Session of 1998
                   
SENATE BILL No. 415
         
By Senators Hensley, Barone, Biggs, Downey, Feleciano, Gilstrap,
         
Gooch, Goodwin, Jones, Karr, Lee, Petty and Steineger
         
1-13
          10             AN ACT relating to sales taxation; concerning the rate imposed upon
11             sales of food for human consumption; amending K.S.A. 79-3603 and
12             repealing the existing section.
13            
14       Be it enacted by the Legislature of the State of Kansas:
15           Section 1. K.S.A. 79-3603 is hereby amended to read as follows:
16       79-3603. For the privilege of engaging in the business of selling tangible
17       personal property at retail in this state or rendering or furnishing any of
18       the services taxable under this act, there is hereby levied and there shall
19       be collected and paid a tax at the rate of 4.9%, unless otherwise specifically
20       provided, upon:
21           (a) The gross receipts received from the sale of tangible personal
22       property at retail within this state;
23           (b) (1) the gross receipts from intrastate telephone or telegraph serv-
24       ices and (2) the gross receipts received from the sale of interstate tele-
25       phone or telegraph services, which (A) originate within this state and
26       terminate outside the state and are billed to a customer's telephone num-
27       ber or account in this state; or (B) originate outside this state and ter-
28       minate within this state and are billed to a customer's telephone number
29       or account in this state except that the sale of interstate telephone or
30       telegraph service does not include: (A) Any interstate incoming or out-
31       going wide area telephone service or wide area transmission type service
32       which entitles the subscriber to make or receive an unlimited number of
33       communications to or from persons having telephone service in a speci-
34       fied area which is outside the state in which the station provided this
35       service is located; (B) any interstate private communications service to
36       the persons contracting for the receipt of that service that entitles the
37       purchaser to exclusive or priority use of a communications channel or
38       group of channels between exchanges; (C) any value-added nonvoice
39       service in which computer processing applications are used to act on the
40       form, content, code or protocol of the information to be transmitted; (D)
41       any telecommunication service to a provider of telecommunication serv-
42       ices which will be used to render telecommunications services, including
43       carrier access services; or (E) any service or transaction defined in this

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  1       section among entities classified as members of an affiliated group as
  2       provided by federal law (U.S.C. Section 1504);
  3           (c) the gross receipts from the sale or furnishing of gas, water, elec-
  4       tricity and heat, which sale is not otherwise exempt from taxation under
  5       the provisions of this act, and whether furnished by municipally or pri-
  6       vately owned utilities;
  7           (d) the gross receipts from the sale of meals or drinks furnished at
  8       any private club, drinking establishment, catered event, restaurant, eating
  9       house, dining car, hotel, drugstore or other place where meals or drinks
10       are regularly sold to the public;
11           (e) the gross receipts from the sale of admissions to any place pro-
12       viding amusement, entertainment or recreation services including admis-
13       sions to state, county, district and local fairs, but such tax shall not be
14       levied and collected upon the gross receipts received from sales of ad-
15       missions to any cultural and historical event which occurs triennially;
16           (f) the gross receipts from the operation of any coin-operated device
17       dispensing or providing tangible personal property, amusement or other
18       services except laundry services, whether automatic or manually operated;
19           (g) the gross receipts from the service of renting of rooms by hotels,
20       as defined by K.S.A. 36-501 and amendments thereto, or by accommo-
21       dation brokers, as defined by K.S.A. 12-1692, and amendments thereto;
22           (h) the gross receipts from the service of renting or leasing of tangible
23       personal property except such tax shall not apply to the renting or leasing
24       of machinery, equipment or other personal property owned by a city and
25       purchased from the proceeds of industrial revenue bonds issued prior to
26       July 1, 1973, in accordance with the provisions of K.S.A. 12-1740 through
27       12-1749, and amendments thereto, and any city or lessee renting or leas-
28       ing such machinery, equipment or other personal property purchased
29       with the proceeds of such bonds who shall have paid a tax under the
30       provisions of this section upon sales made prior to July 1, 1973, shall be
31       entitled to a refund from the sales tax refund fund of all taxes paid
32       thereon;
33           (i) the gross receipts from the rendering of dry cleaning, pressing,
34       dyeing and laundry services except laundry services rendered through a
35       coin-operated device whether automatic or manually operated;
36           (j) the gross receipts from the rendering of the services of washing
37       and washing and waxing of vehicles;
38           (k) the gross receipts from cable, community antennae and other sub-
39       scriber radio and television services;
40           (l) the gross receipts received from the sales of tangible personal
41       property to all contractors, subcontractors or repairmen of materials and
42       supplies for use by them in erecting structures for others, or building on,
43       or otherwise improving, altering, or repairing real or personal property

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  1       of others;
  2           (m) the gross receipts received from fees and charges by public and
  3       private clubs, drinking establishments, organizations and businesses for
  4       participation in sports, games and other recreational activities, but such
  5       tax shall not be levied and collected upon the gross receipts received from:
  6       (1) Fees and charges by any political subdivision, or any youth recreation
  7       organization exclusively providing services to persons 18 years of age or
  8       younger which is exempt from federal income taxation pursuant to section
  9       501(c)(3) of the federal internal revenue code of 1986, for participation
10       in sports, games and other recreational activities; and (2) entry fees and
11       charges for participation in a special event or tournament sanctioned by
12       a national sporting association to which spectators are charged an admis-
13       sion which is taxable pursuant to subsection (e);
14           (n) the gross receipts received from dues charged by public and pri-
15       vate clubs, drinking establishments, organizations and businesses, pay-
16       ment of which entitles a member to the use of facilities for recreation or
17       entertainment;
18           (o) the gross receipts received from the isolated or occasional sale of
19       motor vehicles or trailers but not including: (1) The transfer of motor
20       vehicles or trailers by a person to a corporation solely in exchange for
21       stock securities in such corporation; or (2) the transfer of motor vehicles
22       or trailers by one corporation to another when all of the assets of such
23       corporation are transferred to such other corporation; or (3) the sale of
24       motor vehicles or trailers which are subject to taxation pursuant to the
25       provisions of K.S.A. 79-5101 et seq., and amendments thereto, by an
26       immediate family member to another immediate family member. For the
27       purposes of clause (3), immediate family member means lineal ascendants
28       or descendants, and their spouses. In determining the base for computing
29       the tax on such isolated or occasional sale, the fair market value of any
30       motor vehicle or trailer traded in by the purchaser to the seller may be
31       deducted from the selling price;
32           (p) the gross receipts received for the service of installing or applying
33       tangible personal property which when installed or applied is not being
34       held for sale in the regular course of business, and whether or not such
35       tangible personal property when installed or applied remains tangible
36       personal property or becomes a part of real estate, except that no tax shall
37       be imposed upon the service of installing or applying tangible personal
38       property in connection with the original construction of a building or
39       facility or the construction, reconstruction, restoration, replacement or
40       repair of a bridge or highway.
41           For the purposes of this subsection:
42           (1) ``Original construction'' shall mean the first or initial construction
43       of a new building or facility. The term ``original construction'' shall include

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  1       the addition of an entire room or floor to any existing building or facility,
  2       the completion of any unfinished portion of any existing building or fa-
  3       cility and the restoration, reconstruction or replacement of a building or
  4       facility damaged or destroyed by fire, flood, tornado, lightning, explosion
  5       or earthquake, but such term shall not include replacement, remodeling,
  6       restoration, renovation or reconstruction under any other circumstances;
  7           (2) ``building'' shall mean only those enclosures within which individ-
  8       uals customarily live or are employed, or which are customarily used to
  9       house machinery, equipment or other property, and including the land
10       improvements immediately surrounding such building; and
11           (3) ``facility'' shall mean a mill, plant, refinery, oil or gas well, water
12       well, feedlot or any conveyance, transmission or distribution line of any
13       cooperative, nonprofit, membership corporation organized under or sub-
14       ject to the provisions of K.S.A. 17-4601 et seq., and amendments thereto,
15       or of any municipal or quasi-municipal corporation, including the land
16       improvements immediately surrounding such facility;
17           (q) the gross receipts received for the service of repairing, servicing,
18       altering or maintaining tangible personal property, except computer soft-
19       ware described in subsection (s), which when such services are rendered
20       is not being held for sale in the regular course of business, and whether
21       or not any tangible personal property is transferred in connection there-
22       with. The tax imposed by this subsection shall be applicable to the services
23       of repairing, servicing, altering or maintaining an item of tangible personal
24       property which has been and is fastened to, connected with or built into
25       real property;
26           (r) the gross receipts from fees or charges made under service or
27       maintenance agreement contracts for services, charges for the providing
28       of which are taxable under the provisions of subsection (p) or (q);
29           (s) the gross receipts received from the sale of computer software,
30       and the sale of the services of modifying, altering, updating or maintaining
31       computer software. As used in this subsection, ``computer software''
32       means information and directions loaded into a computer which dictate
33       different functions to be performed by the computer. Computer software
34       includes any canned or prewritten program which is held or existing for
35       general or repeated sale, even if the program was originally developed
36       for a single end user as custom computer software. The sale of computer
37       software or services does not include: (1) The initial sale of any custom
38       computer program which is originally developed for the exclusive use of
39       a single end user; or (2) those services rendered in the modification of
40       computer software when the modification is developed exclusively for a
41       single end user only to the extent of the modification and only to the
42       extent that the actual amount charged for the modification is separately
43       stated on invoices, statements and other billing documents provided to

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  1       the end user. The services of modification, alteration, updating and main-
  2       tenance of computer software shall only include the modification, alter-
  3       ation, updating and maintenance of computer software taxable under this
  4       subsection whether or not the services are actually provided; and
  5           (t) the gross receipts received for telephone answering services, in-
  6       cluding mobile phone services, beeper services and other similar services;
  7       and
  8           (u) the gross receipts received from sales of food for human con-
  9       sumption which shall be taxed at the rate of 3.4%. As used in this sub-
10       section, ``food for human consumption'' means only that food which is
11       eligible for purchase with food stamps issued by the United States de-
12       partment of agriculture pursuant to regulations in effect on January 1,
13       1998, regardless of whether the retailer from which the food is purchased
14       is participating in the food stamp program. Such phrase shall not include:
15       (1) Meals prepared for immediate consumption on or off premises of the
16       retailer; or
17           (2) food sold through vending machines.
18           Sec. 2. K.S.A. 79-3603 is hereby repealed.
19           Sec. 3. This act shall take effect and be in force from and after June
20       1, 1998, and its publication in the Kansas register.
21