(Corrected)
Session of 1999
HOUSE BILL No. 2009
By Special Committee on Assessment and Taxation
12-16
10 AN ACT relating to sales taxation; exempting sales of certain business
11 machinery and equipment replacement parts and installation services;
12 defining property which is consumed; amending K.S.A. 1998 Supp.
13 79-3602 and 79-3606 and repealing the existing sections.
14
15 Be it enacted by the Legislature of the State of Kansas:
16 Section 1. K.S.A. 1998 Supp. 79-3602 is hereby amended to read as
17 follows: 79-3602. (a) "Persons" means any individual, firm, copartnership,
18 joint adventure, association, corporation, estate or trust, receiver or trus-
19 tee, or any group or combination acting as a unit, and the plural as well
20 as the singular number; and shall specifically mean any city or other po-
21 litical subdivision of the state of Kansas engaging in a business or provid-
22 ing a service specifically taxable under the provisions of this act.
23 (b) "Director" means the state director of taxation.
24 (c) "Sale" or "sales" means the exchange of tangible personal prop-
25 erty, as well as the sale thereof for money, and every transaction, condi-
26 tional or otherwise, for a consideration, constituting a sale, including the
27 sale or furnishing of electrical energy, gas, water, services or entertain-
28 ment taxable under the terms of this act and including, except as provided
29 in the following provision, the sale of the use of tangible personal property
30 by way of a lease, license to use or the rental thereof regardless of the
31 method by which the title, possession or right to use the tangible personal
32 property is transferred. The term "sale" or "sales" shall not mean the sale
33 of the use of any tangible personal property used as a dwelling by way of
34 a lease or rental thereof for a term of more than 28 consecutive days.
35 (d) "Retailer" means a person regularly engaged in the business of
36 selling tangible personal property at retail or furnishing electrical energy,
37 gas, water, services or entertainment, and selling only to the user or con-
38 sumer and not for resale.
39 (e) "Retail sale" or "sale at retail" means all sales made within the
40 state of tangible personal property or electrical energy, gas, water, services
41 or entertainment for use or consumption and not for resale.
42 (f) "Tangible personal property" means corporeal personal property.
43 Such term shall include;: (1) Any computer software program which is
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1 not a custom computer software program, as described by subsection (s)
2 of K.S.A. 79-3603, and amendments thereto; and (2) and any prepaid
3 telephone calling card or prepaid authorization number, or recharge of
4 such card or number, as described by subsection (b) of K.S.A. 79-3603,
5 and amendments thereto.
6 (g) "Selling price" means the total cost to the consumer exclusive of
7 discounts allowed and credited, but including freight and transportation
8 charges from retailer to consumer.
9 (h) "Gross receipts" means the total selling price or the amount re-
10 ceived as defined in this act, in money, credits, property or other consid-
11 eration valued in money from sales at retail within this state; and em-
12 braced within the provisions of this act. The taxpayer, may take credit in
13 the report of gross receipts for: (1) An amount equal to the selling price
14 of property returned by the purchaser when the full sale price thereof,
15 including the tax collected, is refunded in cash or by credit; and (2) an
16 amount equal to the allowance given for the trade-in of property.
17 (i) "Taxpayer" means any person obligated to account to the director
18 for taxes collected under the terms of this act.
19 (j) "Isolated or occasional sale" means the nonrecurring sale of tan-
20 gible personal property, or services taxable hereunder by a person not
21 engaged at the time of such sale in the business of selling such property
22 or services. Any religious organization which makes a nonrecurring sale
23 of tangible personal property acquired for the purpose of resale shall be
24 deemed to be not engaged at the time of such sale in the business of
25 selling such property. Such term shall include: (1) Any sale by a bank,
26 savings and loan institution, credit union or any finance company licensed
27 under the provisions of the Kansas uniform consumer credit code of tan-
28 gible personal property which has been repossessed by any such entity;
29 and (2) any sale of tangible personal property made by an auctioneer or
30 agent on behalf of not more than two principals or households if such
31 sale is nonrecurring and any such principal or household is not engaged
32 at the time of such sale in the business of selling tangible personal
33 property.
34 (k) "Service" means those services described in and taxed under the
35 provisions of K.S.A. 79-3603 and amendments thereto.
36 (l) "Ingredient or component part" means tangible personal property
37 which is necessary or essential to, and which is actually used in and be-
38 comes an integral and material part of tangible personal property or serv-
39 ices produced, manufactured or compounded for sale by the producer,
40 manufacturer or compounder in its regular course of business. The fol-
41 lowing items of tangible personal property are hereby declared to be
42 ingredients or component parts, but the listing of such property shall not
43 be deemed to be exclusive nor shall such listing be construed to be a
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1 restriction upon, or an indication of, the type or types of property to be
2 included within the definition of "ingredient or component part" as
3 herein set forth:
4 (1) Containers, labels and shipping cases used in the distribution of
5 property produced, manufactured or compounded for sale which are not
6 to be returned to the producer, manufacturer or compounder for reuse.
7 (2) Containers, labels, shipping cases, paper bags, drinking straws,
8 paper plates, paper cups, twine and wrapping paper used in the distri-
9 bution and sale of property taxable under the provisions of this act by
10 wholesalers and retailers and which is not to be returned to such whole-
11 saler or retailer for reuse.
12 (3) Seeds and seedlings for the production of plants and plant prod-
13 ucts produced for resale.
14 (4) Paper and ink used in the publication of newspapers.
15 (5) Fertilizer used in the production of plants and plant products
16 produced for resale.
17 (6) Feed for animals, fowl and aquatic plants and animals, the primary
18 purpose of which is use in agriculture or aquaculture, as defined in K.S.A.
19 47-1901, and amendments thereto, the production of food for human
20 consumption, the production of animal, dairy, poultry or aquatic plant
21 and animal products, fiber, fur, or the production of offspring for use for
22 any such purpose or purposes.
23 (m) "Property which is consumed" means tangible personal property
24 which is essential or necessary to and which is used in the actual process
25 of and immediately consumed, depleted or dissipated within one year in
26 (1) the production, manufacture, processing, mining, drilling, refining or
27 compounding of tangible personal property, (2) the providing of services
28 or, (3) the irrigation of crops, for sale in the regular course of business,
29 or (4) the storage or processing of grain by a public grain warehouse or
30 other commercial grain storage facility, and which is not reusable for such
31 purpose. The following items of tangible personal property are hereby
32 declared to be "consumed" but the listing of such property shall not be
33 deemed to be exclusive nor shall such listing be construed to be a restric-
34 tion upon or an indication of, the type or types of property to be included
35 within the definition of "property which is consumed" as herein set forth
36 is a listing of tangible personal property, included by way of illustration
37 but not of limitation, which qualifies as property which is consumed:
38 (A) Insecticides, herbicides, germicides, pesticides, fungicides, fu-
39 migants, antibiotics, biologicals, pharmaceuticals, vitamins and chemicals
40 for use in commercial or agricultural production, processing or storage of
41 fruit, vegetables, feeds, seeds, grains, animals or animal products whether
42 fed, injected, applied, combined with or otherwise used; and
43 (B) electricity, gas and water; and
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1 (C) petroleum products, lubricants, chemicals, solvents, reagents and
2 catalysts.
3 (n) "Political subdivision" means any municipality, agency or subdi-
4 vision of the state which is, or shall hereafter be, authorized to levy taxes
5 upon tangible property within the state or which certifies a levy to a
6 municipality, agency or subdivision of the state which is, or shall hereafter
7 be, authorized to levy taxes upon tangible property within the state. Such
8 term also shall include any public building commission, housing, airport,
9 port, metropolitan transit or similar authority established pursuant to law.
10 (o) "Municipal corporation" means any city incorporated under the
11 laws of Kansas.
12 (p) "Quasi-municipal corporation" means any county, township,
13 school district, drainage district or any other governmental subdivision in
14 the state of Kansas having authority to receive or hold moneys or funds.
15 (q) "Nonprofit blood bank" means any nonprofit place, organization,
16 institution or establishment that is operated wholly or in part for the
17 purpose of obtaining, storing, processing, preparing for transfusing, fur-
18 nishing, donating or distributing human blood or parts or fractions of
19 single blood units or products derived from single blood units, whether
20 or not any remuneration is paid therefor, or whether such procedures are
21 done for direct therapeutic use or for storage for future use of such
22 products.
23 (r) "Contractor, subcontractor or repairman" means a person who
24 agrees to furnish and install tangible personal property or install tangible
25 personal property at a specified price. A person who maintains an inven-
26 tory of tangible personal property which enables such person to furnish
27 and install the tangible personal property or install the tangible personal
28 property shall not be deemed a contractor, subcontractor or repairman
29 but shall be deemed a retailer.
30 (s) "Educational institution" means any nonprofit school, college and
31 university that offers education at a level above the twelfth grade, and
32 conducts regular classes and courses of study required for accreditation
33 by, or membership in, the North Central Association of Colleges and
34 Schools, the state board of education, or that otherwise qualify as an
35 "educational institution," as defined by K.S.A. 74-50,103, and amend-
36 ments thereto. Such phrase shall include: (1) A group of educational in-
37 stitutions that operates exclusively for an educational purpose; (2) non-
38 profit endowment associations and foundations organized and operated
39 exclusively to receive, hold, invest and administer moneys and property
40 as a permanent fund for the support and sole benefit of an educational
41 institution; (3) nonprofit trusts, foundations and other entities organized
42 and operated principally to hold and own receipts from intercollegiate
43 sporting events and to disburse such receipts, as well as grants and gifts,
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1 in the interest of collegiate and intercollegiate athletic programs for the
2 support and sole benefit of an educational institution; and (4) nonprofit
3 trusts, foundations and other entities organized and operated for the pri-
4 mary purpose of encouraging, fostering and conducting scholarly inves-
5 tigations and industrial and other types of research for the support and
6 sole benefit of an educational institution.
7 Sec. 2. K.S.A. 1998 Supp. 79-3606 is hereby amended to read as
8 follows: 79-3606. The following shall be exempt from the tax imposed by
9 this act:
10 (a) All sales of motor-vehicle fuel or other articles upon which a sales
11 or excise tax has been paid, not subject to refund, under the laws of this
12 state except cigarettes as defined by K.S.A. 79-3301 and amendments
13 thereto, cereal malt beverages and malt products as defined by K.S.A. 79-
14 3817 and amendments thereto, including wort, liquid malt, malt syrup
15 and malt extract, which is not subject to taxation under the provisions of
16 K.S.A. 79-41a02 and amendments thereto, motor vehicles taxed pursuant
17 to K.S.A. 79-5117, and amendments thereto, tires taxed pursuant to
18 K.S.A. 1998 Supp. 65-3424d, and amendments thereto, and drycleaning
19 and laundry services taxed pursuant to K.S.A. 1998 Supp. 65-34,150, and
20 amendments thereto;
21 (b) all sales of tangible personal property or service, including the
22 renting and leasing of tangible personal property, purchased directly by
23 the state of Kansas, a political subdivision thereof, other than a school or
24 educational institution, or purchased by a public or private nonprofit hos-
25 pital or public hospital authority or nonprofit blood, tissue or organ bank
26 and used exclusively for state, political subdivision, hospital or public hos-
27 pital authority or nonprofit blood, tissue or organ bank purposes, except
28 when: (1) Such state, hospital or public hospital authority is engaged or
29 proposes to engage in any business specifically taxable under the provi-
30 sions of this act and such items of tangible personal property or service
31 are used or proposed to be used in such business, or (2) such political
32 subdivision is engaged or proposes to engage in the business of furnishing
33 gas, water, electricity or heat to others and such items of personal prop-
34 erty or service are used or proposed to be used in such business;
35 (c) all sales of tangible personal property or services, including the
36 renting and leasing of tangible personal property, purchased directly by
37 a public or private elementary or secondary school or public or private
38 nonprofit educational institution and used primarily by such school or
39 institution for nonsectarian programs and activities provided or sponsored
40 by such school or institution or in the erection, repair or enlargement of
41 buildings to be used for such purposes. The exemption herein provided
42 shall not apply to erection, construction, repair, enlargement or equip-
43 ment of buildings used primarily for human habitation;
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1 (d) all sales of tangible personal property or services purchased by a
2 contractor for the purpose of constructing, equipping, reconstructing,
3 maintaining, repairing, enlarging, furnishing or remodeling facilities for
4 any public or private nonprofit hospital or public hospital authority, public
5 or private elementary or secondary school or a public or private nonprofit
6 educational institution, which would be exempt from taxation under the
7 provisions of this act if purchased directly by such hospital or public hos-
8 pital authority, school or educational institution; and all sales of tangible
9 personal property or services purchased by a contractor for the purpose
10 of constructing, equipping, reconstructing, maintaining, repairing, en-
11 larging, furnishing or remodeling facilities for any political subdivision of
12 the state, the total cost of which is paid from funds of such political
13 subdivision and which would be exempt from taxation under the provi-
14 sions of this act if purchased directly by such political subdivision. Nothing
15 in this subsection or in the provisions of K.S.A. 12-3418 and amendments
16 thereto, shall be deemed to exempt the purchase of any construction
17 machinery, equipment or tools used in the constructing, equipping, re-
18 constructing, maintaining, repairing, enlarging, furnishing or remodeling
19 facilities for any political subdivision of the state. As used in this subsec-
20 tion, K.S.A. 12-3418 and 79-3640, and amendments thereto, "funds of a
21 political subdivision" shall mean general tax revenues, the proceeds of
22 any bonds and gifts or grants-in-aid. Gifts shall not mean funds used for
23 the purpose of constructing, equipping, reconstructing, repairing, enlarg-
24 ing, furnishing or remodeling facilities which are to be leased to the do-
25 nor. When any political subdivision of the state, public or private non-
26 profit hospital or public hospital authority, public or private elementary
27 or secondary school or public or private nonprofit educational institution
28 shall contract for the purpose of constructing, equipping, reconstructing,
29 maintaining, repairing, enlarging, furnishing or remodeling facilities, it
30 shall obtain from the state and furnish to the contractor an exemption
31 certificate for the project involved, and the contractor may purchase ma-
32 terials for incorporation in such project. The contractor shall furnish the
33 number of such certificate to all suppliers from whom such purchases are
34 made, and such suppliers shall execute invoices covering the same bearing
35 the number of such certificate. Upon completion of the project the con-
36 tractor shall furnish to the political subdivision, hospital or public hospital
37 authority, school or educational institution concerned a sworn statement,
38 on a form to be provided by the director of taxation, that all purchases so
39 made were entitled to exemption under this subsection. As an alternative
40 to the foregoing procedure, any such contracting entity may apply to the
41 secretary of revenue for agent status for the sole purpose of issuing and
42 furnishing project exemption certificates to contractors pursuant to rules
43 and regulations adopted by the secretary establishing conditions and stan-
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1 dards for the granting and maintaining of such status. All invoices shall
2 be held by the contractor for a period of five years and shall be subject
3 to audit by the director of taxation. If any materials purchased under such
4 a certificate are found not to have been incorporated in the building or
5 other project or not to have been returned for credit or the sales or
6 compensating tax otherwise imposed upon such materials which will not
7 be so incorporated in the building or other project reported and paid by
8 such contractor to the director of taxation not later than the 20th day of
9 the month following the close of the month in which it shall be deter-
10 mined that such materials will not be used for the purpose for which such
11 certificate was issued, the political subdivision, hospital or public hospital
12 authority, school or educational institution concerned shall be liable for
13 tax on all materials purchased for the project, and upon payment thereof
14 it may recover the same from the contractor together with reasonable
15 attorney fees. Any contractor or any agent, employee or subcontractor
16 thereof, who shall use or otherwise dispose of any materials purchased
17 under such a certificate for any purpose other than that for which such a
18 certificate is issued without the payment of the sales or compensating tax
19 otherwise imposed upon such materials, shall be guilty of a misdemeanor
20 and, upon conviction therefor, shall be subject to the penalties provided
21 for in subsection (g) of K.S.A. 79-3615, and amendments thereto;
22 (e) all sales of tangible personal property or services purchased by a
23 contractor for the erection, repair or enlargement of buildings or other
24 projects for the government of the United States, its agencies or instru-
25 mentalities, which would be exempt from taxation if purchased directly
26 by the government of the United States, its agencies or instrumentalities.
27 When the government of the United States, its agencies or instrumen-
28 talities shall contract for the erection, repair, or enlargement of any build-
29 ing or other project, it shall obtain from the state and furnish to the
30 contractor an exemption certificate for the project involved, and the con-
31 tractor may purchase materials for incorporation in such project. The
32 contractor shall furnish the number of such certificates to all suppliers
33 from whom such purchases are made, and such suppliers shall execute
34 invoices covering the same bearing the number of such certificate. Upon
35 completion of the project the contractor shall furnish to the government
36 of the United States, its agencies or instrumentalities concerned a sworn
37 statement, on a form to be provided by the director of taxation, that all
38 purchases so made were entitled to exemption under this subsection. As
39 an alternative to the foregoing procedure, any such contracting entity may
40 apply to the secretary of revenue for agent status for the sole purpose of
41 issuing and furnishing project exemption certificates to contractors pur-
42 suant to rules and regulations adopted by the secretary establishing con-
43 ditions and standards for the granting and maintaining of such status. All
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1 invoices shall be held by the contractor for a period of five years and shall
2 be subject to audit by the director of taxation. Any contractor or any agent,
3 employee or subcontractor thereof, who shall use or otherwise dispose of
4 any materials purchased under such a certificate for any purpose other
5 than that for which such a certificate is issued without the payment of
6 the sales or compensating tax otherwise imposed upon such materials,
7 shall be guilty of a misdemeanor and, upon conviction therefor, shall be
8 subject to the penalties provided for in subsection (g) of K.S.A. 79-3615
9 and amendments thereto;
10 (f) tangible personal property purchased by a railroad or public utility
11 for consumption or movement directly and immediately in interstate
12 commerce;
13 (g) sales of aircraft including remanufactured and modified aircraft,
14 sales of aircraft repair, modification and replacement parts and sales of
15 services employed in the remanufacture, modification and repair of air-
16 craft sold to persons using directly or through an authorized agent such
17 aircraft and aircraft repair, modification and replacement parts as certified
18 or licensed carriers of persons or property in interstate or foreign com-
19 merce under authority of the laws of the United States or any foreign
20 government or sold to any foreign government or agency or instrumen-
21 tality of such foreign government and all sales of aircraft, aircraft parts,
22 replacement parts and services employed in the remanufacture, modifi-
23 cation and repair of aircraft for use outside of the United States;
24 (h) all rentals of nonsectarian textbooks by public or private elemen-
25 tary or secondary schools;
26 (i) the lease or rental of all films, records, tapes, or any type of sound
27 or picture transcriptions used by motion picture exhibitors;
28 (j) meals served without charge or food used in the preparation of
29 such meals to employees of any restaurant, eating house, dining car, hotel,
30 drugstore or other place where meals or drinks are regularly sold to the
31 public if such employees' duties are related to the furnishing or sale of
32 such meals or drinks;
33 (k) any motor vehicle, semitrailer or pole trailer, as such terms are
34 defined by K.S.A. 8-126 and amendments thereto, or aircraft sold and
35 delivered in this state to a bona fide resident of another state, which motor
36 vehicle, semitrailer, pole trailer or aircraft is not to be registered or based
37 in this state and which vehicle, semitrailer, pole trailer or aircraft will not
38 remain in this state more than 10 days;
39 (l) all isolated or occasional sales of tangible personal property, serv-
40 ices, substances or things, except isolated or occasional sale of motor
41 vehicles specifically taxed under the provisions of subsection (o) of K.S.A.
42 79-3603 and amendments thereto;
43 (m) all sales of tangible personal property which become an ingre-
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1 dient or component part of tangible personal property or services pro-
2 duced, manufactured or compounded for ultimate sale at retail within or
3 without the state of Kansas; and any such producer, manufacturer or
4 compounder may obtain from the director of taxation and furnish to the
5 supplier an exemption certificate number for tangible personal property
6 for use as an ingredient or component part of the property or services
7 produced, manufactured or compounded;
8 (n) all sales of tangible personal property which is consumed in the
9 production, manufacture, processing, mining, drilling, refining or com-
10 pounding of tangible personal property, the treating of by-products or
11 wastes derived from any such production process, the providing of serv-
12 ices or the irrigation of crops for ultimate sale at retail within or without
13 the state of Kansas; and any purchaser of such property may obtain from
14 the director of taxation and furnish to the supplier an exemption certifi-
15 cate number for tangible personal property for consumption in such pro-
16 duction, manufacture, processing, mining, drilling, refining, compound-
17 ing, treating, irrigation and in providing such services;
18 (o) all sales of animals, fowl and aquatic plants and animals, the pri-
19 mary purpose of which is use in agriculture or aquaculture, as defined in
20 K.S.A. 47-1901, and amendments thereto, the production of food for
21 human consumption, the production of animal, dairy, poultry or aquatic
22 plant and animal products, fiber or fur, or the production of offspring for
23 use for any such purpose or purposes;
24 (p) all sales of drugs, as defined by K.S.A. 65-1626 and amendments
25 thereto, dispensed pursuant to a prescription order, as defined by K.S.A.
26 65-1626 and amendments thereto, by a licensed practitioner;
27 (q) all sales of insulin dispensed by a person licensed by the state
28 board of pharmacy to a person for treatment of diabetes at the direction
29 of a person licensed to practice medicine by the board of healing arts;
30 (r) all sales of prosthetic and orthopedic appliances prescribed in
31 writing by a person licensed to practice the healing arts, dentistry or
32 optometry. For the purposes of this subsection, the term prosthetic and
33 orthopedic appliances means any apparatus, instrument, device, or equip-
34 ment used to replace or substitute for any missing part of the body; used
35 to alleviate the malfunction of any part of the body; or used to assist any
36 disabled person in leading a normal life by facilitating such person's mo-
37 bility; such term shall include accessories attached or to be attached to
38 motor vehicles, but such term shall not include motor vehicles or personal
39 property which when installed becomes a fixture to real property;
40 (s) all sales of tangible personal property or services purchased di-
41 rectly by a groundwater management district organized or operating un-
42 der the authority of K.S.A. 82a-1020 et seq. and amendments thereto,
43 which property or services are used in the operation or maintenance of
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1 the district;
2 (t) all sales of farm machinery and equipment or aquaculture ma-
3 chinery and equipment, repair and replacement parts therefor and serv-
4 ices performed in the repair and maintenance of such machinery and
5 equipment. For the purposes of this subsection the term "farm machinery
6 and equipment or aquaculture machinery and equipment" shall include
7 machinery and equipment used in the operation of Christmas tree farm-
8 ing but shall not include any passenger vehicle, truck, truck tractor, trailer,
9 semitrailer or pole trailer, other than a farm trailer, as such terms are
10 defined by K.S.A. 8-126 and amendments thereto. Each purchaser of
11 farm machinery and equipment or aquaculture machinery and equipment
12 exempted herein must certify in writing on the copy of the invoice or
13 sales ticket to be retained by the seller that the farm machinery and
14 equipment or aquaculture machinery and equipment purchased will be
15 used only in farming, ranching or aquaculture production. Farming or
16 ranching shall include the operation of a feedlot and farm and ranch work
17 for hire and the operation of a nursery;
18 (u) all leases or rentals of tangible personal property used as a dwell-
19 ing if such tangible personal property is leased or rented for a period of
20 more than 28 consecutive days;
21 (v) all sales of food products to any contractor for use in preparing
22 meals for delivery to homebound elderly persons over 60 years of age and
23 to homebound disabled persons or to be served at a group-sitting at a
24 location outside of the home to otherwise homebound elderly persons
25 over 60 years of age and to otherwise homebound disabled persons, as
26 all or part of any food service project funded in whole or in part by
27 government or as part of a private nonprofit food service project available
28 to all such elderly or disabled persons residing within an area of service
29 designated by the private nonprofit organization, and all sales of food
30 products for use in preparing meals for consumption by indigent or home-
31 less individuals whether or not such meals are consumed at a place des-
32 ignated for such purpose;
33 (w) all sales of natural gas, electricity, heat and water delivered
34 through mains, lines or pipes: (1) To residential premises for noncom-
35 mercial use by the occupant of such premises; (2) for agricultural use and
36 also, for such use, all sales of propane gas; (3) for use in the severing of
37 oil; and (4) to any property which is exempt from property taxation pur-
38 suant to K.S.A. 79-201b Second through Sixth. As used in this paragraph,
39 "severing" shall have the meaning ascribed thereto by subsection (k) of
40 K.S.A. 79-4216, and amendments thereto;
41 (x) all sales of propane gas, LP-gas, coal, wood and other fuel sources
42 for the production of heat or lighting for noncommercial use of an oc-
43 cupant of residential premises;
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1 (y) all sales of materials and services used in the repairing, servicing,
2 altering, maintaining, manufacturing, remanufacturing, or modification of
3 railroad rolling stock for use in interstate or foreign commerce under
4 authority of the laws of the United States;
5 (z) all sales of tangible personal property and services purchased di-
6 rectly by a port authority or by a contractor therefor as provided by the
7 provisions of K.S.A. 12-3418 and amendments thereto;
8 (aa) all sales of materials and services applied to equipment which is
9 transported into the state from without the state for repair, service, al-
10 teration, maintenance, remanufacture or modification and which is sub-
11 sequently transported outside the state for use in the transmission of
12 liquids or natural gas by means of pipeline in interstate or foreign com-
13 merce under authority of the laws of the United States;
14 (bb) all sales of used mobile homes or manufactured homes. As used
15 in this subsection: (1) "Mobile homes" and "manufactured homes" shall
16 have the meanings ascribed thereto by K.S.A. 58-4202 and amendments
17 thereto; and (2) "sales of used mobile homes or manufactured homes"
18 means sales other than the original retail sale thereof;
19 (cc) all sales of tangible personal property or services purchased for
20 the purpose of and in conjunction with constructing, reconstructing, en-
21 larging or remodeling a business or retail business which meets the
22 requirements established in K.S.A. 74-50,115 and amendments thereto,
23 and the sale and installation of machinery and equipment purchased for
24 installation at any such business or retail business. When a person shall
25 contract for the construction, reconstruction, enlargement or remodeling
26 of any such business or retail business, such person shall obtain from the
27 state and furnish to the contractor an exemption certificate for the project
28 involved, and the contractor may purchase materials, machinery and
29 equipment for incorporation in such project. The contractor shall furnish
30 the number of such certificates to all suppliers from whom such purchases
31 are made, and such suppliers shall execute invoices covering the same
32 bearing the number of such certificate. Upon completion of the project
33 the contractor shall furnish to the owner of the business or retail business
34 a sworn statement, on a form to be provided by the director of taxation,
35 that all purchases so made were entitled to exemption under this subsec-
36 tion. All invoices shall be held by the contractor for a period of five years
37 and shall be subject to audit by the director of taxation. Any contractor
38 or any agent, employee or subcontractor thereof, who shall use or oth-
39 erwise dispose of any materials, machinery or equipment purchased un-
40 der such a certificate for any purpose other than that for which such a
41 certificate is issued without the payment of the sales or compensating tax
42 otherwise imposed thereon, shall be guilty of a misdemeanor and, upon
43 conviction therefor, shall be subject to the penalties provided for in sub-
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1 section (g) of K.S.A. 79-3615 and amendments thereto. As used in this
2 subsection, "business" and "retail business" have the meanings respec-
3 tively ascribed thereto by K.S.A. 74-50,114 and amendments thereto;
4 (dd) all sales of tangible personal property purchased with food
5 stamps issued by the United States department of agriculture;
6 (ee) all sales of lottery tickets and shares made as part of a lottery
7 operated by the state of Kansas;
8 (ff) on and after July 1, 1988, all sales of new mobile homes or man-
9 ufactured homes to the extent of 40% of the gross receipts, determined
10 without regard to any trade-in allowance, received from such sale. As used
11 in this subsection, "mobile homes" and "manufactured homes" shall have
12 the meanings ascribed thereto by K.S.A. 58-4202 and amendments
13 thereto;
14 (gg) all sales of tangible personal property purchased in accordance
15 with vouchers issued pursuant to the federal special supplemental food
16 program for women, infants and children;
17 (hh) all sales of medical supplies and equipment purchased directly
18 by a nonprofit skilled nursing home or nonprofit intermediate nursing
19 care home, as defined by K.S.A. 39-923, and amendments thereto, for
20 the purpose of providing medical services to residents thereof. This ex-
21 emption shall not apply to tangible personal property customarily used
22 for human habitation purposes;
23 (ii) all sales of tangible personal property purchased directly by a non-
24 profit organization for nonsectarian comprehensive multidiscipline youth
25 development programs and activities provided or sponsored by such or-
26 ganization, and all sales of tangible personal property by or on behalf of
27 any such organization. This exemption shall not apply to tangible personal
28 property customarily used for human habitation purposes;
29 (jj) all sales of tangible personal property or services, including the
30 renting and leasing of tangible personal property, purchased directly on
31 behalf of a community-based mental retardation facility or mental health
32 center organized pursuant to K.S.A. 19-4001 et seq., and amendments
33 thereto, and licensed in accordance with the provisions of K.S.A. 75-
34 3307b and amendments thereto. This exemption shall not apply to tan-
35 gible personal property customarily used for human habitation purposes;
36 (kk) on and after January 1, 1989, all sales of machinery and equip-
37 ment used directly and primarily for the purposes of manufacturing, as-
38 sembling, processing, finishing, storing, warehousing or distributing ar-
39 ticles of tangible personal property in this state intended for resale by a
40 manufacturing or processing plant or facility or a storage, warehousing or
41 distribution facility, and all sales of repair and replacement parts and
42 accessories purchased for such machinery and equipment:
43 (1) For purposes of this subsection, machinery and equipment shall
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1 be deemed to be used directly and primarily in the manufacture, assem-
2 blage, processing, finishing, storing, warehousing or distributing of tan-
3 gible personal property where such machinery and equipment is used
4 during a manufacturing, assembling, processing or finishing, storing,
5 warehousing or distributing operation:
6 (A) To effect a direct and immediate physical change upon the tan-
7 gible personal property;
8 (B) to guide or measure a direct and immediate physical change upon
9 such property where such function is an integral and essential part of
10 tuning, verifying or aligning the component parts of such property;
11 (C) to test or measure such property where such function is an in-
12 tegral part of the production flow or function;
13 (D) to transport, convey or handle such property during the manu-
14 facturing, processing, storing, warehousing or distribution operation at
15 the plant or facility; or
16 (E) to place such property in the container, package or wrapping in
17 which such property is normally sold or transported.
18 (2) For purposes of this subsection "machinery and equipment used
19 directly and primarily" shall include, but not be limited to:
20 (A) Mechanical machines or components thereof contributing to a
21 manufacturing, assembling or finishing process;
22 (B) molds and dies that determine the physical characteristics of the
23 finished product or its packaging material;
24 (C) testing equipment to determine the quality of the finished
25 product;
26 (D) computers and related peripheral equipment that directly control
27 or measure the manufacturing process or which are utilized for engi-
28 neering of the finished product; and
29 (E) computers and related peripheral equipment utilized for research
30 and development and product design.
31 (3) "Machinery and equipment used directly and primarily" shall not
32 include:
33 (A) Hand tools;
34 (B) machinery, equipment and tools used in maintaining and repair-
35 ing any type of machinery and equipment;
36 (C) transportation equipment not used in the manufacturing, assem-
37 bling, processing, furnishing, storing, warehousing or distributing process
38 at the plant or facility;
39 (D) office machines and equipment including computers and related
40 peripheral equipment not directly and primarily used in controlling or
41 measuring the manufacturing process;
42 (E) furniture and buildings; and
43 (F) machinery and equipment used in administrative, accounting,
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1 sales or other such activities of the business;
2 (4) for purposes of this subsection, "repair and replacement parts and
3 accessories" means all parts and accessories for exempt machinery and
4 equipment, including but not limited to dies, jigs, molds, and patterns
5 which are attached to exempt machinery or which are otherwise used in
6 production, short-lived replaceable parts that can be readily detached
7 from exempt machinery or equipment, such as belts, drill bits, grinding
8 wheels, cutting bars and saws, and other replacement parts for production
9 equipment, including refractory brick and other refractory items for kiln
10 equipment used in production operations
11 (1) (A) all sales of machinery and equipment which are used in this
12 state as an integral or essential part of an integrated production operation
13 by a manufacturing or processing plant or facility;
14 (B) all sales of installation, repair and maintenance services per-
15 formed on such machinery and equipment; and
16 (C) all sales of repair and replacement parts and accessories pur-
17 chased for such machinery and equipment.
18 (2) For purposes of this subsection:
19 (A) "Integrated production operation" means an integrated series of
20 operations engaged in at a manufacturing or processing plant or facility
21 to process, transform or convert tangible personal property by physical,
22 chemical or other means into a different form, composition or character
23 from that in which it originally existed. Integrated production operations
24 shall include: (i) Production line operations, including packaging opera-
25 tions; (ii) preproduction operations to handle, store and treat raw mate-
26 rials; (iii) post production handling, storage, warehousing and distribu-
27 tion operations; and (iv) waste, pollution and environmental control
28 operations, if any;
29 (B) "production line" means the assemblage of machinery and equip-
30 ment at a manufacturing or processing plant or facility where the actual
31 transformation or processing of tangible personal property occurs;
32 (C) "manufacturing or processing plant or facility" means a single,
33 fixed location owned or controlled by a manufacturing or processing busi-
34 ness that consists of one or more structures or buildings in a contiguous
35 area where integrated production operations are conducted to manufac-
36 ture or process tangible personal property to be ultimately sold at retail.
37 A business may operate one or more manufacturing or processing plants
38 or facilities at different locations to manufacture or process a single prod-
39 uct of tangible personal property to be ultimately sold at retail;
40 (D) "manufacturing or processing business" means a business that
41 utilizes an integrated production operation to manufacture, process, fab-
42 ricate, finish, or assemble items for wholesale and retail distribution as
43 part of what is commonly regarded by the general public as an industrial
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1 manufacturing or processing operation or an agricultural commodity
2 processing operation. (i) Industrial manufacturing or processing opera-
3 tions include, by way of illustration but not of limitation, the fabrication
4 of automobiles, airplanes, machinery or transportation equipment, the
5 fabrication of metal, plastic, wood, or paper products, electricity power
6 generation, water treatment, petroleum refining, chemical production,
7 wholesale bottling, newspaper printing, ready mixed concrete production,
8 and the remanufacturing of used parts for wholesale or retail sale. Such
9 processing operations shall include operations at an oil well, gas well, mine
10 or other excavation site where the oil, gas, minerals, coal, clay, stone, sand
11 or gravel that has been extracted from the earth is cleaned, separated,
12 crushed, ground, milled, screened, washed, or otherwise treated or pre-
13 pared before its transmission to a refinery or before any other wholesale
14 or retail distribution. (ii) Agricultural commodity processing operations
15 include, by way of illustration but not of limitation, meat packing, poultry
16 slaughtering and dressing, processing and packaging farm and dairy
17 products in sealed containers for wholesale and retail distribution, feed
18 grinding, grain milling, frozen food processing, and grain handling, clean-
19 ing, blending, fumigation, drying and aeration operations engaged in by
20 grain elevators or other grain storage facilities. (iii) Manufacturing or
21 processing businesses do not include, by way of illustration but not of
22 limitation, nonindustrial businesses whose operations are primarily retail
23 and that produce or process tangible personal property as an incidental
24 part of conducting the retail business, such as retailers who bake, cook or
25 prepare food products in the regular course of their retail trade, grocery
26 stores, meat lockers and meat markets that butcher or dress livestock or
27 poultry in the regular course of their retail trade, contractors who alter,
28 service, repair or improve real property, and retail businesses that clean,
29 service or refurbish and repair tangible personal property for its owner;
30 (E) "repair and replacement parts and accessories" means all parts
31 and accessories for exempt machinery and equipment, including, but not
32 limited to, dies, jigs, molds, patterns and safety devices that are attached
33 to exempt machinery or that are otherwise used in production, and parts
34 and accessories that require periodic replacement such as belts, drill bits,
35 grinding wheels, grinding balls, cutting bars, saws, refractory brick and
36 other refractory items for exempt kiln equipment used in production
37 operations;
38 (F) "primary" or "primarily" mean more than 50% of the time.
39 (3) For purposes of this subsection, machinery and equipment shall
40 be deemed to be used as an integral or essential part of an integrated
41 production operation when used:
42 (A) To receive, transport, convey, handle, treat or store raw materials
43 in preparation of its placement on the production line;
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1 (B) to transport, convey, handle or store the property undergoing
2 manufacturing or processing at any point from the beginning of the pro-
3 duction line through any warehousing or distribution operation of the
4 final product that occurs at the plant or facility;
5 (C) to act upon, effect, promote or otherwise facilitate a physical
6 change to the property undergoing manufacturing or processing;
7 (D) to guide, control or direct the movement of property undergoing
8 manufacturing or processing;
9 (E) to test or measure raw materials, the property undergoing man-
10 ufacturing or processing or the finished product, as a necessary part of
11 the manufacturer's integrated production operations;
12 (F) to plan, manage, control or record the receipt and flow of inven-
13 tories of raw materials, consumables and component parts, the flow of the
14 property undergoing manufacturing or processing and the management
15 of inventories of the finished product;
16 (G) to produce energy for, lubricate, control the operating of or oth-
17 erwise enable the functioning of other production machinery and equip-
18 ment and the continuation of production operations;
19 (H) to package the property being manufactured or processed in a
20 container or wrapping in which such property is normally sold or
21 transported;
22 (I) to transmit or transport electricity, coke, gas, water, steam or sim-
23 ilar substances used in production operations from the point of generation,
24 if produced by the manufacturer or processor at the plant site, to that
25 manufacturer's production operation; or, if purchased or delivered from
26 offsite, from the point where the substance enters the site of the plant or
27 facility to that manufacturer's production operations;
28 (J) to cool, heat, filter, refine or otherwise treat water, steam, acid,
29 oil, solvents or other substances that are used in production operations;
30 (K) to provide and control an environment required to maintain cer-
31 tain levels of air quality, humidity or temperature in special and limited
32 areas of the plant or facility, where such regulation of temperature or
33 humidity is part of and essential to the production process;
34 (L) to treat, transport or store waste or other byproducts of produc-
35 tion operations at the plant or facility; or
36 (M) to control pollution at the plant or facility where the pollution is
37 produced by the manufacturing or processing operation.
38 (4) The following machinery, equipment and materials shall be
39 deemed to be exempt even though it may not otherwise qualify as ma-
40 chinery and equipment used as an integral or essential part of an inte-
41 grated production operation: (A) Computers and related peripheral
42 equipment that are utilized by a manufacturing or processing business for
43 engineering of the finished product or for research and development or
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1 product design; (B) machinery and equipment that is utilized by a man-
2 ufacturing or processing business to manufacture or rebuild tangible per-
3 sonal property that is used in manufacturing or processing operations,
4 including tools, dies, molds, forms and other parts of qualifying machinery
5 and equipment; (C) oil and gas drilling services and supplies, and drilling,
6 pumping and monitoring equipment, used at a well site or in oil and gas
7 exploration; (D) movable batching plants for aggregate concrete, bulk ce-
8 ment and asphalt; (E) industrial fixtures, devices, support facilities and
9 special foundations necessary for manufacturing and production opera-
10 tions, and materials and other tangible personal property sold for the
11 purpose of fabricating such fixtures, devices, facilities and foundations.
12 An exemption certificate for such purchases shall be signed by the man-
13 ufacturer or processor. If the fabricator purchases such material, the fab-
14 ricator shall also sign the exemption certificate; and (F) a manufacturing
15 or processing business' laboratory equipment that is not located at the
16 plant or facility, but that would otherwise qualify for exemption under
17 subsection (3)(E).
18 (5) "Machinery and equipment used as an integral or essential part
19 of an integrated production operation" shall not include:
20 (A) Machinery and equipment used for nonproduction purposes, in-
21 cluding, but not limited to, machinery and equipment used for plant se-
22 curity, fire prevention, first aid, accounting, administration, record keep-
23 ing, advertising, marketing, sales or other related activities, plant
24 cleaning, plant communications, and employee work scheduling;
25 (B) machinery, equipment and tools used primarily in maintaining
26 and repairing any type of machinery and equipment or the building and
27 plant;
28 (C) transportation equipment not primarily used in a production,
29 warehousing or material handling operation at the plant or facility;
30 (D) office machines and equipment including computers and related
31 periheral equipment not used directly and primarily to control or measure
32 the manufacturing process;
33 (E) furniture and other furnishings;
34 (F) buildings, other than exempt machinery and equipment that is
35 permanently affixed to or becomes a physical part of the building, and
36 any other part of real estate that is not otherwise exempt;
37 (G) building fixtures that are not integral to the manufacturing op-
38 eration, such as utility systems for heating, ventilation, air conditioning,
39 communications, plumbing or electrical;
40 (H) machinery and equipment used for general plant heating, cooling
41 and lighting;
42 (I) motor vehicles that are registered for operation on public high-
43 ways; or
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1 (J) employee apparel, except safety and protective apparel that is pur-
2 chased by an employer and furnished gratuitously to employees who are
3 involved in production or research activities.
4 (6) Subsections (3) and (5) shall not be construed as exclusive listings
5 of the machinery and equipment that qualify or do not qualify as an
6 integral or essential part of an integrated production operation. When
7 machinery or equipment is used as an integral or essential part of pro-
8 duction operations part of the time and for nonproduction purpose at
9 other times, the primary use of the machinery or equipment shall deter-
10 mine whether or not such machinery or equipment qualifies for
11 exemption.
12 (7) The secretary of revenue shall adopt rules and regulations nec-
13 essary to administer the provisions of this subsection;
14 (ll) all sales of educational materials purchased for distribution to the
15 public at no charge by a nonprofit corporation organized for the purpose
16 of encouraging, fostering and conducting programs for the improvement
17 of public health;
18 (mm) all sales of seeds and tree seedlings; fertilizers, insecticides,
19 herbicides, germicides, pesticides and fungicides; and services, purchased
20 and used for the purpose of producing plants in order to prevent soil
21 erosion on land devoted to agricultural use;
22 (nn) except as otherwise provided in this act, all sales of services ren-
23 dered by an advertising agency or licensed broadcast station or any mem-
24 ber, agent or employee thereof;
25 (oo) all sales of tangible personal property purchased by a community
26 action group or agency for the exclusive purpose of repairing or weath-
27 erizing housing occupied by low income individuals;
28 (pp) all sales of drill bits and explosives actually utilized in the explo-
29 ration and production of oil or gas material handling equipment, racking
30 systems and other related machinery and equipment that is used for the
31 handling, movement or storage of tangible personal property in a ware-
32 house or distribution facility in this state; all sales of installation, repair
33 and maintenance services performed on such machinery and equipment;
34 and all sales of repair and replacement parts for such machinery and
35 equipment. For purposes of this subsection, a warehouse or distribution
36 facility means a single, fixed location that consists of buildings or struc-
37 tures in a contiguous area where storage or distribution operations are
38 conducted that are separate and apart from the business' retail operations,
39 if any, and which do not otherwise qualify for exemption as occurring at
40 a manufacturing or processing plant or facility. Material handling and
41 storage equipment shall include aeration, dust control, cleaning, handling
42 and other such equipment that is used in a public grain warehouse or
43 other commercial grain storage facility, whether used for grain handling,
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1 grain storage, grain refining or processing, or other grain treatment
2 operation;
3 (qq) all sales of tangible personal property and services purchased by
4 a nonprofit museum or historical society or any combination thereof, in-
5 cluding a nonprofit organization which is organized for the purpose of
6 stimulating public interest in the exploration of space by providing edu-
7 cational information, exhibits and experiences, which is exempt from fed-
8 eral income taxation pursuant to section 501(c)(3) of the federal internal
9 revenue code of 1986;
10 (rr) all sales of tangible personal property which will admit the pur-
11 chaser thereof to any annual event sponsored by a nonprofit organization
12 which is exempt from federal income taxation pursuant to section
13 501(c)(3) of the federal internal revenue code of 1986;
14 (ss) all sales of tangible personal property and services purchased by
15 a public broadcasting station licensed by the federal communications
16 commission as a noncommercial educational television or radio station;
17 (tt) all sales of tangible personal property and services purchased by
18 or on behalf of a not-for-profit corporation which is exempt from federal
19 income taxation pursuant to section 501(c)(3) of the federal internal rev-
20 enue code of 1986, for the sole purpose of constructing a Kansas Korean
21 War memorial;
22 (uu) all sales of tangible personal property and services purchased by
23 or on behalf of any rural volunteer fire-fighting organization for use ex-
24 clusively in the performance of its duties and functions;
25 (vv) all sales of tangible personal property purchased by any of the
26 following organizations which are exempt from federal income taxation
27 pursuant to section 501 (c)(3) of the federal internal revenue code of
28 1986, for the following purposes, and all sales of any such property by or
29 on behalf of any such organization for any such purpose:
30 (1) The American Heart Association, Kansas Affiliate, Inc. for the
31 purposes of providing education, training, certification in emergency car-
32 diac care, research and other related services to reduce disability and
33 death from cardiovascular diseases and stroke;
34 (2) the Kansas Alliance for the Mentally Ill, Inc. for the purpose of
35 advocacy for persons with mental illness and to education, research and
36 support for their families;
37 (3) the Kansas Mental Illness Awareness Council for the purposes of
38 advocacy for persons who are mentally ill and to education, research and
39 support for them and their families;
40 (4) the American Diabetes Association Kansas Affiliate, Inc. for the
41 purpose of eliminating diabetes through medical research, public edu-
42 cation focusing on disease prevention and education, patient education
43 including information on coping with diabetes, and professional education
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1 and training;
2 (5) the American Lung Association of Kansas, Inc. for the purpose of
3 eliminating all lung diseases through medical research, public education
4 including information on coping with lung diseases, professional educa-
5 tion and training related to lung disease and other related services to
6 reduce the incidence of disability and death due to lung disease;
7 (6) the Kansas chapters of the Alzheimer's Disease and Related Dis-
8 orders Association, Inc. for the purpose of providing assistance and sup-
9 port to persons in Kansas with Alzheimer's disease, and their families and
10 caregivers; and
11 (ww) all sales of tangible personal property purchased by the Habitat
12 for Humanity for the exclusive use of being incorporated within a housing
13 project constructed by such organization.;
14 (xx) all sales of tangible personal property and services purchased by
15 a nonprofit zoo which is exempt from federal income taxation pursuant
16 to section 501 (c)(3) of the federal internal revenue code of 1986, or on
17 behalf of such zoo by an entity itself exempt from federal income taxation
18 pursuant to section 50 501 (c)(3) of the federal internal revenue code of
19 1986 contracted with to operate such zoo and all sales of tangible personal
20 property or services purchased by a contractor for the purpose of con-
21 structing, equipping, reconstructing, maintaining, repairing, enlarging,
22 furnishing or remodeling facilities for any nonprofit zoo which would be
23 exempt from taxation under the provisions of this section if purchased
24 directly by such nonprofit zoo or the entity operating such zoo. Nothing
25 in this subsection shall be deemed to exempt the purchase of any con-
26 struction machinery, equipment or tools used in the constructing, equip-
27 ping, reconstructing, maintaining, repairing, enlarging, furnishing or re-
28 modeling facilities for any nonprofit zoo. When any nonprofit zoo shall
29 contract for the purpose of constructing, equipping, reconstructing, main-
30 taining, repairing, enlarging, furnishing or remodeling facilities, it shall
31 obtain from the state and furnish to the contractor an exemption certifi-
32 cate for the project involved, and the contractor may purchase materials
33 for incorporation in such project. The contractor shall furnish the number
34 of such certificate to all suppliers from whom such purchases are made,
35 and such suppliers shall execute invoices covering the same bearing the
36 number of such certificate. Upon completion of the project the contractor
37 shall furnish to the nonprofit zoo concerned a sworn statement, on a form
38 to be provided by the director of taxation, that all purchases so made were
39 entitled to exemption under this subsection. All invoices shall be held by
40 the contractor for a period of five years and shall be subject to audit by
41 the director of taxation. If any materials purchased under such a certifi-
42 cate are found not to have been incorporated in the building or other
43 project or not to have been returned for credit or the sales or compen-
HB 2009
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1 sating tax otherwise imposed upon such materials which will not be so
2 incorporated in the building or other project reported and paid by such
3 contractor to the director of taxation not later than the 20th day of the
4 month following the close of the month in which it shall be determined
5 that such materials will not be used for the purpose for which such cer-
6 tificate was issued, the nonprofit zoo concerned shall be liable for tax on
7 all materials purchased for the project, and upon payment thereof it may
8 recover the same from the contractor together with reasonable attorney
9 fees. Any contractor or any agent, employee or subcontractor thereof,
10 who shall use or otherwise dispose of any materials purchased under such
11 a certificate for any purpose other than that for which such a certificate
12 is issued without the payment of the sales or compensating tax otherwise
13 imposed upon such materials, shall be guilty of a misdemeanor and, upon
14 conviction therefor, shall be subject to the penalties provided for in sub-
15 section (g) of K.S.A. 79-3615, and amendments thereto;
16 (yy) all sales of tangible personal property and services purchased by
17 a parent-teacher association or organization, and all sales of tangible per-
18 sonal property by or on behalf of such association or organization;
19 (zz) all sales of machinery and equipment purchased by over-the-air,
20 free access radio or television station which is used directly and primarily
21 for the purpose of producing a broadcast signal or is such that the failure
22 of the machinery or equipment to operate would cause broadcasting to
23 cease. For purposes of this subsection, machinery and equipment shall
24 include, but not be limited to, that required by rules and regulations of
25 the federal communications commission, and all sales of electricity which
26 are essential or necessary for the purpose of producing a broadcast signal
27 or is such that the failure of the electricity would cause broadcasting to
28 cease;
29 (aaa) all sales of tangible personal property and services purchased
30 by a religious organization which is exempt from federal income taxation
31 pursuant to section 501 (c)(3) of the federal internal revenue code, and
32 used exclusively for religious purposes; and
33 (bbb) all sales of food for human consumption by an organization
34 which is exempt from federal income taxation pursuant to section 501
35 (c)(3) of the federal internal revenue code of 1986, pursuant to a food
36 distribution program which offers such food at a price below cost in
37 exchange for the performance of community service by the purchaser
38 thereof.
39 Sec. 3. K.S.A. 1998 Supp. 79-3602 and 79-3606 are hereby repealed.
40 Sec. 4. This act shall take effect and be in force from and after its
41 publication in the statute book.