the deadline
29 for filing in the case of sickness, absence
or disability of the claimant if
30 said claim has been filed within four
(4) years of said such
deadline.
31 Sec. 6. K.S.A. 79-3640 is
hereby amended to read as follows: 79-
32 3640. (a) That portion of the sales
tax paid on the sale of tangible personal
33 property or services purchased for the
purpose of constructing, equip-
34 ping, reconstructing, maintaining,
repairing, enlarging, furnishing or re-
35 modeling facilities the cost of which is
paid in part from funds of a political
36 subdivision which in proportion to the
total sales tax paid equals the pro-
37 portion of such funds to the total cost of
the project shall be refunded.
38 Each claim for a sales tax refund shall be
verified and submitted to the
39 director of taxation upon forms furnished
by the director and shall be
40 accompanied by any additional documentation
required by the director.
41 The director shall review each claim and
shall refund that amount of sales
42 tax paid as determined under the provisions
of this section. All refunds
43 shall be paid from the sales tax refund
fund upon warrants of the director
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25
1 of accounts and reports pursuant to
vouchers approved by the director
2 or the director's designee.
3 (b) Notwithstanding
any other provision of this section, when the
4 total cost of a facility is paid
for with the funds of revenue bonds, a
5 political subdivision's rental or
lease of machinery, equipment or other
6 tangible personal property to
equip or furnish the facility shall be exempt
7 if the lease or rental payments
are made under a lease-purchase agreement
8 entered into pursuant to K.S.A.
12-1740 et seq., and amendments thereto.
9 Sec. 7. On and after
October 16, 1998, 79-3634 and 79-3635 are
10 hereby repealed.
11 Sec. 8. K.S.A. 79-3602,
79-3603, 79-3606 and 79-3640 are hereby
12 repealed.
13 Sec. 9. This act shall take
effect and be in force from and after its
14 publication in the statute book.
15