Session of 1999
         
HOUSE BILL No. 2051
         
By Representative Welshimer
          
1-20
          
  9             AN  ACT relating to sales taxation; exempting sales of food for human
10             consumption therefrom; amending K.S.A. 1998 Supp. 79-3606 and
11             repealing the existing section; also repealing K.S.A. 79-3632, 79-3634
12             and 79-3636 through 79-3639 and K.S.A. 1998 Supp. 79-3633 and 79-
13             3635.
14      
15       Be it enacted by the Legislature of the State of Kansas:
16             Section  1. K.S.A. 1998 Supp. 79-3606 is hereby amended to read as
17       follows: 79-3606. The following shall be exempt from the tax imposed by
18       this act:
19             (a) All sales of motor-vehicle fuel or other articles upon which a sales
20       or excise tax has been paid, not subject to refund, under the laws of this
21       state except cigarettes as defined by K.S.A. 79-3301 and amendments
22       thereto, cereal malt beverages and malt products as defined by K.S.A. 79-
23       3817 and amendments thereto, including wort, liquid malt, malt syrup
24       and malt extract, which is not subject to taxation under the provisions of
25       K.S.A. 79-41a02 and amendments thereto, motor vehicles taxed pursuant
26       to K.S.A. 79-5117, and amendments thereto, tires taxed pursuant to
27       K.S.A. 1998 Supp. 65-3424d, and amendments thereto, and drycleaning
28       and laundry services taxed pursuant to K.S.A. 1998 Supp. 65-34,150, and
29       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 public hospital authority or nonprofit blood, tissue or organ bank
35       and used exclusively for state, political subdivision, hospital or public hos-
36       pital authority or nonprofit blood, tissue or organ bank purposes, except
37       when: (1) Such state, hospital or public hospital authority is engaged or
38       proposes to engage in any business specifically taxable under the provi-
39       sions of this act and such items of tangible personal property or service
40       are used or proposed to be used in such business, or (2) such political
41       subdivision is engaged or proposes to engage in the business of furnishing
42       gas, water, electricity or heat to others and such items of personal prop-
43       erty or service are used or proposed to be used in such business;

HB 2051

2

  1             (c) all sales of tangible personal property or services, including the
  2       renting and leasing of tangible personal property, purchased directly by
  3       a public or private elementary or secondary school or public or private
  4       nonprofit educational institution and used primarily by such school or
  5       institution for nonsectarian programs and activities provided or sponsored
  6       by such school or institution or in the erection, repair or enlargement of
  7       buildings to be used for such purposes. The exemption herein provided
  8       shall not apply to erection, construction, repair, enlargement or equip-
  9       ment of buildings used primarily for human habitation;
10             (d) all sales of tangible personal property or services purchased by a
11       contractor for the purpose of constructing, equipping, reconstructing,
12       maintaining, repairing, enlarging, furnishing or remodeling facilities for
13       any public or private nonprofit hospital or public hospital authority, public
14       or private elementary or secondary school or a public or private nonprofit
15       educational institution, which would be exempt from taxation under the
16       provisions of this act if purchased directly by such hospital or public hos-
17       pital authority, school or educational institution; and all sales of tangible
18       personal property or services purchased by a contractor for the purpose
19       of constructing, equipping, reconstructing, maintaining, repairing, en-
20       larging, furnishing or remodeling facilities for any political subdivision of
21       the state, the total cost of which is paid from funds of such political
22       subdivision and which would be exempt from taxation under the provi-
23       sions of this act if purchased directly by such political subdivision. Nothing
24       in this subsection or in the provisions of K.S.A. 12-3418 and amendments
25       thereto, shall be deemed to exempt the purchase of any construction
26       machinery, equipment or tools used in the constructing, equipping, re-
27       constructing, maintaining, repairing, enlarging, furnishing or remodeling
28       facilities for any political subdivision of the state. As used in this subsec-
29       tion, K.S.A. 12-3418 and 79-3640, and amendments thereto, "funds of a
30       political subdivision" shall mean general tax revenues, the proceeds of
31       any bonds and gifts or grants-in-aid. Gifts shall not mean funds used for
32       the purpose of constructing, equipping, reconstructing, repairing, enlarg-
33       ing, furnishing or remodeling facilities which are to be leased to the do-
34       nor. When any political subdivision of the state, public or private non-
35       profit hospital or public hospital authority, public or private elementary
36       or secondary school or public or private nonprofit educational institution
37       shall contract for the purpose of constructing, equipping, reconstructing,
38       maintaining, repairing, enlarging, furnishing or remodeling facilities, it
39       shall obtain from the state and furnish to the contractor an exemption
40       certificate for the project involved, and the contractor may purchase ma-
41       terials for incorporation in such project. The contractor shall furnish the
42       number of such certificate to all suppliers from whom such purchases are
43       made, and such suppliers shall execute invoices covering the same bearing

HB 2051

3

  1       the number of such certificate. Upon completion of the project the con-
  2       tractor shall furnish to the political subdivision, hospital or public hospital
  3       authority, school or educational institution concerned a sworn statement,
  4       on a form to be provided by the director of taxation, that all purchases so
  5       made were entitled to exemption under this subsection. As an alternative
  6       to the foregoing procedure, any such contracting entity may apply to the
  7       secretary of revenue for agent status for the sole purpose of issuing and
  8       furnishing project exemption certificates to contractors pursuant to rules
  9       and regulations adopted by the secretary establishing conditions and stan-
10       dards for the granting and maintaining of such status. All invoices shall
11       be held by the contractor for a period of five years and shall be subject
12       to audit by the director of taxation. If any materials purchased under such
13       a certificate are found not to have been incorporated in the building or
14       other project or not to have been returned for credit or the sales or
15       compensating tax otherwise imposed upon such materials which will not
16       be so incorporated in the building or other project reported and paid by
17       such contractor to the director of taxation not later than the 20th day of
18       the month following the close of the month in which it shall be deter-
19       mined that such materials will not be used for the purpose for which such
20       certificate was issued, the political subdivision, hospital or public hospital
21       authority, school or educational institution concerned shall be liable for
22       tax on all materials purchased for the project, and upon payment thereof
23       it may recover the same from the contractor together with reasonable
24       attorney fees. Any contractor or any agent, employee or subcontractor
25       thereof, who shall use or otherwise dispose of any materials purchased
26       under such a certificate for any purpose other than that for which such a
27       certificate is issued without the payment of the sales or compensating tax
28       otherwise imposed upon such materials, shall be guilty of a misdemeanor
29       and, upon conviction therefor, shall be subject to the penalties provided
30       for in subsection (g) of K.S.A. 79-3615, and amendments thereto;
31             (e) all sales of tangible personal property or services purchased by a
32       contractor for the erection, repair or enlargement of buildings or other
33       projects for the government of the United States, its agencies or instru-
34       mentalities, which would be exempt from taxation if purchased directly
35       by the government of the United States, its agencies or instrumentalities.
36       When the government of the United States, its agencies or instrumen-
37       talities shall contract for the erection, repair, or enlargement of any build-
38       ing or other project, it shall obtain from the state and furnish to the
39       contractor an exemption certificate for the project involved, and the con-
40       tractor may purchase materials for incorporation in such project. The
41       contractor shall furnish the number of such certificates to all suppliers
42       from whom such purchases are made, and such suppliers shall execute
43       invoices covering the same bearing the number of such certificate. Upon

HB 2051

4

  1       completion of the project the contractor shall furnish to the government
  2       of the United States, its agencies or instrumentalities concerned a sworn
  3       statement, on a form to be provided by the director of taxation, that all
  4       purchases so made were entitled to exemption under this subsection. As
  5       an alternative to the foregoing procedure, any such contracting entity may
  6       apply to the secretary of revenue for agent status for the sole purpose of
  7       issuing and furnishing project exemption certificates to contractors pur-
  8       suant to rules and regulations adopted by the secretary establishing con-
  9       ditions and standards for the granting and maintaining of such status. All
10       invoices shall be held by the contractor for a period of five years and shall
11       be subject to audit by the director of taxation. Any contractor or any agent,
12       employee or subcontractor thereof, who shall use or otherwise dispose of
13       any materials purchased under such a certificate for any purpose other
14       than that for which such a certificate is issued without the payment of
15       the sales or compensating tax otherwise imposed upon such materials,
16       shall be guilty of a misdemeanor and, upon conviction therefor, shall be
17       subject to the penalties provided for in subsection (g) of K.S.A. 79-3615
18       and amendments thereto;
19             (f) tangible personal property purchased by a railroad or public utility
20       for consumption or movement directly and immediately in interstate
21       commerce;
22             (g) sales of aircraft including remanufactured and modified aircraft,
23       sales of aircraft repair, modification and replacement parts and sales of
24       services employed in the remanufacture, modification and repair of air-
25       craft sold to persons using directly or through an authorized agent such
26       aircraft and aircraft repair, modification and replacement parts as certified
27       or licensed carriers of persons or property in interstate or foreign com-
28       merce under authority of the laws of the United States or any foreign
29       government or sold to any foreign government or agency or instrumen-
30       tality of such foreign government and all sales of aircraft, aircraft parts,
31       replacement parts and services employed in the remanufacture, modifi-
32       cation and repair of aircraft for use outside of the United States;
33             (h) all rentals of nonsectarian textbooks by public or private elemen-
34       tary or secondary schools;
35             (i) the lease or rental of all films, records, tapes, or any type of sound
36       or picture transcriptions used by motion picture exhibitors;
37             (j) meals served without charge or food used in the preparation of
38       such meals to employees of any restaurant, eating house, dining car, hotel,
39       drugstore or other place where meals or drinks are regularly sold to the
40       public if such employees' duties are related to the furnishing or sale of
41       such meals or drinks;
42             (k) any motor vehicle, semitrailer or pole trailer, as such terms are
43       defined by K.S.A. 8-126 and amendments thereto, or aircraft sold and

HB 2051

5

  1       delivered in this state to a bona fide resident of another state, which motor
  2       vehicle, semitrailer, pole trailer or aircraft is not to be registered or based
  3       in this state and which vehicle, semitrailer, pole trailer or aircraft will not
  4       remain in this state more than 10 days;
  5             (l) all isolated or occasional sales of tangible personal property, serv-
  6       ices, substances or things, except isolated or occasional sale of motor
  7       vehicles specifically taxed under the provisions of subsection (o) of K.S.A.
  8       79-3603 and amendments thereto;
  9             (m) all sales of tangible personal property which become an ingre-
10       dient or component part of tangible personal property or services pro-
11       duced, manufactured or compounded for ultimate sale at retail within or
12       without the state of Kansas; and any such producer, manufacturer or
13       compounder may obtain from the director of taxation and furnish to the
14       supplier an exemption certificate number for tangible personal property
15       for use as an ingredient or component part of the property or services
16       produced, manufactured or compounded;
17             (n) all sales of tangible personal property which is consumed in the
18       production, manufacture, processing, mining, drilling, refining or com-
19       pounding of tangible personal property, the treating of by-products or
20       wastes derived from any such production process, the providing of serv-
21       ices or the irrigation of crops for ultimate sale at retail within or without
22       the state of Kansas; and any purchaser of such property may obtain from
23       the director of taxation and furnish to the supplier an exemption certifi-
24       cate number for tangible personal property for consumption in such pro-
25       duction, manufacture, processing, mining, drilling, refining, compound-
26       ing, treating, irrigation and in providing such services;
27             (o) all sales of animals, fowl and aquatic plants and animals, the pri-
28       mary purpose of which is use in agriculture or aquaculture, as defined in
29       K.S.A. 47-1901, and amendments thereto, the production of food for
30       human consumption, the production of animal, dairy, poultry or aquatic
31       plant and animal products, fiber or fur, or the production of offspring for
32       use for any such purpose or purposes;
33             (p) all sales of drugs, as defined by K.S.A. 65-1626 and amendments
34       thereto, dispensed pursuant to a prescription order, as defined by K.S.A.
35       65-1626 and amendments thereto, by a licensed practitioner;
36             (q) all sales of insulin dispensed by a person licensed by the state
37       board of pharmacy to a person for treatment of diabetes at the direction
38       of a person licensed to practice medicine by the board of healing arts;
39             (r) all sales of prosthetic and orthopedic appliances prescribed in
40       writing by a person licensed to practice the healing arts, dentistry or
41       optometry. For the purposes of this subsection, the term prosthetic and
42       orthopedic appliances means any apparatus, instrument, device, or equip-
43       ment used to replace or substitute for any missing part of the body; used

HB 2051

6

  1       to alleviate the malfunction of any part of the body; or used to assist any
  2       disabled person in leading a normal life by facilitating such person's mo-
  3       bility; such term shall include accessories attached or to be attached to
  4       motor vehicles, but such term shall not include motor vehicles or personal
  5       property which when installed becomes a fixture to real property;
  6             (s) all sales of tangible personal property or services purchased di-
  7       rectly by a groundwater management district organized or operating un-
  8       der the authority of K.S.A. 82a-1020 et seq. and amendments thereto,
  9       which property or services are used in the operation or maintenance of
10       the district;
11             (t) all sales of farm machinery and equipment or aquaculture ma-
12       chinery and equipment, repair and replacement parts therefor and serv-
13       ices performed in the repair and maintenance of such machinery and
14       equipment. For the purposes of this subsection the term "farm machinery
15       and equipment or aquaculture machinery and equipment" shall include
16       machinery and equipment used in the operation of Christmas tree farm-
17       ing but shall not include any passenger vehicle, truck, truck tractor, trailer,
18       semitrailer or pole trailer, other than a farm trailer, as such terms are
19       defined by K.S.A. 8-126 and amendments thereto. Each purchaser of
20       farm machinery and equipment or aquaculture machinery and equipment
21       exempted herein must certify in writing on the copy of the invoice or
22       sales ticket to be retained by the seller that the farm machinery and
23       equipment or aquaculture machinery and equipment purchased will be
24       used only in farming, ranching or aquaculture production. Farming or
25       ranching shall include the operation of a feedlot and farm and ranch work
26       for hire and the operation of a nursery;
27             (u) all leases or rentals of tangible personal property used as a dwell-
28       ing if such tangible personal property is leased or rented for a period of
29       more than 28 consecutive days;
30             (v) all sales of food products to any contractor for use in preparing
31       meals for delivery to homebound elderly persons over 60 years of age and
32       to homebound disabled persons or to be served at a group-sitting at a
33       location outside of the home to otherwise homebound elderly persons
34       over 60 years of age and to otherwise homebound disabled persons, as
35       all or part of any food service project funded in whole or in part by
36       government or as part of a private nonprofit food service project available
37       to all such elderly or disabled persons residing within an area of service
38       designated by the private nonprofit organization, and all sales of food
39       products for use in preparing meals for consumption by indigent or home-
40       less individuals whether or not such meals are consumed at a place des-
41       ignated for such purpose;
42             (w) all sales of natural gas, electricity, heat and water delivered
43       through mains, lines or pipes: (1) To residential premises for noncom-

HB 2051

7

  1       mercial use by the occupant of such premises; (2) for agricultural use and
  2       also, for such use, all sales of propane gas; (3) for use in the severing of
  3       oil; and (4) to any property which is exempt from property taxation pur-
  4       suant to K.S.A. 79-201b Second through Sixth. As used in this paragraph,
  5       "severing" shall have the meaning ascribed thereto by subsection (k) of
  6       K.S.A. 79-4216, and amendments thereto;
  7             (x) all sales of propane gas, LP-gas, coal, wood and other fuel sources
  8       for the production of heat or lighting for noncommercial use of an oc-
  9       cupant of residential premises;
10             (y) all sales of materials and services used in the repairing, servicing,
11       altering, maintaining, manufacturing, remanufacturing, or modification of
12       railroad rolling stock for use in interstate or foreign commerce under
13       authority of the laws of the United States;
14             (z) all sales of tangible personal property and services purchased di-
15       rectly by a port authority or by a contractor therefor as provided by the
16       provisions of K.S.A. 12-3418 and amendments thereto;
17             (aa) all sales of materials and services applied to equipment which is
18       transported into the state from without the state for repair, service, al-
19       teration, maintenance, remanufacture or modification and which is sub-
20       sequently transported outside the state for use in the transmission of
21       liquids or natural gas by means of pipeline in interstate or foreign com-
22       merce under authority of the laws of the United States;
23             (bb) all sales of used mobile homes or manufactured homes. As used
24       in this subsection: (1) "Mobile homes" and "manufactured homes" shall
25       have the meanings ascribed thereto by K.S.A. 58-4202 and amendments
26       thereto; and (2) "sales of used mobile homes or manufactured homes"
27       means sales other than the original retail sale thereof;
28             (cc) all sales of tangible personal property or services purchased for
29       the purpose of and in conjunction with constructing, reconstructing, en-
30       larging or remodeling a business or retail business which meets the
31       requirements established in K.S.A. 74-50,115 and amendments thereto,
32       and the sale and installation of machinery and equipment purchased for
33       installation at any such business or retail business. When a person shall
34       contract for the construction, reconstruction, enlargement or remodeling
35       of any such business or retail business, such person shall obtain from the
36       state and furnish to the contractor an exemption certificate for the project
37       involved, and the contractor may purchase materials, machinery and
38       equipment for incorporation in such project. The contractor shall furnish
39       the number of such certificates to all suppliers from whom such purchases
40       are made, and such suppliers shall execute invoices covering the same
41       bearing the number of such certificate. Upon completion of the project
42       the contractor shall furnish to the owner of the business or retail business
43       a sworn statement, on a form to be provided by the director of taxation,

HB 2051

8

  1       that all purchases so made were entitled to exemption under this subsec-
  2       tion. All invoices shall be held by the contractor for a period of five years
  3       and shall be subject to audit by the director of taxation. Any contractor
  4       or any agent, employee or subcontractor thereof, who shall use or oth-
  5       erwise dispose of any materials, machinery or equipment purchased un-
  6       der such a certificate for any purpose other than that for which such a
  7       certificate is issued without the payment of the sales or compensating tax
  8       otherwise imposed thereon, shall be guilty of a misdemeanor and, upon
  9       conviction therefor, shall be subject to the penalties provided for in sub-
10       section (g) of K.S.A. 79-3615 and amendments thereto. As used in this
11       subsection, "business" and "retail business" have the meanings respec-
12       tively ascribed thereto by K.S.A. 74-50,114 and amendments thereto;
13             (dd) all sales of tangible personal property purchased with food
14       stamps issued by the United States department of agriculture;
15             (ee) all sales of lottery tickets and shares made as part of a lottery
16       operated by the state of Kansas;
17             (ff) on and after July 1, 1988, all sales of new mobile homes or man-
18       ufactured homes to the extent of 40% of the gross receipts, determined
19       without regard to any trade-in allowance, received from such sale. As used
20       in this subsection, "mobile homes" and "manufactured homes" shall have
21       the meanings ascribed thereto by K.S.A. 58-4202 and amendments
22       thereto;
23             (gg) all sales of tangible personal property purchased in accordance
24       with vouchers issued pursuant to the federal special supplemental food
25       program for women, infants and children;
26             (hh) all sales of medical supplies and equipment purchased directly
27       by a nonprofit skilled nursing home or nonprofit intermediate nursing
28       care home, as defined by K.S.A. 39-923, and amendments thereto, for
29       the purpose of providing medical services to residents thereof. This ex-
30       emption shall not apply to tangible personal property customarily used
31       for human habitation purposes;
32             (ii) all sales of tangible personal property purchased directly by a non-
33       profit organization for nonsectarian comprehensive multidiscipline youth
34       development programs and activities provided or sponsored by such or-
35       ganization, and all sales of tangible personal property by or on behalf of
36       any such organization. This exemption shall not apply to tangible personal
37       property customarily used for human habitation purposes;
38             (jj) all sales of tangible personal property or services, including the
39       renting and leasing of tangible personal property, purchased directly on
40       behalf of a community-based mental retardation facility or mental health
41       center organized pursuant to K.S.A. 19-4001 et seq., and amendments
42       thereto, and licensed in accordance with the provisions of K.S.A. 75-
43       3307b and amendments thereto. This exemption shall not apply to tan-

HB 2051

9

  1       gible personal property customarily used for human habitation purposes;
  2             (kk) on and after January 1, 1989, all sales of machinery and equip-
  3       ment used directly and primarily for the purposes of manufacturing, as-
  4       sembling, processing, finishing, storing, warehousing or distributing ar-
  5       ticles of tangible personal property in this state intended for resale by a
  6       manufacturing or processing plant or facility or a storage, warehousing or
  7       distribution facility, and all sales of repair and replacement parts and
  8       accessories purchased for such machinery and equipment:
  9             (1) For purposes of this subsection, machinery and equipment shall
10       be deemed to be used directly and primarily in the manufacture, assem-
11       blage, processing, finishing, storing, warehousing or distributing of tan-
12       gible personal property where such machinery and equipment is used
13       during a manufacturing, assembling, processing or finishing, storing,
14       warehousing or distributing operation:
15             (A) To effect a direct and immediate physical change upon the tan-
16       gible personal property;
17             (B) to guide or measure a direct and immediate physical change upon
18       such property where such function is an integral and essential part of
19       tuning, verifying or aligning the component parts of such property;
20             (C) to test or measure such property where such function is an in-
21       tegral part of the production flow or function;
22             (D) to transport, convey or handle such property during the manu-
23       facturing, processing, storing, warehousing or distribution operation at
24       the plant or facility; or
25             (E) to place such property in the container, package or wrapping in
26       which such property is normally sold or transported.
27             (2)  For purposes of this subsection "machinery and equipment used
28       directly and primarily" shall include, but not be limited to:
29             (A) Mechanical machines or components thereof contributing to a
30       manufacturing, assembling or finishing process;
31             (B) molds and dies that determine the physical characteristics of the
32       finished product or its packaging material;
33             (C) testing equipment to determine the quality of the finished
34       product;
35             (D) computers and related peripheral equipment that directly control
36       or measure the manufacturing process or which are utilized for engi-
37       neering of the finished product; and
38             (E) computers and related peripheral equipment utilized for research
39       and development and product design.
40             (3) "Machinery and equipment used directly and primarily" shall not
41       include:
42             (A) Hand tools;
43             (B) machinery, equipment and tools used in maintaining and repair-

HB 2051

10

  1       ing any type of machinery and equipment;
  2             (C) transportation equipment not used in the manufacturing, assem-
  3       bling, processing, furnishing, storing, warehousing or distributing process
  4       at the plant or facility;
  5             (D) office machines and equipment including computers and related
  6       peripheral equipment not directly and primarily used in controlling or
  7       measuring the manufacturing process;
  8             (E) furniture and buildings; and
  9             (F) machinery and equipment used in administrative, accounting,
10       sales or other such activities of the business;
11             (4) for purposes of this subsection, "repair and replacement parts and
12       accessories" means all parts and accessories for exempt machinery and
13       equipment, including but not limited to dies, jigs, molds, and patterns
14       which are attached to exempt machinery or which are otherwise used in
15       production, short-lived replaceable parts that can be readily detached
16       from exempt machinery or equipment, such as belts, drill bits, grinding
17       wheels, cutting bars and saws, and other replacement parts for production
18       equipment, including refractory brick and other refractory items for kiln
19       equipment used in production operations;
20             (ll) all sales of educational materials purchased for distribution to the
21       public at no charge by a nonprofit corporation organized for the purpose
22       of encouraging, fostering and conducting programs for the improvement
23       of public health;
24             (mm) all sales of seeds and tree seedlings; fertilizers, insecticides,
25       herbicides, germicides, pesticides and fungicides; and services, purchased
26       and used for the purpose of producing plants in order to prevent soil
27       erosion on land devoted to agricultural use;
28             (nn) except as otherwise provided in this act, all sales of services ren-
29       dered by an advertising agency or licensed broadcast station or any mem-
30       ber, agent or employee thereof;
31             (oo) all sales of tangible personal property purchased by a community
32       action group or agency for the exclusive purpose of repairing or weath-
33       erizing housing occupied by low income individuals;
34             (pp) all sales of drill bits and explosives actually utilized in the explo-
35       ration and production of oil or gas;
36             (qq) all sales of tangible personal property and services purchased by
37       a nonprofit museum or historical society or any combination thereof, in-
38       cluding a nonprofit organization which is organized for the purpose of
39       stimulating public interest in the exploration of space by providing edu-
40       cational information, exhibits and experiences, which is exempt from fed-
41       eral income taxation pursuant to section 501(c)(3) of the federal internal
42       revenue code of 1986;
43             (rr) all sales of tangible personal property which will admit the pur-

HB 2051

11

  1       chaser thereof to any annual event sponsored by a nonprofit organization
  2       which is exempt from federal income taxation pursuant to section
  3       501(c)(3) of the federal internal revenue code of 1986;
  4             (ss) all sales of tangible personal property and services purchased by
  5       a public broadcasting station licensed by the federal communications
  6       commission as a noncommercial educational television or radio station;
  7             (tt) all sales of tangible personal property and services purchased by
  8       or on behalf of a not-for-profit corporation which is exempt from federal
  9       income taxation pursuant to section 501(c)(3) of the federal internal rev-
10       enue code of 1986, for the sole purpose of constructing a Kansas Korean
11       War memorial;
12             (uu) all sales of tangible personal property and services purchased by
13       or on behalf of any rural volunteer fire-fighting organization for use ex-
14       clusively in the performance of its duties and functions;
15             (vv) all sales of tangible personal property purchased by any of the
16       following organizations which are exempt from federal income taxation
17       pursuant to section 501 (c)(3) of the federal internal revenue code of
18       1986, for the following purposes, and all sales of any such property by or
19       on behalf of any such organization for any such purpose:
20             (1) The American Heart Association, Kansas Affiliate, Inc. for the
21       purposes of providing education, training, certification in emergency car-
22       diac care, research and other related services to reduce disability and
23       death from cardiovascular diseases and stroke;
24             (2) the Kansas Alliance for the Mentally Ill, Inc. for the purpose of
25       advocacy for persons with mental illness and to education, research and
26       support for their families;
27             (3) the Kansas Mental Illness Awareness Council for the purposes of
28       advocacy for persons who are mentally ill and to education, research and
29       support for them and their families;
30             (4) the American Diabetes Association Kansas Affiliate, Inc. for the
31       purpose of eliminating diabetes through medical research, public edu-
32       cation focusing on disease prevention and education, patient education
33       including information on coping with diabetes, and professional education
34       and training;
35             (5) the American Lung Association of Kansas, Inc. for the purpose of
36       eliminating all lung diseases through medical research, public education
37       including information on coping with lung diseases, professional educa-
38       tion and training related to lung disease and other related services to
39       reduce the incidence of disability and death due to lung disease;
40             (6) the Kansas chapters of the Alzheimer's Disease and Related Dis-
41       orders Association, Inc. for the purpose of providing assistance and sup-
42       port to persons in Kansas with Alzheimer's disease, and their families and
43       caregivers; and

HB 2051

12

  1             (ww) all sales of tangible personal property purchased by the Habitat
  2       for Humanity for the exclusive use of being incorporated within a housing
  3       project constructed by such organization.
  4             (xx) all sales of tangible personal property and services purchased by
  5       a nonprofit zoo which is exempt from federal income taxation pursuant
  6       to section 501 (c)(3) of the federal internal revenue code of 1986, or on
  7       behalf of such zoo by an entity itself exempt from federal income taxation
  8       pursuant to section 50 501 (c)(3) of the federal internal revenue code of
  9       1986 contracted with to operate such zoo and all sales of tangible personal
10       property or services purchased by a contractor for the purpose of con-
11       structing, equipping, reconstructing, maintaining, repairing, enlarging,
12       furnishing or remodeling facilities for any nonprofit zoo which would be
13       exempt from taxation under the provisions of this section if purchased
14       directly by such nonprofit zoo or the entity operating such zoo. Nothing
15       in this subsection shall be deemed to exempt the purchase of any con-
16       struction machinery, equipment or tools used in the constructing, equip-
17       ping, reconstructing, maintaining, repairing, enlarging, furnishing or re-
18       modeling facilities for any nonprofit zoo. When any nonprofit zoo shall
19       contract for the purpose of constructing, equipping, reconstructing, main-
20       taining, repairing, enlarging, furnishing or remodeling facilities, it shall
21       obtain from the state and furnish to the contractor an exemption certifi-
22       cate for the project involved, and the contractor may purchase materials
23       for incorporation in such project. The contractor shall furnish the number
24       of such certificate to all suppliers from whom such purchases are made,
25       and such suppliers shall execute invoices covering the same bearing the
26       number of such certificate. Upon completion of the project the contractor
27       shall furnish to the nonprofit zoo concerned a sworn statement, on a form
28       to be provided by the director of taxation, that all purchases so made were
29       entitled to exemption under this subsection. All invoices shall be held by
30       the contractor for a period of five years and shall be subject to audit by
31       the director of taxation. If any materials purchased under such a certifi-
32       cate are found not to have been incorporated in the building or other
33       project or not to have been returned for credit or the sales or compen-
34       sating tax otherwise imposed upon such materials which will not be so
35       incorporated in the building or other project reported and paid by such
36       contractor to the director of taxation not later than the 20th day of the
37       month following the close of the month in which it shall be determined
38       that such materials will not be used for the purpose for which such cer-
39       tificate was issued, the nonprofit zoo concerned shall be liable for tax on
40       all materials purchased for the project, and upon payment thereof it may
41       recover the same from the contractor together with reasonable attorney
42       fees. Any contractor or any agent, employee or subcontractor thereof,
43       who shall use or otherwise dispose of any materials purchased under such

HB 2051

13

  1       a certificate for any purpose other than that for which such a certificate
  2       is issued without the payment of the sales or compensating tax otherwise
  3       imposed upon such materials, shall be guilty of a misdemeanor and, upon
  4       conviction therefor, shall be subject to the penalties provided for in sub-
  5       section (g) of K.S.A. 79-3615, and amendments thereto;
  6             (yy) all sales of tangible personal property and services purchased by
  7       a parent-teacher association or organization, and all sales of tangible per-
  8       sonal property by or on behalf of such association or organization;
  9             (zz) all sales of machinery and equipment purchased by over-the-air,
10       free access radio or television station which is used directly and primarily
11       for the purpose of producing a broadcast signal or is such that the failure
12       of the machinery or equipment to operate would cause broadcasting to
13       cease. For purposes of this subsection, machinery and equipment shall
14       include, but not be limited to, that required by rules and regulations of
15       the federal communications commission, and all sales of electricity which
16       are essential or necessary for the purpose of producing a broadcast signal
17       or is such that the failure of the electricity would cause broadcasting to
18       cease;
19             (aaa) all sales of tangible personal property and services purchased
20       by a religious organization which is exempt from federal income taxation
21       pursuant to section 501 (c)(3) of the federal internal revenue code, and
22       used exclusively for religious purposes; and
23             (bbb) all sales of food for human consumption by an organization
24       which is exempt from federal income taxation pursuant to section 501
25       (c)(3) of the federal internal revenue code of 1986, pursuant to a food
26       distribution program which offers such food at a price below cost in
27       exchange for the performance of community service by the purchaser
28       thereof.; and
29             (ccc) all sales of food for human consumption. As used in this subsec-
30       tion, "food for human consumption" means only that food which is eligible
31       for purchase with food stamps issued by the United States department of
32       agriculture pursuant to regulations in effect on January 1, 1999, regard-
33       less of whether the retailer from which the food is purchased is partici-
34       pating in the food stamp program. Such phrase shall not include: (1) Meals
35       prepared for immediate consumption on or off the premises of the retailer;
36       or (2) food sold through vending machines. 
37       Sec.  2. On and after April 16, 2000, K.S.A. 79-3632, 79-3634 and 79-
38       3636 through 79-3639 and K.S.A. 1998 Supp. 79-3633 and 79-3635 are
39       hereby repealed.
40             Sec.  3. K.S.A. 1998 Supp. 79-3606 is hereby repealed.
41        Sec.  4. This act shall take effect and be in force from and after its
42       publication in the statute book.