Session of 1998
                   
SENATE BILL No. 466
         
By Senators Hensley, Barone, Biggs, Downey, Feleciano, Gilstrap,
         
Gooch, Goodwin, Jones, Karr, Lee, Petty and Steineger
         
1-20
          10             AN ACT relating to sales taxation; exempting labor services used in con-
11             junction with remodeling of buildings and facilities; amending K.S.A.
12             79-3603 and 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%:
20           (a) The gross receipts received from the sale of tangible personal
21       property at retail within this state;
22           (b) (1) the gross receipts from intrastate telephone or telegraph serv-
23       ices and (2) the gross receipts received from the sale of interstate tele-
24       phone or telegraph services, which (A) originate within this state and
25       terminate outside the state and are billed to a customer's telephone num-
26       ber or account in this state; or (B) originate outside this state and ter-
27       minate within this state and are billed to a customer's telephone number
28       or account in this state except that the sale of interstate telephone or
29       telegraph service does not include: (A) Any interstate incoming or out-
30       going wide area telephone service or wide area transmission type service
31       which entitles the subscriber to make or receive an unlimited number of
32       communications to or from persons having telephone service in a speci-
33       fied area which is outside the state in which the station provided this
34       service is located; (B) any interstate private communications service to
35       the persons contracting for the receipt of that service that entitles the
36       purchaser to exclusive or priority use of a communications channel or
37       group of channels between exchanges; (C) any value-added nonvoice
38       service in which computer processing applications are used to act on the
39       form, content, code or protocol of the information to be transmitted; (D)
40       any telecommunication service to a provider of telecommunication serv-
41       ices which will be used to render telecommunications services, including
42       carrier access services; or (E) any service or transaction defined in this
43       section among entities classified as members of an affiliated group as

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

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  1           (m) the gross receipts received from fees and charges by public and
  2       private clubs, drinking establishments, organizations and businesses for
  3       participation in sports, games and other recreational activities, but such
  4       tax shall not be levied and collected upon the gross receipts received from:
  5       (1) Fees and charges by any political subdivision, or any youth recreation
  6       organization exclusively providing services to persons 18 years of age or
  7       younger which is exempt from federal income taxation pursuant to section
  8       501(c)(3) of the federal internal revenue code of 1986, for participation
  9       in sports, games and other recreational activities; and (2) entry fees and
10       charges for participation in a special event or tournament sanctioned by
11       a national sporting association to which spectators are charged an admis-
12       sion which is taxable pursuant to subsection (e);
13           (n) the gross receipts received from dues charged by public and pri-
14       vate clubs, drinking establishments, organizations and businesses, pay-
15       ment of which entitles a member to the use of facilities for recreation or
16       entertainment;
17           (o) the gross receipts received from the isolated or occasional sale of
18       motor vehicles or trailers but not including: (1) The transfer of motor
19       vehicles or trailers by a person to a corporation solely in exchange for
20       stock securities in such corporation; or (2) the transfer of motor vehicles
21       or trailers by one corporation to another when all of the assets of such
22       corporation are transferred to such other corporation; or (3) the sale of
23       motor vehicles or trailers which are subject to taxation pursuant to the
24       provisions of K.S.A. 79-5101 et seq., and amendments thereto, by an
25       immediate family member to another immediate family member. For the
26       purposes of clause (3), immediate family member means lineal ascendants
27       or descendants, and their spouses. In determining the base for computing
28       the tax on such isolated or occasional sale, the fair market value of any
29       motor vehicle or trailer traded in by the purchaser to the seller may be
30       deducted from the selling price;
31           (p) the gross receipts received for the service of installing or applying
32       tangible personal property which when installed or applied is not being
33       held for sale in the regular course of business, and whether or not such
34       tangible personal property when installed or applied remains tangible
35       personal property or becomes a part of real estate, except that no tax shall
36       be imposed upon the service of installing or applying tangible personal
37       property in connection with the original construction, reconstruction, res-
38       toration, remodeling, renovation, repair or replacement 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) (2) ``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) and as otherwise provided by subsection
20       (p), which when such services are rendered is not being held for sale in
21       the regular course of business, and whether or not any tangible personal
22       property is transferred in connection therewith. The Except as otherwise
23       provided by subsection (p), the tax imposed by this subsection shall be
24       applicable to the services of repairing, servicing, altering or maintaining
25       an item of tangible personal property which has been and is fastened to,
26       connected with or built into real property;
27           (r) the gross receipts from fees or charges made under service or
28       maintenance agreement contracts for services, charges for the providing
29       of which are taxable under the provisions of subsection (p) or (q);
30           (s) the gross receipts received from the sale of computer software,
31       and the sale of the services of modifying, altering, updating or maintaining
32       computer software. As used in this subsection, ``computer software''
33       means information and directions loaded into a computer which dictate
34       different functions to be performed by the computer. Computer software
35       includes any canned or prewritten program which is held or existing for
36       general or repeated sale, even if the program was originally developed
37       for a single end user as custom computer software. The sale of computer
38       software or services does not include: (1) The initial sale of any custom
39       computer program which is originally developed for the exclusive use of
40       a single end user; or (2) those services rendered in the modification of
41       computer software when the modification is developed exclusively for a
42       single end user only to the extent of the modification and only to the
43       extent that the actual amount charged for the modification is separately

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  1       stated on invoices, statements and other billing documents provided to
  2       the end user. The services of modification, alteration, updating and main-
  3       tenance of computer software shall only include the modification, alter-
  4       ation, updating and maintenance of computer software taxable under this
  5       subsection whether or not the services are actually provided; and
  6           (t) the gross receipts received for telephone answering services, in-
  7       cluding mobile phone services, beeper services and other similar services.
  8           Sec. 2. K.S.A. 79-3603 is hereby repealed.
  9           Sec. 3. This act shall take effect and be in force from and after its
10       publication in the statute book.
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