[As Amended by House Committee of the Whole]
Session of 1999
HOUSE BILL No. 2216
By Representative Sloan
2-2
10 AN ACT concerning rural [certain] water districts; relating to the re-
11 lease of land from districts[; exempting certain purchases thereof
12 from sales taxation; amending K.S.A. 1998 Supp. 79-3606 and
13 repealing the existing section].
14
15 from; amending K.S.A. 12-189a and K.S.A. 75-37,116, 79-2959,
16 79-5105 and K.S.A. 1998 Supp. 72-6431, 79-2964, 79-32,117, 79-
17 34,147, 79-3602, 79-3603, 79-3606 and 79-3703 and repealing
18 the existing sections; also repealing K.S.A. 79-3632, 79-3634 and
19 79-3636 through 79-3639 and K.S.A. 1998 Supp. 79-3633 and
20 79-3635.]
21
22 Be it enacted by the Legislature of the State of Kansas:
23 [New] Section 1. (a) As an alternative to the procedure contained in
24 K.S.A. 82a-630, and amendments thereto, the owners of land located in
25 a rural water district who desire for their land to be released from such
26 district and attached to a different district may proceed in accordance
27 with this section. A petition to release such land shall be filed with the
28 board of directors of the district in which such land is located. The petition
29 shall:
30 (1) Describe the land sought to be released;
31 (2) state the name and number of the rural water district to which
32 the owners seek to have such land attached; and
33 (3) state that such release is sought conditioned upon the attachment
34 thereof by such other rural water district.
35 Such petition shall be signed by at least 75% of the owners of the land
36 affected. The ownership shall be determined by an enumeration of land-
37 owners taken from the tax rolls of the county in which the land is located.
38 Within 30 days of receipt of such petition the board of directors of the
39 district shall call and hold a hearing on the advisability of granting such
40 petition. The board shall give notice of such hearing in the same manner
41 provided by K.S.A. 82a-640, and amendments thereto. On the date of
42 such hearing, the board shall approve or disapprove such release based
43 on its determination of the best interests of the district and the petitioning
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2
1 landowners.
2 (b) Following approval of such petition for release, a petition for at-
3 tachment of such lands shall be filed with the board of directors of the
4 district to which such land is sought to be attached. The petition shall:
5 (1) Describe the land sought to be attached;
6 (2) request that the owners thereof seek to have such land attached
7 to the district; and
8 (3) have attached to it a copy of the approval of release of such land
9 by the board of directors of the district in which such land was condi-
10 tionally released. Such petition shall be signed by at least 75% of the
11 owners of the land affected. Ownership shall be determined by an enu-
12 meration of landowners taken from the tax rolls of the county in which
13 the land is located.
14 Within 30 days of receipt of such petition the board of directors of the
15 district shall call and hold a hearing on the advisability of granting such
16 petition. Notice of such hearing shall be provided in the manner provided
17 by K.S.A. 82a-640, and amendments thereto, by the board of directors.
18 On the date of such hearing, the board shall approve or disapprove such
19 attachment based on its determination of the best interests of the district
20 and the petitioning landowners. If the board does not approve of such
21 attachment, it shall notify the district from which release had been sought,
22 which district shall then declare such release to be void.
23 (c) If the district to which release is sought approves of the release
24 of such lands and the district to which attachment is sought approves of
25 attachment of such lands, copies of the approval of such action by the
26 boards of directors of each district shall be transmitted to the chief en-
27 gineer. Copies also shall be filed with the county clerk, who shall note
28 the change of such district's boundaries.
29 (d) Nothing in this section shall be construed as limiting landowners
30 from using the procedures for attachment or release of property other-
31 wise provided in K.S.A. 82a-622 et seq., and amendments thereto.
32 [Sec. 2. K.S.A. 1998 Supp. 79-3606 is hereby amended to read
33 as follows: 79-3606. The following shall be exempt from the tax
34 imposed by this act:
35 [(a) All sales of motor-vehicle fuel or other articles upon which
36 a sales or excise tax has been paid, not subject to refund, under
37 the laws of this state except cigarettes as defined by K.S.A. 79-3301
38 and amendments thereto, cereal malt beverages and malt products
39 as defined by K.S.A. 79-3817 and amendments thereto, including
40 wort, liquid malt, malt syrup and malt extract, which is not subject
41 to taxation under the provisions of K.S.A. 79-41a02 and amend-
42 ments thereto, motor vehicles taxed pursuant to K.S.A. 79-5117,
43 and amendments thereto, tires taxed pursuant to K.S.A. 1998
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3
1 Supp. 65-3424d, and amendments thereto, and drycleaning and
2 laundry services taxed pursuant to K.S.A. 1998 Supp. 65-34,150,
3 and amendments thereto;
4 [(b) all sales of tangible personal property or service, including
5 the renting and leasing of tangible personal property, purchased
6 directly by the state of Kansas, a political subdivision thereof, other
7 than a school or educational institution, or purchased by a public
8 or private nonprofit hospital or public hospital authority or non-
9 profit blood, tissue or organ bank and used exclusively for state,
10 political subdivision, hospital or public hospital authority or non-
11 profit blood, tissue or organ bank purposes, except when: (1) Such
12 state, hospital or public hospital authority is engaged or proposes
13 to engage in any business specifically taxable under the provisions
14 of this act and such items of tangible personal property or service
15 are used or proposed to be used in such business, or (2) such po-
16 litical subdivision is engaged or proposes to engage in the business
17 of furnishing gas, water, electricity or heat to others and such items
18 of personal property or service are used or proposed to be used in
19 such business;
20 [(c) all sales of tangible personal property or services, includ-
21 ing the renting and leasing of tangible personal property, pur-
22 chased directly by a public or private elementary or secondary
23 school or public or private nonprofit educational institution and
24 used primarily by such school or institution for nonsectarian pro-
25 grams and activities provided or sponsored by such school or in-
26 stitution or in the erection, repair or enlargement of buildings to
27 be used for such purposes. The exemption herein provided shall
28 not apply to erection, construction, repair, enlargement or equip-
29 ment of buildings used primarily for human habitation;
30 [(d) all sales of tangible personal property or services pur-
31 chased by a contractor for the purpose of constructing, equipping,
32 reconstructing, maintaining, repairing, enlarging, furnishing or
33 remodeling facilities for any public or private nonprofit hospital
34 or public hospital authority, public or private elementary or sec-
35 ondary school or a public or private nonprofit educational insti-
36 tution, which would be exempt from taxation under the provisions
37 of this act if purchased directly by such hospital or public hospital
38 authority, school or educational institution; and all sales of tangible
39 personal property or services purchased by a contractor for the
40 purpose of constructing, equipping, reconstructing, maintaining,
41 repairing, enlarging, furnishing or remodeling facilities for any
42 political subdivision of the state or district described in subsection (s),
43 the total cost of which is paid from funds of such political subdi-
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1 vision or district and which would be exempt from taxation under
2 the provisions of this act if purchased directly by such political
3 subdivision or district. Nothing in this subsection or in the provi-
4 sions of K.S.A. 12-3418 and amendments thereto, shall be deemed
5 to exempt the purchase of any construction machinery, equipment
6 or tools used in the constructing, equipping, reconstructing, main-
7 taining, repairing, enlarging, furnishing or remodeling facilities
8 for any political subdivision of the state or any such district. As used
9 in this subsection, K.S.A. 12-3418 and 79-3640, and amendments
10 thereto, "funds of a political subdivision" shall mean general tax
11 revenues, the proceeds of any bonds and gifts or grants-in-aid.
12 Gifts shall not mean funds used for the purpose of constructing,
13 equipping, reconstructing, repairing, enlarging, furnishing or re-
14 modeling facilities which are to be leased to the donor. When any
15 political subdivision of the state, district described in subsection (s),
16 public or private nonprofit hospital or public hospital authority,
17 public or private elementary or secondary school or public or pri-
18 vate nonprofit educational institution shall contract for the pur-
19 pose of constructing, equipping, reconstructing, maintaining, re-
20 pairing, enlarging, furnishing or remodeling facilities, it shall
21 obtain from the state and furnish to the contractor an exemption
22 certificate for the project involved, and the contractor may pur-
23 chase materials for incorporation in such project. The contractor
24 shall furnish the number of such certificate to all suppliers from
25 whom such purchases are made, and such suppliers shall execute
26 invoices covering the same bearing the number of such certificate.
27 Upon completion of the project the contractor shall furnish to the
28 political subdivision, district, hospital or public hospital authority,
29 school or educational institution concerned a sworn statement, on
30 a form to be provided by the director of taxation, that all purchases
31 so made were entitled to exemption under this subsection. As an
32 alternative to the foregoing procedure, any such contracting entity
33 may apply to the secretary of revenue for agent status for the sole
34 purpose of issuing and furnishing project exemption certificates to
35 contractors pursuant to rules and regulations adopted by the sec-
36 retary establishing conditions and standards for the granting and
37 maintaining of such status. All invoices shall be held by the con-
38 tractor for a period of five years and shall be subject to audit by
39 the director of taxation. If any materials purchased under such a
40 certificate are found not to have been incorporated in the building
41 or other project or not to have been returned for credit or the
42 sales or compensating tax otherwise imposed upon such materials
43 which will not be so incorporated in the building or other project
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1 reported and paid by such contractor to the director of taxation
2 not later than the 20th day of the month following the close of the
3 month in which it shall be determined that such materials will not
4 be used for the purpose for which such certificate was issued, the
5 political subdivision, district, hospital or public hospital authority,
6 school or educational institution concerned shall be liable for tax
7 on all materials purchased for the project, and upon payment
8 thereof it may recover the same from the contractor together with
9 reasonable attorney fees. Any contractor or any agent, employee
10 or subcontractor thereof, who shall use or otherwise dispose of any
11 materials purchased under such a certificate for any purpose other
12 than that for which such a certificate is issued without the payment
13 of the sales or compensating tax otherwise imposed upon such ma-
14 terials, shall be guilty of a misdemeanor and, upon conviction
15 therefor, shall be subject to the penalties provided for in subsec-
16 tion (g) of K.S.A. 79-3615, and amendments thereto;
17 [(e) all sales of tangible personal property or services pur-
18 chased by a contractor for the erection, repair or enlargement of
19 buildings or other projects for the government of the United
20 States, its agencies or instrumentalities, which would be exempt
21 from taxation if purchased directly by the government of the
22 United States, its agencies or instrumentalities. When the govern-
23 ment of the United States, its agencies or instrumentalities shall
24 contract for the erection, repair, or enlargement of any building
25 or other project, it shall obtain from the state and furnish to the
26 contractor an exemption certificate for the project involved, and
27 the contractor may purchase materials for incorporation in such
28 project. The contractor shall furnish the number of such certifi-
29 cates to all suppliers from whom such purchases are made, and
30 such suppliers shall execute invoices covering the same bearing
31 the number of such certificate. Upon completion of the project the
32 contractor shall furnish to the government of the United States, its
33 agencies or instrumentalities concerned a sworn statement, on a
34 form to be provided by the director of taxation, that all purchases
35 so made were entitled to exemption under this subsection. As an
36 alternative to the foregoing procedure, any such contracting entity
37 may apply to the secretary of revenue for agent status for the sole
38 purpose of issuing and furnishing project exemption certificates to
39 contractors pursuant to rules and regulations adopted by the sec-
40 retary establishing conditions and standards for the granting and
41 maintaining of such status. All invoices shall be held by the con-
42 tractor for a period of five years and shall be subject to audit by
43 the director of taxation. Any contractor or any agent, employee or
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1 subcontractor thereof, who shall use or otherwise dispose of any
2 materials purchased under such a certificate for any purpose other
3 than that for which such a certificate is issued without the payment
4 of the sales or compensating tax otherwise imposed upon such ma-
5 terials, shall be guilty of a misdemeanor and, upon conviction
6 therefor, shall be subject to the penalties provided for in subsec-
7 tion (g) of K.S.A. 79-3615 and amendments thereto;
8 [(f) tangible personal property purchased by a railroad or pub-
9 lic utility for consumption or movement directly and immediately
10 in interstate commerce;
11 [(g) sales of aircraft including remanufactured and modified
12 aircraft, sales of aircraft repair, modification and replacement
13 parts and sales of services employed in the remanufacture, modi-
14 fication and repair of aircraft sold to persons using directly or
15 through an authorized agent such aircraft and aircraft repair,
16 modification and replacement parts as certified or licensed carri-
17 ers of persons or property in interstate or foreign commerce under
18 authority of the laws of the United States or any foreign govern-
19 ment or sold to any foreign government or agency or instrumen-
20 tality of such foreign government and all sales of aircraft, aircraft
21 parts, replacement parts and services employed in the remanufac-
22 ture, modification and repair of aircraft for use outside of the
23 United States;
24 [(h) all rentals of nonsectarian textbooks by public or private
25 elementary or secondary schools;
26 [(i) the lease or rental of all films, records, tapes, or any type
27 of sound or picture transcriptions used by motion picture
28 exhibitors;
29 [(j) meals served without charge or food used in the prepara-
30 tion of such meals to employees of any restaurant, eating house,
31 dining car, hotel, drugstore or other place where meals or drinks
32 are regularly sold to the public if such employees' duties are re-
33 lated to the furnishing or sale of such meals or drinks;
34 [(k) any motor vehicle, semitrailer or pole trailer, as such terms
35 are defined by K.S.A. 8-126 and amendments thereto, or aircraft
36 sold and delivered in this state to a bona fide resident of another
37 state, which motor vehicle, semitrailer, pole trailer or aircraft is
38 not to be registered or based in this state and which vehicle, sem-
39 itrailer, pole trailer or aircraft will not remain in this state more
40 than 10 days;
41 [(l) all isolated or occasional sales of tangible personal prop-
42 erty, services, substances or things, except isolated or occasional
43 sale of motor vehicles specifically taxed under the provisions of
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1 subsection (o) of K.S.A. 79-3603 and amendments thereto;
2 [(m) all sales of tangible personal property which become an
3 ingredient or component part of tangible personal property or
4 services produced, manufactured or compounded for ultimate sale
5 at retail within or without the state of Kansas; and any such pro-
6 ducer, manufacturer or compounder may obtain from the director
7 of taxation and furnish to the supplier an exemption certificate
8 number for tangible personal property for use as an ingredient or
9 component part of the property or services produced, manufac-
10 tured or compounded;
11 [(n) all sales of tangible personal property which is consumed
12 in the production, manufacture, processing, mining, drilling, re-
13 fining or compounding of tangible personal property, the treating
14 of by-products or wastes derived from any such production pro-
15 cess, the providing of services or the irrigation of crops for ulti-
16 mate sale at retail within or without the state of Kansas; and any
17 purchaser of such property may obtain from the director of taxa-
18 tion and furnish to the supplier an exemption certificate number
19 for tangible personal property for consumption in such produc-
20 tion, manufacture, processing, mining, drilling, refining, com-
21 pounding, treating, irrigation and in providing such services;
22 [(o) all sales of animals, fowl and aquatic plants and animals,
23 the primary purpose of which is use in agriculture or aquaculture,
24 as defined in K.S.A. 47-1901, and amendments thereto, the pro-
25 duction of food for human consumption, the production of animal,
26 dairy, poultry or aquatic plant and animal products, fiber or fur,
27 or the production of offspring for use for any such purpose or
28 purposes;
29 [(p) all sales of drugs, as defined by K.S.A. 65-1626 and amend-
30 ments thereto, dispensed pursuant to a prescription order, as de-
31 fined by K.S.A. 65-1626 and amendments thereto, by a licensed
32 practitioner;
33 [(q) all sales of insulin dispensed by a person licensed by the
34 state board of pharmacy to a person for treatment of diabetes at
35 the direction of a person licensed to practice medicine by the
36 board of healing arts;
37 [(r) all sales of prosthetic and orthopedic appliances prescribed
38 in writing by a person licensed to practice the healing arts, den-
39 tistry or optometry. For the purposes of this subsection, the term
40 prosthetic and orthopedic appliances means any apparatus, instru-
41 ment, device, or equipment used to replace or substitute for any
42 missing part of the body; used to alleviate the malfunction of any
43 part of the body; or used to assist any disabled person in leading
HB 2216--Am. by HCW
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1 a normal life by facilitating such person's mobility; such term shall
2 include accessories attached or to be attached to motor vehicles,
3 but such term shall not include motor vehicles or personal prop-
4 erty which when installed becomes a fixture to real property;
5 [(s) all sales of tangible personal property or services pur-
6 chased directly by a groundwater management district organized
7 or operating under the authority of K.S.A. 82a-1020 et seq. and
8 amendments thereto, by a rural water district organized or operated
9 under the authority of K.S.A. 82a-612, and amendments thereto, or by a
10 water supply district organized or operating under the authority of K.S.A.
11 19-3501 et seq., and amendments thereto, K.S.A. 19-3522 et seq., and
12 amendments thereto, or K.S.A. 1903545 et seq., and amendments
13 thereto, which property or services are used in the construction
14 activities, operation or maintenance of the district;
15 [(t) all sales of farm machinery and equipment or aquaculture
16 machinery and equipment, repair and replacement parts therefor
17 and services performed in the repair and maintenance of such ma-
18 chinery and equipment. For the purposes of this subsection the
19 term "farm machinery and equipment or aquaculture machinery
20 and equipment" shall include machinery and equipment used in
21 the operation of Christmas tree farming but shall not include any
22 passenger vehicle, truck, truck tractor, trailer, semitrailer or pole
23 trailer, other than a farm trailer, as such terms are defined by
24 K.S.A. 8-126 and amendments thereto. Each purchaser of farm
25 machinery and equipment or aquaculture machinery and equip-
26 ment exempted herein must certify in writing on the copy of the
27 invoice or sales ticket to be retained by the seller that the farm
28 machinery and equipment or aquaculture machinery and equip-
29 ment purchased will be used only in farming, ranching or aqua-
30 culture production. Farming or ranching shall include the opera-
31 tion of a feedlot and farm and ranch work for hire and the
32 operation of a nursery;
33 [(u) all leases or rentals of tangible personal property used as
34 a dwelling if such tangible personal property is leased or rented
35 for a period of more than 28 consecutive days;
36 [(v) all sales of food products to any contractor for use in pre-
37 paring meals for delivery to homebound elderly persons over 60
38 years of age and to homebound disabled persons or to be served
39 at a group-sitting at a location outside of the home to otherwise
40 homebound elderly persons over 60 years of age and to otherwise
41 homebound disabled persons, as all or part of any food service
42 project funded in whole or in part by government or as part of a
43 private nonprofit food service project available to all such elderly
HB 2216--Am. by HCW
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1 or disabled persons residing within an area of service designated
2 by the private nonprofit organization, and all sales of food prod-
3 ucts for use in preparing meals for consumption by indigent or
4 homeless individuals whether or not such meals are consumed at
5 a place designated for such purpose;
6 [(w) all sales of natural gas, electricity, heat and water deliv-
7 ered through mains, lines or pipes: (1) To residential premises for
8 noncommercial use by the occupant of such premises; (2) for ag-
9 ricultural use and also, for such use, all sales of propane gas; (3)
10 for use in the severing of oil; and (4) to any property which is
11 exempt from property taxation pursuant to K.S.A. 79-201b Second
12 through Sixth. As used in this paragraph, "severing" shall have the
13 meaning ascribed thereto by subsection (k) of K.S.A. 79-4216, and
14 amendments thereto;
15 [(x) all sales of propane gas, LP-gas, coal, wood and other fuel
16 sources for the production of heat or lighting for noncommercial
17 use of an occupant of residential premises;
18 [(y) all sales of materials and services used in the repairing,
19 servicing, altering, maintaining, manufacturing, remanufacturing,
20 or modification of railroad rolling stock for use in interstate or
21 foreign commerce under authority of the laws of the United States;
22 [(z) all sales of tangible personal property and services pur-
23 chased directly by a port authority or by a contractor therefor as
24 provided by the provisions of K.S.A. 12-3418 and amendments
25 thereto;
26 [(aa) all sales of materials and services applied to equipment
27 which is transported into the state from without the state for re-
28 pair, service, alteration, maintenance, remanufacture or modifi-
29 cation and which is subsequently transported outside the state for
30 use in the transmission of liquids or natural gas by means of pipe-
31 line in interstate or foreign commerce under authority of the laws
32 of the United States;
33 [(bb) all sales of used mobile homes or manufactured homes.
34 As used in this subsection: (1) "Mobile homes" and "manufactured
35 homes" shall have the meanings ascribed thereto by K.S.A. 58-
36 4202 and amendments thereto; and (2) "sales of used mobile
37 homes or manufactured homes" means sales other than the orig-
38 inal retail sale thereof;
39 [(cc) all sales of tangible personal property or services pur-
40 chased for the purpose of and in conjunction with constructing,
41 reconstructing, enlarging or remodeling a business or retail busi-
42 ness which meets the requirements established in K.S.A. 74-50,115
43 and amendments thereto, and the sale and installation of machin-
HB 2216--Am. by HCW
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1 ery and equipment purchased for installation at any such business
2 or retail business. When a person shall contract for the construc-
3 tion, reconstruction, enlargement or remodeling of any such busi-
4 ness or retail business, such person shall obtain from the state and
5 furnish to the contractor an exemption certificate for the project
6 involved, and the contractor may purchase materials, machinery
7 and equipment for incorporation in such project. The contractor
8 shall furnish the number of such certificates to all suppliers from
9 whom such purchases are made, and such suppliers shall execute
10 invoices covering the same bearing the number of such certificate.
11 Upon completion of the project the contractor shall furnish to the
12 owner of the business or retail business a sworn statement, on a
13 form to be provided by the director of taxation, that all purchases
14 so made were entitled to exemption under this subsection. All in-
15 voices shall be held by the contractor for a period of five years and
16 shall be subject to audit by the director of taxation. Any contractor
17 or any agent, employee or subcontractor thereof, who shall use or
18 otherwise dispose of any materials, machinery or equipment pur-
19 chased under such a certificate for any purpose other than that for
20 which such a certificate is issued without the payment of the sales
21 or compensating tax otherwise imposed thereon, shall be guilty of
22 a misdemeanor and, upon conviction therefor, shall be subject to
23 the penalties provided for in subsection (g) of K.S.A. 79-3615 and
24 amendments thereto. As used in this subsection, "business" and
25 "retail business" have the meanings respectively ascribed thereto
26 by K.S.A. 74-50,114 and amendments thereto;
27 [(dd) all sales of tangible personal property purchased with
28 food stamps issued by the United States department of agriculture;
29 [(ee) all sales of lottery tickets and shares made as part of a
30 lottery operated by the state of Kansas;
31 [(ff) on and after July 1, 1988, all sales of new mobile homes
32 or manufactured homes to the extent of 40% of the gross receipts,
33 determined without regard to any trade-in allowance, received
34 from such sale. As used in this subsection, "mobile homes" and
35 "manufactured homes" shall have the meanings ascribed thereto
36 by K.S.A. 58-4202 and amendments thereto;
37 [(gg) all sales of tangible personal property purchased in ac-
38 cordance with vouchers issued pursuant to the federal special sup-
39 plemental food program for women, infants and children;
40 [(hh) all sales of medical supplies and equipment purchased
41 directly by a nonprofit skilled nursing home or nonprofit inter-
42 mediate nursing care home, as defined by K.S.A. 39-923, and
43 amendments thereto, for the purpose of providing medical serv-
HB 2216--Am. by HCW
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1 ices to residents thereof. This exemption shall not apply to tangible
2 personal property customarily used for human habitation
3 purposes;
4 [(ii) all sales of tangible personal property purchased directly
5 by a nonprofit organization for nonsectarian comprehensive mul-
6 tidiscipline youth development programs and activities provided
7 or sponsored by such organization, and all sales of tangible per-
8 sonal property by or on behalf of any such organization. This ex-
9 emption shall not apply to tangible personal property customarily
10 used for human habitation purposes;
11 [(jj) all sales of tangible personal property or services, includ-
12 ing the renting and leasing of tangible personal property, pur-
13 chased directly on behalf of a community-based mental retarda-
14 tion facility or mental health center organized pursuant to K.S.A.
15 19-4001 et seq., and amendments thereto, and licensed in accord-
16 ance with the provisions of K.S.A. 75-3307b and amendments
17 thereto. This exemption shall not apply to tangible personal prop-
18 erty customarily used for human habitation purposes;
19 [(kk) on and after January 1, 1989, all sales of machinery and
20 equipment used directly and primarily for the purposes of manu-
21 facturing, assembling, processing, finishing, storing, warehousing
22 or distributing articles of tangible personal property in this state
23 intended for resale by a manufacturing or processing plant or fa-
24 cility or a storage, warehousing or distribution facility, and all sales
25 of repair and replacement parts and accessories purchased for
26 such machinery and equipment:
27 [(1) For purposes of this subsection, machinery and equipment
28 shall be deemed to be used directly and primarily in the manufac-
29 ture, assemblage, processing, finishing, storing, warehousing or
30 distributing of tangible personal property where such machinery
31 and equipment is used during a manufacturing, assembling, proc-
32 essing or finishing, storing, warehousing or distributing operation:
33 [(A) To effect a direct and immediate physical change upon the
34 tangible personal property;
35 [(B) to guide or measure a direct and immediate physical
36 change upon such property where such function is an integral and
37 essential part of tuning, verifying or aligning the component parts
38 of such property;
39 [(C) to test or measure such property where such function is
40 an integral part of the production flow or function;
41 [(D) to transport, convey or handle such property during the
42 manufacturing, processing, storing, warehousing or distribution
43 operation at the plant or facility; or
HB 2216--Am. by HCW
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1 [(E) to place such property in the container, package or wrap-
2 ping in which such property is normally sold or transported.
3 [(2) For purposes of this subsection "machinery and equip-
4 ment used directly and primarily" shall include, but not be limited
5 to:
6 [(A) Mechanical machines or components thereof contributing
7 to a manufacturing, assembling or finishing process;
8 [(B) molds and dies that determine the physical characteristics
9 of the finished product or its packaging material;
10 [(C) testing equipment to determine the quality of the finished
11 product;
12 [(D) computers and related peripheral equipment that directly
13 control or measure the manufacturing process or which are util-
14 ized for engineering of the finished product; and
15 [(E) computers and related peripheral equipment utilized for
16 research and development and product design.
17 [(3) "Machinery and equipment used directly and primarily"
18 shall not include:
19 [(A) Hand tools;
20 [(B) machinery, equipment and tools used in maintaining and
21 repairing any type of machinery and equipment;
22 [(C) transportation equipment not used in the manufacturing,
23 assembling, processing, furnishing, storing, warehousing or dis-
24 tributing process at the plant or facility;
25 [(D) office machines and equipment including computers and
26 related peripheral equipment not directly and primarily used in
27 controlling or measuring the manufacturing process;
28 [(E) furniture and buildings; and
29 [(F) machinery and equipment used in administrative, ac-
30 counting, sales or other such activities of the business;
31 [(4) for purposes of this subsection, "repair and replacement
32 parts and accessories" means all parts and accessories for exempt
33 machinery and equipment, including but not limited to dies, jigs,
34 molds, and patterns which are attached to exempt machinery or
35 which are otherwise used in production, short-lived replaceable
36 parts that can be readily detached from exempt machinery or
37 equipment, such as belts, drill bits, grinding wheels, cutting bars
38 and saws, and other replacement parts for production equipment,
39 including refractory brick and other refractory items for kiln
40 equipment used in production operations;
41 [(ll) all sales of educational materials purchased for distribu-
42 tion to the public at no charge by a nonprofit corporation organ-
43 ized for the purpose of encouraging, fostering and conducting pro-
HB 2216--Am. by HCW
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1 grams for the improvement of public health;
2 [(mm) all sales of seeds and tree seedlings; fertilizers, insecti-
3 cides, herbicides, germicides, pesticides and fungicides; and serv-
4 ices, purchased and used for the purpose of producing plants in
5 order to prevent soil erosion on land devoted to agricultural use;
6 [(nn) except as otherwise provided in this act, all sales of serv-
7 ices rendered by an advertising agency or licensed broadcast sta-
8 tion or any member, agent or employee thereof;
9 [(oo) all sales of tangible personal property purchased by a
10 community action group or agency for the exclusive purpose of
11 repairing or weatherizing housing occupied by low income
12 individuals;
13 [(pp) all sales of drill bits and explosives actually utilized in the
14 exploration and production of oil or gas;
15 [(qq) all sales of tangible personal property and services pur-
16 chased by a nonprofit museum or historical society or any combi-
17 nation thereof, including a nonprofit organization which is organ-
18 ized for the purpose of stimulating public interest in the
19 exploration of space by providing educational information, exhib-
20 its and experiences, which is exempt from federal income taxation
21 pursuant to section 501(c)(3) of the federal internal revenue code
22 of 1986;
23 [(rr) all sales of tangible personal property which will admit the
24 purchaser thereof to any annual event sponsored by a nonprofit
25 organization which is exempt from federal income taxation pur-
26 suant to section 501(c)(3) of the federal internal revenue code of
27 1986;
28 [(ss) all sales of tangible personal property and services pur-
29 chased by a public broadcasting station licensed by the federal
30 communications commission as a noncommercial educational tel-
31 evision or radio station;
32 [(tt) all sales of tangible personal property and services pur-
33 chased by or on behalf of a not-for-profit corporation which is ex-
34 empt from federal income taxation pursuant to section 501(c)(3)
35 of the federal internal revenue code of 1986, for the sole purpose
36 of constructing a Kansas Korean War memorial;
37 [(uu) all sales of tangible personal property and services pur-
38 chased by or on behalf of any rural volunteer fire-fighting organ-
39 ization for use exclusively in the performance of its duties and
40 functions;
41 [(vv) all sales of tangible personal property purchased by any
42 of the following organizations which are exempt from federal in-
43 come taxation pursuant to section 501 (c)(3) of the federal internal
HB 2216--Am. by HCW
14
1 revenue code of 1986, for the following purposes, and all sales of
2 any such property by or on behalf of any such organization for any
3 such purpose:
4 [(1) The American Heart Association, Kansas Affiliate, Inc. for
5 the purposes of providing education, training, certification in
6 emergency cardiac care, research and other related services to
7 reduce disability and death from cardiovascular diseases and
8 stroke;
9 [(2) the Kansas Alliance for the Mentally Ill, Inc. for the pur-
10 pose of advocacy for persons with mental illness and to education,
11 research and support for their families;
12 [(3) the Kansas Mental Illness Awareness Council for the pur-
13 poses of advocacy for persons who are mentally ill and to educa-
14 tion, research and support for them and their families;
15 [(4) the American Diabetes Association Kansas Affiliate, Inc.
16 for the purpose of eliminating diabetes through medical research,
17 public education focusing on disease prevention and education,
18 patient education including information on coping with diabetes,
19 and professional education and training;
20 [(5) the American Lung Association of Kansas, Inc. for the pur-
21 pose of eliminating all lung diseases through medical research,
22 public education including information on coping with lung dis-
23 eases, professional education and training related to lung disease
24 and other related services to reduce the incidence of disability and
25 death due to lung disease;
26 [(6) the Kansas chapters of the Alzheimer's Disease and Re-
27 lated Disorders Association, Inc. for the purpose of providing as-
28 sistance and support to persons in Kansas with Alzheimer's disease,
29 and their families and caregivers; and
30 [(ww) all sales of tangible personal property purchased by the
31 Habitat for Humanity for the exclusive use of being incorporated
32 within a housing project constructed by such organization.
33 [(xx) all sales of tangible personal property and services pur-
34 chased by a nonprofit zoo which is exempt from federal income
35 taxation pursuant to section 501(c)(3) of the federal internal rev-
36 enue code of 1986, or on behalf of such zoo by an entity itself
37 exempt from federal income taxation pursuant to section 50 501
38 (c)(3) of the federal internal revenue code of 1986 contracted with
39 to operate such zoo and all sales of tangible personal property or
40 services purchased by a contractor for the purpose of constructing,
41 equipping, reconstructing, maintaining, repairing, enlarging, fur-
42 nishing or remodeling facilities for any nonprofit zoo which would
43 be exempt from taxation under the provisions of this section if
HB 2216--Am. by HCW
15
1 purchased directly by such nonprofit zoo or the entity operating
2 such zoo. Nothing in this subsection shall be deemed to exempt
3 the purchase of any construction machinery, equipment or tools
4 used in the constructing, equipping, reconstructing, maintaining,
5 repairing, enlarging, furnishing or remodeling facilities for any
6 nonprofit zoo. When any nonprofit zoo shall contract for the pur-
7 pose of constructing, equipping, reconstructing, maintaining, re-
8 pairing, enlarging, furnishing or remodeling facilities, it shall ob-
9 tain from the state and furnish to the contractor an exemption
10 certificate for the project involved, and the contractor may pur-
11 chase materials for incorporation in such project. The contractor
12 shall furnish the number of such certificate to all suppliers from
13 whom such purchases are made, and such suppliers shall execute
14 invoices covering the same bearing the number of such certificate.
15 Upon completion of the project the contractor shall furnish to the
16 nonprofit zoo concerned a sworn statement, on a form to be pro-
17 vided by the director of taxation, that all purchases so made were
18 entitled to exemption under this subsection. All invoices shall be
19 held by the contractor for a period of five years and shall be subject
20 to audit by the director of taxation. If any materials purchased
21 under such a certificate are found not to have been incorporated
22 in the building or other project or not to have been returned for
23 credit or the sales or compensating tax otherwise imposed upon
24 such materials which will not be so incorporated in the building
25 or other project reported and paid by such contractor to the di-
26 rector of taxation not later than the 20th day of the month follow-
27 ing the close of the month in which it shall be determined that
28 such materials will not be used for the purpose for which such
29 certificate was issued, the nonprofit zoo concerned shall be liable
30 for tax on all materials purchased for the project, and upon pay-
31 ment thereof it may recover the same from the contractor together
32 with reasonable attorney fees. Any contractor or any agent, em-
33 ployee or subcontractor thereof, who shall use or otherwise dis-
34 pose of any materials purchased under such a certificate for any
35 purpose other than that for which such a certificate is issued with-
36 out the payment of the sales or compensating tax otherwise im-
37 posed upon such materials, shall be guilty of a misdemeanor and,
38 upon conviction therefor, shall be subject to the penalties provided
39 for in subsection (g) of K.S.A. 79-3615, and amendments thereto;
40 [(yy) all sales of tangible personal property and services pur-
41 chased by a parent-teacher association or organization, and all
42 sales of tangible personal property by or on behalf of such asso-
43 ciation or organization;
HB 2216--Am. by HCW
16
1 [(zz) all sales of machinery and equipment purchased by over-
2 the-air, free access radio or television station which is used directly
3 and primarily for the purpose of producing a broadcast signal or
4 is such that the failure of the machinery or equipment to operate
5 would cause broadcasting to cease. For purposes of this subsec-
6 tion, machinery and equipment shall include, but not be limited
7 to, that required by rules and regulations of the federal commu-
8 nications commission, and all sales of electricity which are essential
9 or necessary for the purpose of producing a broadcast signal or is
10 such that the failure of the electricity would cause broadcasting to
11 cease;
12 [(aaa) all sales of tangible personal property and services pur-
13 chased by a religious organization which is exempt from federal
14 income taxation pursuant to section 501 (c)(3) of the federal inter-
15 nal revenue code, and used exclusively for religious purposes; and
16 [(bbb) all sales of food for human consumption by an organi-
17 zation which is exempt from federal income taxation pursuant to
18 section 501 (c)(3) of the federal internal revenue code of 1986,
19 pursuant to a food distribution program which offers such food at
20 a price below cost in exchange for the performance of community
21 service by the purchaser thereof.
22
23 3602, 79-3603, and 79-3635 are hereby repealed.]
24 [Sec. 2. K.S.A. 1998 Supp. 79-3603 is hereby amended to read
25 as follows: 79-3603. For the privilege of engaging in the business
26 of selling tangible personal property at retail in this state or ren-
27 dering or furnishing any of the services taxable under this act,
28 there is hereby levied and there shall be collected and paid a tax
29 at the rate of 4.9%, except as otherwise more specifically provided,
30 upon:
31 [(a) The gross receipts received from the sale of tangible per-
32 sonal property at retail within this state;
33 [(b) (1) the gross receipts from intrastate telephone or tele-
34 graph services and (2) the gross receipts received from the sale of
35 interstate telephone or telegraph services, which (A) originate
36 within this state and terminate outside the state and are billed to
37 a customer's telephone number or account in this state; or (B) orig-
38 inate outside this state and terminate within this state and are
39 billed to a customer's telephone number or account in this state
40 except that the sale of interstate telephone or telegraph service
41 does not include: (A) Any interstate incoming or outgoing wide
42 area telephone service or wide area transmission type service
43 which entitles the subscriber to make or receive an unlimited num-
HB 2216--Am. by HCW
17
1 ber of communications to or from persons having telephone serv-
2 ice in a specified area which is outside the state in which the station
3 provided this service is located; (B) any interstate private com-
4 munications service to the persons contracting for the receipt of
5 that service that entitles the purchaser to exclusive or priority use
6 of a communications channel or group of channels between ex-
7 changes; (C) any value-added nonvoice service in which computer
8 processing applications are used to act on the form, content, code
9 or protocol of the information to be transmitted; (D) any telecom-
10 munication service to a provider of telecommunication services
11 which will be used to render telecommunications services, includ-
12 ing carrier access services; or (E) any service or transaction de-
13 fined in this section among entities classified as members of an
14 affiliated group as provided by federal law (U.S.C. Section 1504).
15 For the purposes of this subsection the term gross receipts does
16 not include purchases of telephone, telegraph or telecommunica-
17 tions using a prepaid telephone calling card or pre-paid authori-
18 zation number. As used in this subsection, a pre-paid telephone
19 calling card or pre-paid authorization number means the right to
20 exclusively make telephone calls, paid for in advance, with the pre-
21 paid value measured in minutes or other time units, that enables
22 the origination of calls using an access number or authorization
23 code or both, whether manually or electronically dialed;
24 [(c) the gross receipts from the sale or furnishing of gas, water,
25 electricity and heat, which sale is not otherwise exempt from tax-
26 ation under the provisions of this act, and whether furnished by
27 municipally or privately owned utilities;
28 [(d) the gross receipts from the sale of meals or drinks fur-
29 nished at any private club, drinking establishment, catered event,
30 restaurant, eating house, dining car, hotel, drugstore or other
31 place where meals or drinks are regularly sold to the public;
32 [(e) the gross receipts from the sale of admissions to any place
33 providing amusement, entertainment or recreation services in-
34 cluding admissions to state, county, district and local fairs, but such
35 tax shall not be levied and collected upon the gross receipts re-
36 ceived from sales of admissions to any cultural and historical event
37 which occurs triennially;
38 [(f) the gross receipts from the operation of any coin-operated
39 device dispensing or providing tangible personal property, amuse-
40 ment or other services except laundry services, whether automatic
41 or manually operated;
42 [(g) the gross receipts from the service of renting of rooms by
43 hotels, as defined by K.S.A. 36-501 and amendments thereto, or
HB 2216--Am. by HCW
18
1 by accommodation brokers, as defined by K.S.A. 12-1692, and
2 amendments thereto;
3 [(h) the gross receipts from the service of renting or leasing of
4 tangible personal property except such tax shall not apply to the
5 renting or leasing of machinery, equipment or other personal
6 property owned by a city and purchased from the proceeds of in-
7 dustrial revenue bonds issued prior to July 1, 1973, in accordance
8 with the provisions of K.S.A. 12-1740 through 12-1749, and amend-
9 ments thereto, and any city or lessee renting or leasing such ma-
10 chinery, equipment or other personal property purchased with the
11 proceeds of such bonds who shall have paid a tax under the pro-
12 visions of this section upon sales made prior to July 1, 1973, shall
13 be entitled to a refund from the sales tax refund fund of all taxes
14 paid thereon;
15 [(i) the gross receipts from the rendering of dry cleaning,
16 pressing, dyeing and laundry services except laundry services ren-
17 dered through a coin-operated device whether automatic or man-
18 ually operated;
19 [(j) the gross receipts from the rendering of the services of
20 washing and washing and waxing of vehicles;
21 [(k) the gross receipts from cable, community antennae and
22 other subscriber radio and television services;
23 [(l) the gross receipts received from the sales of tangible per-
24 sonal property to all contractors, subcontractors or repairmen of
25 materials and supplies for use by them in erecting structures for
26 others, or building on, or otherwise improving, altering, or re-
27 pairing real or personal property of others;
28 [(m) the gross receipts received from fees and charges by pub-
29 lic and private clubs, drinking establishments, organizations and
30 businesses for participation in sports, games and other recrea-
31 tional activities, but such tax shall not be levied and collected upon
32 the gross receipts received from: (1) Fees and charges by any po-
33 litical subdivision, by any organization exempt from property tax-
34 ation pursuant to paragraph Ninth of K.S.A. 79-201, and amend-
35 ments thereto, or by any youth recreation organization exclusively
36 providing services to persons 18 years of age or younger which is
37 exempt from federal income taxation pursuant to section 501(c)(3)
38 of the federal internal revenue code of 1986, for participation in
39 sports, games and other recreational activities; and (2) entry fees
40 and charges for participation in a special event or tournament
41 sanctioned by a national sporting association to which spectators
42 are charged an admission which is taxable pursuant to subsection
43 (e);
HB 2216--Am. by HCW
19
1 [(n) the gross receipts received from dues charged by public
2 and private clubs, drinking establishments, organizations and busi-
3 nesses, payment of which entitles a member to the use of facilities
4 for recreation or entertainment, but such tax shall not be levied
5 and collected upon the gross receipts received from: (1) Dues
6 charged by any organization exempt from property taxation pur-
7 suant to paragraphs Eighth and Ninth of K.S.A. 79-201, and amend-
8 ments thereto; and (2) sales of memberships in a nonprofit or-
9 ganization which is exempt from federal income taxation pursuant
10 to section 501 (c)(3) of the federal internal revenue code of 1986,
11 and whose purpose is to support the operation of a nonprofit zoo;
12 [(o) the gross receipts received from the isolated or occasional
13 sale of motor vehicles or trailers but not including: (1) The transfer
14 of motor vehicles or trailers by a person to a corporation solely in
15 exchange for stock securities in such corporation; or (2) the trans-
16 fer of motor vehicles or trailers by one corporation to another
17 when all of the assets of such corporation are transferred to such
18 other corporation; or (3) the sale of motor vehicles or trailers
19 which are subject to taxation pursuant to the provisions of K.S.A.
20 79-5101 et seq., and amendments thereto, by an immediate family
21 member to another immediate family member. For the purposes
22 of clause (3), immediate family member means lineal ascendants
23 or descendants, and their spouses. In determining the base for
24 computing the tax on such isolated or occasional sale, the fair mar-
25 ket value of any motor vehicle or trailer traded in by the purchaser
26 to the seller may be deducted from the selling price;
27 [(p) the gross receipts received for the service of installing or
28 applying tangible personal property which when installed or ap-
29 plied is not being held for sale in the regular course of business,
30 and whether or not such tangible personal property when installed
31 or applied remains tangible personal property or becomes a part
32 of real estate, except that no tax shall be imposed upon the service
33 of installing or applying tangible personal property in connection
34 with the original construction of a building or facility, the original
35 construction, reconstruction, restoration, remodeling, renovation,
36 repair or replacement of a residence or the construction, recon-
37 struction, restoration, replacement or repair of a bridge or
38 highway.
39 [For the purposes of this subsection:
40 [(1) "Original construction" shall mean the first or initial con-
41 struction of a new building or facility. The term "original construc-
42 tion" shall include the addition of an entire room or floor to any
43 existing building or facility, the completion of any unfinished por-
HB 2216--Am. by HCW
20
1 tion of any existing building or facility and the restoration, recon-
2 struction or replacement of a building or facility damaged or de-
3 stroyed by fire, flood, tornado, lightning, explosion or earthquake,
4 but such term, except with regard to a residence, shall not include
5 replacement, remodeling, restoration, renovation or reconstruc-
6 tion under any other circumstances;
7 [(2) "building" shall mean only those enclosures within which
8 individuals customarily are employed, or which are customarily
9 used to house machinery, equipment or other property, and in-
10 cluding the land improvements immediately surrounding such
11 building;
12 [(3) "facility" shall mean a mill, plant, refinery, oil or gas well,
13 water well, feedlot or any conveyance, transmission or distribution
14 line of any cooperative, nonprofit, membership corporation or-
15 ganized under or subject to the provisions of K.S.A. 17-4601 et
16 seq., and amendments thereto, or of any municipal or quasi-mu-
17 nicipal corporation, including the land improvements immediately
18 surrounding such facility; and
19 [(4) "residence" shall mean only those enclosures within which
20 individuals customarily live;
21 [(q) the gross receipts received for the service of repairing,
22 servicing, altering or maintaining tangible personal property, ex-
23 cept computer software described in subsection (s), which when
24 such services are rendered is not being held for sale in the regular
25 course of business, and whether or not any tangible personal prop-
26 erty is transferred in connection therewith. The tax imposed by
27 this subsection shall be applicable to the services of repairing, serv-
28 icing, altering or maintaining an item of tangible personal prop-
29 erty which has been and is fastened to, connected with or built into
30 real property;
31 [(r) the gross receipts from fees or charges made under service
32 or maintenance agreement contracts for services, charges for the
33 providing of which are taxable under the provisions of subsection
34 (p) or (q);
35 [(s) the gross receipts received from the sale of computer soft-
36 ware, and the sale of the services of modifying, altering, updating
37 or maintaining computer software. As used in this subsection,
38 "computer software" means information and directions loaded
39 into a computer which dictate different functions to be performed
40 by the computer. Computer software includes any canned or pre-
41 written program which is held or existing for general or repeated
42 sale, even if the program was originally developed for a single end
43 user as custom computer software. The sale of computer software
HB 2216--Am. by HCW
21
1 or services does not include: (1) The initial sale of any custom com-
2 puter program which is originally developed for the exclusive use
3 of a single end user; or (2) those services rendered in the modifi-
4 cation of computer software when the modification is developed
5 exclusively for a single end user only to the extent of the modifi-
6 cation and only to the extent that the actual amount charged for
7 the modification is separately stated on invoices, statements and
8 other billing documents provided to the end user. The services of
9 modification, alteration, updating and maintenance of computer
10 software shall only include the modification, alteration, updating
11 and maintenance of computer software taxable under this subsec-
12 tion whether or not the services are actually provided; and
13 [(t) the gross receipts received for telephone answering serv-
14 ices, including mobile phone services, beeper services and other
15 similar services; and
16 [(u) the gross receipts received from the sale of prepaid tele-
17 phone calling cards or pre-paid authorization numbers and the
18 recharge of such cards or numbers. A pre-paid telephone calling
19 card or pre-paid authorization number means the right to exclu-
20 sively make telephone calls, paid for in advance, with the prepaid
21 value measured in minutes or other time units, that enables the
22 origination of calls using an access number or authorization code
23 or both, whether manually or electronically dialed. If the dale or
24 recharge of such card or number does not take place at the ven-
25 dor's place of business, it shall be conclusively determined to take
26 place at the customer's shipping address; if there is no item
27 shipped then it shall be the customer's billing address.; and
28 [(v) (1) the gross receipts received from sales of food for human con-
29 sumption at the rate of: (A) 3.3% on June 1, 1999, and before June 1,
30 2001; and (B) 2.2% on June 1, 2001, and before June 1, 2002; (2) on and
31 after June 1, 2002, all sales of food for human consumption are hereby
32 exempt; and (3) as used in this subsection, "food for human consumption"
33 means only that food which is eligible for purchase with food stamps
34 issued by the United States department of agriculture pursuant to regu-
35 lations in effect on January 1, 1998, regardless of whether the retailer
36 from which the food is purchased is participating in the food stamp pro-
37 gram. Such phrase shall not include meals prepared for immediate con-
38 sumption on or off premises of the retailer.
39 [Sec. 3. K.S.A. 1998 Supp. 79-3703 is hereby amended to read
40 as follows: 79-3703. There is hereby levied and there shall be col-
41 lected from every person in this state a tax or excise for the priv-
42 ilege of using, storing, or consuming within this state any article
43 of tangible personal property. Such tax shall be levied and col-
HB 2216--Am. by HCW
22
1 lected in an amount equal to the consideration paid by the tax-
2 payer multiplied by the rate of 4.9%, except that the rate imposed
3 upon sales of food for human consumption shall be identical to the rate
4 of sales tax imposed thereon. Within a redevelopment district estab-
5 lished pursuant to K.S.A. 1998 Supp. 74-8921, and amendments
6 thereto, there is hereby levied and there shall be collected and
7 paid an additional tax of 1% until the earlier of: (1) The date the
8 bonds issued to finance or refinance the redevelopment project
9 undertaken in the district have been paid in full; or (2) twenty years
10 after the establishment of the redevelopment district. All property
11 purchased or leased within or without this state and subsequently
12 used, stored or consumed in this state shall be subject to the com-
13 pensating tax if the same property or transaction would have been
14 subject to the Kansas retailers' sales tax had the transaction been
15 wholly within this state.
16 [Sec. 4. K.S.A. 12-189a is hereby amended to read as follows:
17 12-189a. The following sales shall be subject to the taxes levied
18 and collected by all cities and counties under the provisions of
19 K.S.A. 12-187 et seq. and amendments thereto:
20 [(a) All sales of natural gas, electricity, heat and water deliv-
21 ered through mains, lines or pipes to residential premises for non-
22 commercial use by the occupant of such premises and all sales of
23 natural gas, electricity, heat and water delivered through mains,
24 lines or pipes for agricultural use;
25 [(b) All sales of propane gas, LP-gas, coal, wood and other fuel
26 sources for the production of heat or lighting for noncommercial
27 use of an occupant of residential premises;
28 [(c) All sales of intrastate telephone and telegraph services for
29 noncommercial use.; and
30 [(d) all sales of food for human consumption, as defined by subsection
31 (v) of K.S.A. 79-3603, and amendments thereto.
32 [Sec. 5. K.S.A. 79-2959 is hereby amended to read as follows:
33 79-2959. (a) There is hereby created the local ad valorem tax re-
34 duction fund. All moneys transferred or credited to such fund un-
35 der the provisions of this act or any other law shall be apportioned
36 and distributed in the manner provided herein.
37 [(b) On January 15 and on July 15 of each year, the director of
38 accounts and reports shall make transfers in equal amounts which
39 in the aggregate equal 4.5% of the total retail sales and compen-
40 sating taxes credited to the state general fund pursuant to articles
41 36 and 37 of chapter 79 of Kansas Statutes Annotated and acts
42 amendatory thereof and supplemental thereto during the preced-
43 ing calendar year from the state general fund to the local ad va-
HB 2216--Am. by HCW
23
1 lorem tax reduction fund, except that: (1) The transfers on January
2 15 and July 15 of each year shall be in equal amounts which in the
3 aggregate equal 3.630% of such taxes credited to the state general
4 fund during the preceding calendar year; and (2) the amount of
5 the transfer on each such date during state fiscal year 1998 shall be
6 equal to 101.75% of the amount transferred on the same date during
7 state fiscal year 1997 2000, shall be in equal amounts which in the aggre-
8 gate equal 3.671% of such taxes credited to the state general fund during
9 the preceding calendar year; (3) the amount of the transfer on each such
10 date during fiscal year 2001, shall be in equal amounts which in the ag-
11 gregate equal 3.752% of such taxes credited to the state general fund
12 during the preceding calendar year; (4) the amount of the transfer on
13 each such date during fiscal year 2002, shall be in equal amounts which
14 in the aggregate equal 3.823% of such taxes credited to the state general
15 fund during the preceding calendar year; (5) the amount of the transfer
16 on each such date during fiscal year 2003, shall be in equal amounts which
17 in the aggregate equal 3.948% of such taxes credited to the state general
18 fund during the preceding calendar year; (6) the amount of the transfer
19 on each such date during fiscal year 2004, shall be in equal amounts which
20 in the aggregate equal 4.11% of such taxes credited to the state general
21 fund during the preceding calendar year; and (7) the amount of the trans-
22 fer on each such date during fiscal year 2005, and all such years there-
23 after, shall be in equal amounts which in the aggregate equal 4.178% of
24 such taxes credited to the state general fund during the preceding calendar
25 year. All such transfers are subject to reduction under K.S.A. 75-
26 6704 and amendments thereto. All transfers made in accordance
27 with the provisions of this section shall be considered to be demand
28 transfers from the state general fund.
29 [(c) The state treasurer shall apportion and pay the amounts
30 transferred under subsection (b) to the several county treasurers
31 on January 15 and on July 15 in each year as follows: (1) Sixty-five
32 percent of the amount to be distributed shall be apportioned on
33 the basis of the population figures of the counties certified to the
34 secretary of state pursuant to K.S.A. 11-201 and amendments
35 thereto on July 1 of the preceding year; and (2) thirty-five percent
36 of such amount shall be apportioned on the basis of the equalized
37 assessed tangible valuations on the tax rolls of the counties on No-
38 vember 1 of the preceding year as certified by the director of prop-
39 erty valuation.
40 [Sec. 6. K.S.A. 1998 Supp. 79-2964 is hereby amended to read
41 as follows: 79-2964. There is hereby created the county and city
42 revenue sharing fund. All moneys transferred or credited to such
43 fund under the provisions of this act or any other law shall be
HB 2216--Am. by HCW
24
1 allocated and distributed in the manner provided herein. The di-
2 rector of accounts and reports in each year on July 15 and Decem-
3 ber 10, shall make transfers in equal amounts which in the aggre-
4 gate equal 3.5% of the total retail sales and compensating taxes
5 credited to the state general fund pursuant to articles 36 and 37
6 of chapter 79 of the Kansas Statutes Annotated and acts amenda-
7 tory thereof and supplemental thereto during the preceding cal-
8 endar year from the state general fund to the county and city rev-
9 enue sharing fund, except that: (a) The transfers on July 15 and
10 December 10 of each year shall be in equal amounts which in the
11 aggregate equal 2.823% of such taxes credited to the state general
12 fund during the preceding calendar year; and (b) the amount of
13 the transfer on each such date during state fiscal year 1999 shall be
14 equal to 102.4% of the amount transferred on the same date during state
15 fiscal year 1998 2001, shall be in equal amounts which in the aggregate
16 equal 2.886% of such taxes credited to the state general fund during the
17 preceding calendar year; (c) the amount of the transfer on each such date
18 during fiscal year 2002, shall be in equal amounts which in the aggregate
19 equal 2.949% of such taxes credited to the state general fund during the
20 preceding calendar year; (d) the amount of the transfer on each such date
21 during fiscal year 2003, shall be in equal amounts which in the aggregate
22 equal 2.996% of such taxes credited to the state general fund during the
23 preceding calendar year; (e) the amount of the transfer on each such date
24 during fiscal year 2004, shall be in equal amounts which in the aggregate
25 equal 3.144% of such taxes credited to the state general fund during the
26 preceding calendar year; and (f) the amount of the transfer on each such
27 date during fiscal year 2005, and all such years thereafter, shall be in
28 equal amounts which in the aggregate equal 3.248% of such taxes credited
29 to the state general fund during the preceding calendar year. All such
30 transfers are subject to reduction under K.S.A. 75-6704 and
31 amendments thereto. All transfers made in accordance with the
32 provisions of this section shall be considered to be demand trans-
33 fers from the state general fund.
34 [Sec. 7. K.S.A. 1998 Supp. 79-34,147 is hereby amended to
35 read as follows: 79-34,147. (a) On each January 1, April 1, July 1
36 and October 1, the secretary of revenue shall certify to the director
37 of accounts and reports the amount equal to 7.628% of the total
38 revenues received by the secretary from the taxes imposed under
39 the Kansas retailers' sales tax act and deposited in the state treas-
40 ury and credited to the state general fund during the preceding
41 three calendar months, except that: (1) The amount so certified during
42 fiscal year 2000, shall be the amount equal to 8.2% of the total revenues
43 received from such tax and so deposited and credited during such months;
HB 2216--Am. by HCW
25
1 (2) the amount so certified during fiscal year 2001, shall be the amount
2 equal to 8.3% of the total revenues received from such tax and so deposited
3 and credited during such months; (3) the amount so certified during fiscal
4 year 2002, shall be the amount equal to 8.726% of the total revenues
5 received from such tax so deposited and credited during such months; (4)
6 the amount so certified during fiscal year 2003, shall be the amount equal
7 to 9.745% of the total revenues received from such tax so deposited and
8 credited during such months; and (5) the amount so certified during fiscal
9 year 2004, and all such years thereafter, shall be the amount equal to
10 9.932% of the total revenues received from such tax so deposited and
11 credited during such months.
12 [(b) Upon receipt of each certification under subsection (a), the
13 director of accounts and reports shall transfer from the state gen-
14 eral fund to the state highway fund an amount equal to the amount
15 so certified, on each January 1, April 1, July 1 and October 1, ex-
16 cept that the amount of the transfer on each such date during state
17 fiscal year 1999 shall not exceed the amount equal to 102.4% of
18 the amount transferred on the same date during state fiscal year
19 1998. All transfers made pursuant to this section are subject to
20 reduction under K.S.A. 75-6704, and amendments thereto.
21 [(c) All transfers made in accordance with the provisions of this
22 section shall be considered to be demand transfers from the state
23 general fund.
24 [Sec. 8. On and after April 16, 2003, K.S.A. 79-3632, 79-3634
25 and 79-3636 through 79-3639 and K.S.A. 1998 Supp. 79-3633 and
26 79-3635 are hereby repealed.
27 [Sec. 9. K.S.A. 12-189a and 79-2959 and K.S.A. 1998 Supp. 12-
28 187, 12-188, 12-189, 12-192, 79-2964, 79-34,147, 79-3603, 79-3606
29 and 79-3703 are hereby repealed.]
30 [Sec. 10. K.S.A. 1998 Supp. 79-3602 is hereby amended to
31 read as follows: 79-3602. (a) "Persons" means any individual, firm,
32 copartnership, joint adventure, association, corporation, estate or
33 trust, receiver or trustee, or any group or combination acting as a
34 unit, and the plural as well as the singular number; and shall spe-
35 cifically mean any city or other political subdivision of the state of
36 Kansas engaging in a business or providing a service specifically
37 taxable under the provisions of this act.
38 [(b) "Director" means the state director of taxation.
39 [(c) "Sale" or "sales" means the exchange of tangible personal
40 property, as well as the sale thereof for money, and every trans-
41 action, conditional or otherwise, for a consideration, constituting
42 a sale, including the sale or furnishing of electrical energy, gas,
43 water, services or entertainment taxable under the terms of this
HB 2216--Am. by HCW
26
1 act and including, except as provided in the following provision,
2 the sale of the use of tangible personal property by way of a lease,
3 license to use or the rental thereof regardless of the method by
4 which the title, possession or right to use the tangible personal
5 property is transferred. The term "sale" or "sales" shall not mean
6 the sale of the use of any tangible personal property used as a
7 dwelling by way of a lease or rental thereof for a term of more
8 than 28 consecutive days.
9 [(d) "Retailer" means a person regularly engaged in the busi-
10 ness of selling tangible personal property at retail or furnishing
11 electrical energy, gas, water, services or entertainment, and selling
12 only to the user or consumer and not for resale.
13 [(e) "Retail sale" or "sale at retail" means all sales made within
14 the state of tangible personal property or electrical energy, gas,
15 water, services or entertainment for use or consumption and not
16 for resale.
17 [(f) "Tangible personal property" means corporeal personal
18 property. Such term shall include;: (1) Any computer software pro-
19 gram which is not a custom computer software program, as de-
20 scribed by subsection (s) of K.S.A. 79-3603, and amendments
21 thereto; and (2) and any prepaid telephone calling card or prepaid
22 authorization number, or recharge of such card or number, as de-
23 scribed by subsection (b) of K.S.A. 79-3603, and amendments
24 thereto.
25 [(g) "Selling price" means the total cost to the consumer exclu-
26 sive of discounts allowed and credited, but including freight and
27 transportation charges from retailer to consumer.
28 [(h) "Gross receipts" means the total selling price or the
29 amount received as defined in this act, in money, credits, property
30 or other consideration valued in money from sales at retail within
31 this state; and embraced within the provisions of this act. The tax-
32 payer, may take credit in the report of gross receipts for: (1) An
33 amount equal to the selling price of property returned by the pur-
34 chaser when the full sale price thereof, including the tax collected,
35 is refunded in cash or by credit; and (2) an amount equal to the
36 allowance given for the trade-in of property.
37 [(i) "Taxpayer" means any person obligated to account to the
38 director for taxes collected under the terms of this act.
39 [(j) "Isolated or occasional sale" means the nonrecurring sale
40 of tangible personal property, or services taxable hereunder by a
41 person not engaged at the time of such sale in the business of
42 selling such property or services. Any religious organization which
43 makes a nonrecurring sale of tangible personal property acquired
HB 2216--Am. by HCW
27
1 for the purpose of resale shall be deemed to be not engaged at the
2 time of such sale in the business of selling such property. Such term
3 shall include: (1) Any sale by a bank, savings and loan institution,
4 credit union or any finance company licensed under the provisions
5 of the Kansas uniform consumer credit code of tangible personal
6 property which has been repossessed by any such entity; and (2)
7 any sale of tangible personal property made by an auctioneer or
8 agent on behalf of not more than two principals or households if
9 such sale is nonrecurring and any such principal or household is
10 not engaged at the time of such sale in the business of selling tan-
11 gible personal property.
12 [(k) "Service" means those services described in and taxed un-
13 der the provisions of K.S.A. 79-3603 and amendments thereto.
14 [(l) "Ingredient or component part" means tangible personal
15 property which is necessary or essential to, and which is actually
16 used in and becomes an integral and material part of tangible per-
17 sonal property or services produced, manufactured or com-
18 pounded for sale by the producer, manufacturer or compounder
19 in its regular course of business. The following items of tangible
20 personal property are hereby declared to be ingredients or com-
21 ponent parts, but the listing of such property shall not be deemed
22 to be exclusive nor shall such listing be construed to be a restriction
23 upon, or an indication of, the type or types of property to be in-
24 cluded within the definition of "ingredient or component part" as
25 herein set forth:
26 [(1) Containers, labels and shipping cases used in the distri-
27 bution of property produced, manufactured or compounded for
28 sale which are not to be returned to the producer, manufacturer
29 or compounder for reuse.
30 [(2) Containers, labels, shipping cases, paper bags, drinking
31 straws, paper plates, paper cups, twine and wrapping paper used
32 in the distribution and sale of property taxable under the provi-
33 sions of this act by wholesalers and retailers and which is not to be
34 returned to such wholesaler or retailer for reuse.
35 [(3) Seeds and seedlings for the production of plants and plant
36 products produced for resale.
37 [(4) Paper and ink used in the publication of newspapers.
38 [(5) Fertilizer used in the production of plants and plant prod-
39 ucts produced for resale.
40 [(6) Feed for animals, fowl and aquatic plants and animals, the
41 primary purpose of which is use in agriculture or aquaculture, as
42 defined in K.S.A. 47-1901, and amendments thereto, the produc-
43 tion of food for human consumption, the production of animal,
HB 2216--Am. by HCW
28
1 dairy, poultry or aquatic plant and animal products, fiber, fur, or
2 the production of offspring for use for any such purpose or
3 purposes.
4 [(m) "Property which is consumed" means tangible personal
5 property which is essential or necessary to and which is used in the
6 actual process of and immediately consumed, depleted or dissipated
7 within one year in (1) the production, manufacture, processing, min-
8 ing, drilling, refining or compounding of tangible personal prop-
9 erty, (2) the providing of services or, (3) the irrigation of crops, for
10 sale in the regular course of business, or (4) the storage or processing
11 of grain by a public grain warehouse or other commercial grain storage
12 facility, and which is not reusable for such purpose. The following
13 items of tangible personal property are hereby declared to be "consumed"
14 but the listing of such property shall not be deemed to be exclusive nor
15 shall such listing be construed to be a restriction upon or an indication
16 of, the type or types of property to be included within the definition of
17 "property which is consumed" as herein set forth is a listing of tangible
18 personal property, included by way of illustration but not of limitation,
19 which qualifies as property which is consumed:
20 [(A) Insecticides, herbicides, germicides, pesticides, fungi-
21 cides, fumigants, antibiotics, biologicals, pharmaceuticals, vita-
22 mins and chemicals for use in commercial or agricultural produc-
23 tion, processing or storage of fruit, vegetables, feeds, seeds, grains,
24 animals or animal products whether fed, injected, applied, com-
25 bined with or otherwise used; and
26 [(B) electricity, gas and water; and
27 [(C) petroleum products, lubricants, chemicals, solvents, reagents and
28 catalysts.
29 [(n) "Political subdivision" means any municipality, agency or
30 subdivision of the state which is, or shall hereafter be, authorized
31 to levy taxes upon tangible property within the state or which cer-
32 tifies a levy to a municipality, agency or subdivision of the state
33 which is, or shall hereafter be, authorized to levy taxes upon tan-
34 gible property within the state. Such term also shall include any
35 public building commission, housing, airport, port, metropolitan
36 transit or similar authority established pursuant to law.
37 [(o) "Municipal corporation" means any city incorporated un-
38 der the laws of Kansas.
39 [(p) "Quasi-municipal corporation" means any county, town-
40 ship, school district, drainage district or any other governmental
41 subdivision in the state of Kansas having authority to receive or
42 hold moneys or funds.
43 [(q) "Nonprofit blood bank" means any nonprofit place, organ-
HB 2216--Am. by HCW
29
1 ization, institution or establishment that is operated wholly or in
2 part for the purpose of obtaining, storing, processing, preparing
3 for transfusing, furnishing, donating or distributing human blood
4 or parts or fractions of single blood units or products derived from
5 single blood units, whether or not any remuneration is paid there-
6 for, or whether such procedures are done for direct therapeutic
7 use or for storage for future use of such products.
8 [(r) "Contractor, subcontractor or repairman" means a person
9 who agrees to furnish and install tangible personal property or
10 install tangible personal property at a specified price. A person
11 who maintains an inventory of tangible personal property which
12 enables such person to furnish and install the tangible personal
13 property or install the tangible personal property shall not be
14 deemed a contractor, subcontractor or repairman but shall be
15 deemed a retailer.
16 [(s) "Educational institution" means any nonprofit school, col-
17 lege and university that offers education at a level above the
18 twelfth grade, and conducts regular classes and courses of study
19 required for accreditation by, or membership in, the North Cen-
20 tral Association of Colleges and Schools, the state board of edu-
21 cation, or that otherwise qualify as an "educational institution," as
22 defined by K.S.A. 74-50,103, and amendments thereto. Such
23 phrase shall include: (1) A group of educational institutions that
24 operates exclusively for an educational purpose; (2) nonprofit en-
25 dowment associations and foundations organized and operated ex-
26 clusively to receive, hold, invest and administer moneys and prop-
27 erty as a permanent fund for the support and sole benefit of an
28 educational institution; (3) nonprofit trusts, foundations and other
29 entities organized and operated principally to hold and own re-
30 ceipts from intercollegiate sporting events and to disburse such
31 receipts, as well as grants and gifts, in the interest of collegiate and
32 intercollegiate athletic programs for the support and sole benefit
33 of an educational institution; and (4) nonprofit trusts, foundations
34 and other entities organized and operated for the primary purpose
35 of encouraging, fostering and conducting scholarly investigations
36 and industrial and other types of research for the support and sole
37 benefit of an educational institution.
38 [Sec. 11. K.S.A. 1998 Supp. 79-3603 is hereby amended to
39 read as follows: 79-3603. For the privilege of engaging in the busi-
40 ness of selling tangible personal property at retail in this state or
41 rendering or furnishing any of the services taxable under this act,
42 there is hereby levied and there shall be collected and paid a tax
43 at the rate of 4.9%, except as otherwise more specifically provided,
HB 2216--Am. by HCW
30
1 upon:
2 [(a) The gross receipts received from the sale of tangible per-
3 sonal property at retail within this state;
4 [(b) (1) the gross receipts from intrastate telephone or tele-
5 graph services and (2) the gross receipts received from the sale of
6 interstate telephone or telegraph services, which (A) originate
7 within this state and terminate outside the state and are billed to
8 a customer's telephone number or account in this state; or (B) orig-
9 inate outside this state and terminate within this state and are
10 billed to a customer's telephone number or account in this state
11 except that the sale of interstate telephone or telegraph service
12 does not include: (A) Any interstate incoming or outgoing wide
13 area telephone service or wide area transmission type service
14 which entitles the subscriber to make or receive an unlimited num-
15 ber of communications to or from persons having telephone serv-
16 ice in a specified area which is outside the state in which the station
17 provided this service is located; (B) any interstate private com-
18 munications service to the persons contracting for the receipt of
19 that service that entitles the purchaser to exclusive or priority use
20 of a communications channel or group of channels between ex-
21 changes; (C) any value-added nonvoice service in which computer
22 processing applications are used to act on the form, content, code
23 or protocol of the information to be transmitted; (D) any telecom-
24 munication service to a provider of telecommunication services
25 which will be used to render telecommunications services, includ-
26 ing carrier access services; or (E) any service or transaction de-
27 fined in this section among entities classified as members of an
28 affiliated group as provided by federal law (U.S.C. Section 1504).
29 For the purposes of this subsection the term gross receipts does
30 not include purchases of telephone, telegraph or telecommunica-
31 tions using a prepaid telephone calling card or pre-paid authori-
32 zation number. As used in this subsection, a pre-paid telephone
33 calling card or pre-paid authorization number means the right to
34 exclusively make telephone calls, paid for in advance, with the pre-
35 paid value measured in minutes or other time units, that enables
36 the origination of calls using an access number or authorization
37 code or both, whether manually or electronically dialed;
38 [(c) the gross receipts from the sale or furnishing of gas, water,
39 electricity and heat, which sale is not otherwise exempt from tax-
40 ation under the provisions of this act, and whether furnished by
41 municipally or privately owned utilities;
42 [(d) the gross receipts from the sale of meals or drinks fur-
43 nished at any private club, drinking establishment, catered event,
HB 2216--Am. by HCW
31
1 restaurant, eating house, dining car, hotel, drugstore or other
2 place where meals or drinks are regularly sold to the public;
3 [(e) the gross receipts from the sale of admissions to any place
4 providing amusement, entertainment or recreation services in-
5 cluding admissions to state, county, district and local fairs, but such
6 tax shall not be levied and collected upon the gross receipts re-
7 ceived from sales of admissions to any cultural and historical event
8 which occurs triennially;
9 [(f) the gross receipts from the operation of any coin-operated
10 device dispensing or providing tangible personal property, amuse-
11 ment or other services except laundry services, whether automatic
12 or manually operated;
13 [(g) the gross receipts from the service of renting of rooms by
14 hotels, as defined by K.S.A. 36-501 and amendments thereto, or
15 by accommodation brokers, as defined by K.S.A. 12-1692, and
16 amendments thereto;
17 [(h) the gross receipts from the service of renting or leasing of
18 tangible personal property except such tax shall not apply to the
19 renting or leasing of machinery, equipment or other personal
20 property owned by a city and purchased from the proceeds of in-
21 dustrial revenue bonds issued prior to July 1, 1973, in accordance
22 with the provisions of K.S.A. 12-1740 through 12-1749, and amend-
23 ments thereto, and any city or lessee renting or leasing such ma-
24 chinery, equipment or other personal property purchased with the
25 proceeds of such bonds who shall have paid a tax under the pro-
26 visions of this section upon sales made prior to July 1, 1973, shall
27 be entitled to a refund from the sales tax refund fund of all taxes
28 paid thereon;
29 [(i) the gross receipts from the rendering of dry cleaning,
30 pressing, dyeing and laundry services except laundry services ren-
31 dered through a coin-operated device whether automatic or man-
32 ually operated;
33 [(j) the gross receipts from the rendering of the services of
34 washing and washing and waxing of vehicles;
35 [(k) the gross receipts from cable, community antennae and
36 other subscriber radio and television services;
37 [(l) the gross receipts received from the sales of tangible per-
38 sonal property to all contractors, subcontractors or repairmen of
39 materials and supplies for use by them in erecting structures for
40 others, or building on, or otherwise improving, altering, or re-
41 pairing real or personal property of others;
42 [(m) the gross receipts received from fees and charges by pub-
43 lic and private clubs, drinking establishments, organizations and
HB 2216--Am. by HCW
32
1 businesses for participation in sports, games and other recrea-
2 tional activities, but such tax shall not be levied and collected upon
3 the gross receipts received from: (1) Fees and charges by any po-
4 litical subdivision, by any organization exempt from property tax-
5 ation pursuant to paragraph Ninth of K.S.A. 79-201, and amend-
6 ments thereto, or by any youth recreation organization exclusively
7 providing services to persons 18 years of age or younger which is
8 exempt from federal income taxation pursuant to section 501(c)(3)
9 of the federal internal revenue code of 1986, for participation in
10 sports, games and other recreational activities; and (2) entry fees
11 and charges for participation in a special event or tournament
12 sanctioned by a national sporting association to which spectators
13 are charged an admission which is taxable pursuant to subsection
14 (e);
15 [(n) the gross receipts received from dues charged by public
16 and private clubs, drinking establishments, organizations and busi-
17 nesses, payment of which entitles a member to the use of facilities
18 for recreation or entertainment, but such tax shall not be levied
19 and collected upon the gross receipts received from: (1) Dues
20 charged by any organization exempt from property taxation pur-
21 suant to paragraphs Eighth and Ninth of K.S.A. 79-201, and amend-
22 ments thereto; and (2) sales of memberships in a nonprofit or-
23 ganization which is exempt from federal income taxation pursuant
24 to section 501(c)(3) of the federal internal revenue code of 1986,
25 and whose purpose is to support the operation of a nonprofit zoo;
26 [(o) the gross receipts received from the isolated or occasional
27 sale of motor vehicles or trailers but not including: (1) The transfer
28 of motor vehicles or trailers by a person to a corporation solely in
29 exchange for stock securities in such corporation; or (2) the trans-
30 fer of motor vehicles or trailers by one corporation to another
31 when all of the assets of such corporation are transferred to such
32 other corporation; or (3) the sale of motor vehicles or trailers
33 which are subject to taxation pursuant to the provisions of K.S.A.
34 79-5101 et seq., and amendments thereto, by an immediate family
35 member to another immediate family member. For the purposes
36 of clause (3), immediate family member means lineal ascendants
37 or descendants, and their spouses. In determining the base for
38 computing the tax on such isolated or occasional sale, the fair mar-
39 ket value of any motor vehicle or trailer traded in by the purchaser
40 to the seller may be deducted from the selling price;
41 [(p) the gross receipts received for the service of installing or
42 applying tangible personal property which when installed or ap-
43 plied is not being held for sale in the regular course of business,
HB 2216--Am. by HCW
33
1 and whether or not such tangible personal property when installed
2 or applied remains tangible personal property or becomes a part
3 of real estate, except that no tax shall be imposed upon the service
4 of installing or applying tangible personal property in connection
5 with the original construction of a building or facility, the original con-
6 struction, reconstruction, restoration, remodeling, renovation, re-
7 pair or replacement of a residence building or facility or the construc-
8 tion, reconstruction, restoration, replacement or repair of a bridge
9 or highway.
10 [For the purposes of this subsection:
11 [(1) "Original construction" shall mean the first or initial construction
12 of a new building or facility. The term "original construction" shall include
13 the addition of an entire room or floor to any existing building or facility,
14 the completion of any unfinished portion of any existing building or fa-
15 cility and the restoration, reconstruction or replacement of a building or
16 facility damaged or destroyed by fire, flood, tornado, lightning, explosion
17 or earthquake, but such term, except with regard to a residence, shall not
18 include replacement, remodeling, restoration, renovation or reconstruc-
19 tion under any other circumstances;
20 [(2) "Building" shall mean only those enclosures within which
21 individuals customarily live or are employed, or which are custom-
22 arily used to house machinery, equipment or other property, and
23 including the land improvements immediately surrounding such
24 building; and
25 [(3) (2) "facility" shall mean a mill, plant, refinery, oil or gas
26 well, water well, feedlot or any conveyance, transmission or dis-
27 tribution line of any cooperative, nonprofit, membership corpo-
28 ration organized under or subject to the provisions of K.S.A. 17-
29 4601 et seq., and amendments thereto, or of any municipal or
30 quasi-municipal corporation, including the land improvements im-
31 mediately surrounding such facility; and
32 [(4) "residence" shall mean only those enclosures within which in-
33 dividuals customarily live;
34 [(q) the gross receipts received for the service of repairing,
35 servicing, altering or maintaining tangible personal property, ex-
36 cept computer software described in subsection (s), which when
37 such services are rendered is not being held for sale in the regular
38 course of business, and whether or not any tangible personal prop-
39 erty is transferred in connection therewith. The tax imposed by
40 this subsection shall be applicable to the services of repairing, serv-
41 icing, altering or maintaining an item of tangible personal prop-
42 erty which has been and is fastened to, connected with or built into
43 real property;
HB 2216--Am. by HCW
34
1 [(r) the gross receipts from fees or charges made under service
2 or maintenance agreement contracts for services, charges for the
3 providing of which are taxable under the provisions of subsection
4 (p) or (q);
5 [(s) the gross receipts received from the sale of computer soft-
6 ware, and the sale of the services of modifying, altering, updating
7 or maintaining computer software. As used in this subsection,
8 "computer software" means information and directions loaded
9 into a computer which dictate different functions to be performed
10 by the computer. Computer software includes any canned or pre-
11 written program which is held or existing for general or repeated
12 sale, even if the program was originally developed for a single end
13 user as custom computer software. The sale of computer software
14 or services does not include: (1) The initial sale of any custom com-
15 puter program which is originally developed for the exclusive use
16 of a single end user; or (2) those services rendered in the modifi-
17 cation of computer software when the modification is developed
18 exclusively for a single end user only to the extent of the modifi-
19 cation and only to the extent that the actual amount charged for
20 the modification is separately stated on invoices, statements and
21 other billing documents provided to the end user. The services of
22 modification, alteration, updating and maintenance of computer
23 software shall only include the modification, alteration, updating
24 and maintenance of computer software taxable under this subsec-
25 tion whether or not the services are actually provided; and
26 [(t) the gross receipts received for telephone answering serv-
27 ices, including mobile phone services, beeper services and other
28 similar services; and
29 [(u) the gross receipts received from the sale of prepaid tele-
30 phone calling cards or pre-paid authorization numbers and the
31 recharge of such cards or numbers. A pre-paid telephone calling
32 card or pre-paid authorization number means the right to exclu-
33 sively make telephone calls, paid for in advance, with the prepaid
34 value measured in minutes or other time units, that enables the
35 origination of calls using an access number or authorization code
36 or both, whether manually or electronically dialed. If the dale or
37 recharge of such card or number does not take place at the ven-
38 dor's place of business, it shall be conclusively determined to take
39 place at the customer's shipping address; if there is no item
40 shipped then it shall be the customer's billing address.; and
41 [(v) (1) the gross receipts received from sales of food for human con-
42 sumption at the rate of: (A) 3.3% on June 1, 1999, and before June 1,
43 2001; and (B) 2.2% on June 1, 2001, and before June 1, 2002; (2) on and
HB 2216--Am. by HCW
35
1 after June 1, 2002, all sales of food for human consumption are hereby
2 exempt; and (3) as used in this subsection, "food for human consumption"
3 means only that food which is eligible for purchase with food stamps
4 issued by the United States department of agriculture pursuant to regu-
5 lations in effect on January 1, 1998, regardless of whether the retailer
6 from which the food is purchased is participating in the food stamp pro-
7 gram. Such phrase shall not include meals prepared for immediate con-
8 sumption on or off premises of the retailer.
9 [Sec. 12. K.S.A. 1998 Supp. 79-3606 is hereby amended to
10 read as follows: 79-3606. The following shall be exempt from the
11 tax imposed by this act:
12 [(a) All sales of motor-vehicle fuel or other articles upon which
13 a sales or excise tax has been paid, not subject to refund, under
14 the laws of this state except cigarettes as defined by K.S.A. 79-3301
15 and amendments thereto, cereal malt beverages and malt products
16 as defined by K.S.A. 79-3817 and amendments thereto, including
17 wort, liquid malt, malt syrup and malt extract, which is not subject
18 to taxation under the provisions of K.S.A. 79-41a02 and amend-
19 ments thereto, motor vehicles taxed pursuant to K.S.A. 79-5117,
20 and amendments thereto, tires taxed pursuant to K.S.A. 1998
21 Supp. 65-3424d, and amendments thereto, and drycleaning and
22 laundry services taxed pursuant to K.S.A. 1998 Supp. 65-34,150,
23 and amendments thereto;
24 [(b) all sales of tangible personal property or service, including
25 the renting and leasing of tangible personal property, purchased
26 directly by the state of Kansas, a political subdivision thereof, other
27 than a school or educational institution, or purchased by a public
28 or private nonprofit hospital or public hospital authority or non-
29 profit blood, tissue or organ bank and used exclusively for state,
30 political subdivision, hospital or public hospital authority or non-
31 profit blood, tissue or organ bank purposes, except when: (1) Such
32 state, hospital or public hospital authority is engaged or proposes
33 to engage in any business specifically taxable under the provisions
34 of this act and such items of tangible personal property or service
35 are used or proposed to be used in such business, or (2) such po-
36 litical subdivision is engaged or proposes to engage in the business
37 of furnishing gas, water, electricity or heat to others and such items
38 of personal property or service are used or proposed to be used in
39 such business;
40 [(c) all sales of tangible personal property or services, includ-
41 ing the renting and leasing of tangible personal property, pur-
42 chased directly by a public or private elementary or secondary
43 school or public or private nonprofit educational institution and
HB 2216--Am. by HCW
36
1 used primarily by such school or institution for nonsectarian pro-
2 grams and activities provided or sponsored by such school or in-
3 stitution or in the erection, repair or enlargement of buildings to
4 be used for such purposes. The exemption herein provided shall
5 not apply to erection, construction, repair, enlargement or equip-
6 ment of buildings used primarily for human habitation;
7 [(d) all sales of tangible personal property or services pur-
8 chased by a contractor for the purpose of constructing, equipping,
9 reconstructing, maintaining, repairing, enlarging, furnishing or
10 remodeling facilities for any public or private nonprofit hospital
11 or public hospital authority, public or private elementary or sec-
12 ondary school or a public or private nonprofit educational insti-
13 tution, which would be exempt from taxation under the provisions
14 of this act if purchased directly by such hospital or public hospital
15 authority, school or educational institution; and all sales of tangible
16 personal property or services purchased by a contractor for the
17 purpose of constructing, equipping, reconstructing, maintaining,
18 repairing, enlarging, furnishing or remodeling facilities for any
19 political subdivision of the state or district described in subsection (s),
20 the total cost of which is paid from funds of such political subdi-
21 vision or district and which would be exempt from taxation under
22 the provisions of this act if purchased directly by such political
23 subdivision or district. Nothing in this subsection or in the provi-
24 sions of K.S.A. 12-3418 and amendments thereto, shall be deemed
25 to exempt the purchase of any construction machinery, equipment
26 or tools used in the constructing, equipping, reconstructing, main-
27 taining, repairing, enlarging, furnishing or remodeling facilities
28 for any political subdivision of the state or any such district. As used
29 in this subsection, K.S.A. 12-3418 and 79-3640, and amendments
30 thereto, "funds of a political subdivision" shall mean general tax
31 revenues, the proceeds of any bonds and gifts or grants-in-aid.
32 Gifts shall not mean funds used for the purpose of constructing,
33 equipping, reconstructing, repairing, enlarging, furnishing or re-
34 modeling facilities which are to be leased to the donor. When any
35 political subdivision of the state district described in subsection (s),
36 public or private nonprofit hospital or public hospital authority,
37 public or private elementary or secondary school or public or pri-
38 vate nonprofit educational institution shall contract for the pur-
39 pose of constructing, equipping, reconstructing, maintaining, re-
40 pairing, enlarging, furnishing or remodeling facilities, it shall
41 obtain from the state and furnish to the contractor an exemption
42 certificate for the project involved, and the contractor may pur-
43 chase materials for incorporation in such project. The contractor
HB 2216--Am. by HCW
37
1 shall furnish the number of such certificate to all suppliers from
2 whom such purchases are made, and such suppliers shall execute
3 invoices covering the same bearing the number of such certificate.
4 Upon completion of the project the contractor shall furnish to the
5 political subdivision, district, hospital or public hospital authority,
6 school or educational institution concerned a sworn statement, on
7 a form to be provided by the director of taxation, that all purchases
8 so made were entitled to exemption under this subsection. As an
9 alternative to the foregoing procedure, any such contracting entity
10 may apply to the secretary of revenue for agent status for the sole
11 purpose of issuing and furnishing project exemption certificates to
12 contractors pursuant to rules and regulations adopted by the sec-
13 retary establishing conditions and standards for the granting and
14 maintaining of such status. All invoices shall be held by the con-
15 tractor for a period of five years and shall be subject to audit by
16 the director of taxation. If any materials purchased under such a
17 certificate are found not to have been incorporated in the building
18 or other project or not to have been returned for credit or the
19 sales or compensating tax otherwise imposed upon such materials
20 which will not be so incorporated in the building or other project
21 reported and paid by such contractor to the director of taxation
22 not later than the 20th day of the month following the close of the
23 month in which it shall be determined that such materials will not
24 be used for the purpose for which such certificate was issued, the
25 political subdivision, district, hospital or public hospital authority,
26 school or educational institution concerned shall be liable for tax
27 on all materials purchased for the project, and upon payment
28 thereof it may recover the same from the contractor together with
29 reasonable attorney fees. Any contractor or any agent, employee
30 or subcontractor thereof, who shall use or otherwise dispose of any
31 materials purchased under such a certificate for any purpose other
32 than that for which such a certificate is issued without the payment
33 of the sales or compensating tax otherwise imposed upon such ma-
34 terials, shall be guilty of a misdemeanor and, upon conviction
35 therefor, shall be subject to the penalties provided for in subsec-
36 tion (g) of K.S.A. 79-3615, and amendments thereto;
37 [(e) all sales of tangible personal property or services pur-
38 chased by a contractor for the erection, repair or enlargement of
39 buildings or other projects for the government of the United
40 States, its agencies or instrumentalities, which would be exempt
41 from taxation if purchased directly by the government of the
42 United States, its agencies or instrumentalities. When the govern-
43 ment of the United States, its agencies or instrumentalities shall
HB 2216--Am. by HCW
38
1 contract for the erection, repair, or enlargement of any building
2 or other project, it shall obtain from the state and furnish to the
3 contractor an exemption certificate for the project involved, and
4 the contractor may purchase materials for incorporation in such
5 project. The contractor shall furnish the number of such certifi-
6 cates to all suppliers from whom such purchases are made, and
7 such suppliers shall execute invoices covering the same bearing
8 the number of such certificate. Upon completion of the project the
9 contractor shall furnish to the government of the United States, its
10 agencies or instrumentalities concerned a sworn statement, on a
11 form to be provided by the director of taxation, that all purchases
12 so made were entitled to exemption under this subsection. As an
13 alternative to the foregoing procedure, any such contracting entity
14 may apply to the secretary of revenue for agent status for the sole
15 purpose of issuing and furnishing project exemption certificates to
16 contractors pursuant to rules and regulations adopted by the sec-
17 retary establishing conditions and standards for the granting and
18 maintaining of such status. All invoices shall be held by the con-
19 tractor for a period of five years and shall be subject to audit by
20 the director of taxation. Any contractor or any agent, employee or
21 subcontractor thereof, who shall use or otherwise dispose of any
22 materials purchased under such a certificate for any purpose other
23 than that for which such a certificate is issued without the payment
24 of the sales or compensating tax otherwise imposed upon such ma-
25 terials, shall be guilty of a misdemeanor and, upon conviction
26 therefor, shall be subject to the penalties provided for in subsec-
27 tion (g) of K.S.A. 79-3615 and amendments thereto;
28 [(f) tangible personal property purchased by a railroad or pub-
29 lic utility for consumption or movement directly and immediately
30 in interstate commerce;
31 [(g) sales of aircraft including remanufactured and modified
32 aircraft, sales of aircraft repair, modification and replacement
33 parts and sales of services employed in the remanufacture, modi-
34 fication and repair of aircraft sold to persons using directly or
35 through an authorized agent such aircraft and aircraft repair,
36 modification and replacement parts as certified or licensed carri-
37 ers of persons or property in interstate or foreign commerce under
38 authority of the laws of the United States or any foreign govern-
39 ment or sold to any foreign government or agency or instrumen-
40 tality of such foreign government and all sales of aircraft, aircraft
41 parts, replacement parts and services employed in the remanufac-
42 ture, modification and repair of aircraft for use outside of the
43 United States;
HB 2216--Am. by HCW
39
1 [(h) all rentals of nonsectarian textbooks by public or private
2 elementary or secondary schools;
3 [(i) the lease or rental of all films, records, tapes, or any type
4 of sound or picture transcriptions used by motion picture
5 exhibitors;
6 [(j) meals served without charge or food used in the prepara-
7 tion of such meals to employees of any restaurant, eating house,
8 dining car, hotel, drugstore or other place where meals or drinks
9 are regularly sold to the public if such employees' duties are re-
10 lated to the furnishing or sale of such meals or drinks;
11 [(k) any motor vehicle, semitrailer or pole trailer, as such terms
12 are defined by K.S.A. 8-126 and amendments thereto, or aircraft
13 sold and delivered in this state to a bona fide resident of another
14 state, which motor vehicle, semitrailer, pole trailer or aircraft is
15 not to be registered or based in this state and which vehicle, sem-
16 itrailer, pole trailer or aircraft will not remain in this state more
17 than 10 days;
18 [(l) all isolated or occasional sales of tangible personal prop-
19 erty, services, substances or things, except isolated or occasional
20 sale of motor vehicles specifically taxed under the provisions of
21 subsection (o) of K.S.A. 79-3603 and amendments thereto;
22 [(m) all sales of tangible personal property which become an
23 ingredient or component part of tangible personal property or
24 services produced, manufactured or compounded for ultimate sale
25 at retail within or without the state of Kansas; and any such pro-
26 ducer, manufacturer or compounder may obtain from the director
27 of taxation and furnish to the supplier an exemption certificate
28 number for tangible personal property for use as an ingredient or
29 component part of the property or services produced, manufac-
30 tured or compounded;
31 [(n) all sales of tangible personal property which is consumed
32 in the production, manufacture, processing, mining, drilling, re-
33 fining or compounding of tangible personal property, the treating
34 of by-products or wastes derived from any such production pro-
35 cess, the providing of services or the irrigation of crops for ulti-
36 mate sale at retail within or without the state of Kansas; and any
37 purchaser of such property may obtain from the director of taxa-
38 tion and furnish to the supplier an exemption certificate number
39 for tangible personal property for consumption in such produc-
40 tion, manufacture, processing, mining, drilling, refining, com-
41 pounding, treating, irrigation and in providing such services;
42 [(o) all sales of animals, fowl and aquatic plants and animals,
43 the primary purpose of which is use in agriculture or aquaculture,
HB 2216--Am. by HCW
40
1 as defined in K.S.A. 47-1901, and amendments thereto, the pro-
2 duction of food for human consumption, the production of animal,
3 dairy, poultry or aquatic plant and animal products, fiber or fur,
4 or the production of offspring for use for any such purpose or
5 purposes;
6 [(p) all sales of drugs, as defined by K.S.A. 65-1626 and amend-
7 ments thereto, dispensed pursuant to a prescription order, as de-
8 fined by K.S.A. 65-1626 and amendments thereto, by a licensed
9 practitioner;
10 [(q) all sales of insulin dispensed by a person licensed by the
11 state board of pharmacy to a person for treatment of diabetes at
12 the direction of a person licensed to practice medicine by the
13 board of healing arts;
14 [(r) all sales of prosthetic and orthopedic appliances prescribed
15 in writing by a person licensed to practice the healing arts, den-
16 tistry or optometry, all sales of repair and replacement parts therefor
17 and all sales of services performed in the installation, maintenance or
18 repair thereof. For the purposes of this subsection, the term pros-
19 thetic and orthopedic appliances means any apparatus, instru-
20 ment, device, or equipment used to replace or substitute for any
21 missing part of the body; used to alleviate the malfunction of any
22 part of the body; or used to assist any disabled person in leading
23 a normal life by facilitating such person's mobility; such term shall
24 include accessories attached or to be attached to motor vehicles,
25 but such term shall not include motor vehicles or personal prop-
26 erty which when installed becomes a fixture to real property;
27 [(s) all sales of tangible personal property or services pur-
28 chased directly by a groundwater management district organized
29 or operating under the authority of K.S.A. 82a-1020 et seq. and
30 amendments thereto, by a rural water district organized or operated
31 under the authority of K.S.A. 82a-612, and amendments thereto, or by a
32 water supply district organized or operating under the authority of K.S.A.
33 19-3501 et seq., and amendments thereto, K.S.A. 19-3522 et seq., and
34 amendments thereto or K.S.A. 19-3545 et seq., and amendments thereto,
35 which property or services are used in the construction activities,
36 operation or maintenance of the district;
37 [(t) all sales of farm machinery and equipment or aquaculture
38 machinery and equipment, repair and replacement parts therefor
39 and services performed in the repair and maintenance of such ma-
40 chinery and equipment. For the purposes of this subsection the
41 term "farm machinery and equipment or aquaculture machinery
42 and equipment" shall include machinery and equipment used in
43 the operation of Christmas tree farming but shall not include any
HB 2216--Am. by HCW
41
1 passenger vehicle, truck, truck tractor, trailer, semitrailer or pole
2 trailer, other than a farm trailer, as such terms are defined by
3 K.S.A. 8-126 and amendments thereto. Each purchaser of farm
4 machinery and equipment or aquaculture machinery and equip-
5 ment exempted herein must certify in writing on the copy of the
6 invoice or sales ticket to be retained by the seller that the farm
7 machinery and equipment or aquaculture machinery and equip-
8 ment purchased will be used only in farming, ranching or aqua-
9 culture production. Farming or ranching shall include the opera-
10 tion of a feedlot and farm and ranch work for hire and the
11 operation of a nursery;
12 [(u) all leases or rentals of tangible personal property used as
13 a dwelling if such tangible personal property is leased or rented
14 for a period of more than 28 consecutive days;
15 [(v) all sales of food products to any contractor for use in pre-
16 paring meals for delivery to homebound elderly persons over 60
17 years of age and to homebound disabled persons or to be served
18 at a group-sitting at a location outside of the home to otherwise
19 homebound elderly persons over 60 years of age and to otherwise
20 homebound disabled persons, as all or part of any food service
21 project funded in whole or in part by government or as part of a
22 private nonprofit food service project available to all such elderly
23 or disabled persons residing within an area of service designated
24 by the private nonprofit organization, and all sales of food prod-
25 ucts for use in preparing meals for consumption by indigent or
26 homeless individuals whether or not such meals are consumed at
27 a place designated for such purpose;
28 [(w) all sales of natural gas, electricity, heat and water deliv-
29 ered through mains, lines or pipes: (1) To residential premises for
30 noncommercial use by the occupant of such premises; (2) for ag-
31 ricultural use and also, for such use, all sales of propane gas; (3)
32 for use in the severing of oil; and (4) to any property which is
33 exempt from property taxation pursuant to K.S.A. 79-201b Second
34 through Sixth. As used in this paragraph, "severing" shall have the
35 meaning ascribed thereto by subsection (k) of K.S.A. 79-4216, and
36 amendments thereto;
37 [(x) all sales of propane gas, LP-gas, coal, wood and other fuel
38 sources for the production of heat or lighting for noncommercial
39 use of an occupant of residential premises;
40 [(y) all sales of materials and services used in the repairing,
41 servicing, altering, maintaining, manufacturing, remanufacturing,
42 or modification of railroad rolling stock for use in interstate or
43 foreign commerce under authority of the laws of the United States;
HB 2216--Am. by HCW
42
1 [(z) all sales of tangible personal property and services pur-
2 chased directly by a port authority or by a contractor therefor as
3 provided by the provisions of K.S.A. 12-3418 and amendments
4 thereto;
5 [(aa) all sales of materials and services applied to equipment
6 which is transported into the state from without the state for re-
7 pair, service, alteration, maintenance, remanufacture or modifi-
8 cation and which is subsequently transported outside the state for
9 use in the transmission of liquids or natural gas by means of pipe-
10 line in interstate or foreign commerce under authority of the laws
11 of the United States;
12 [(bb) all sales of used mobile homes or manufactured homes.
13 As used in this subsection: (1) "Mobile homes" and "manufactured
14 homes" shall have the meanings ascribed thereto by K.S.A. 58-
15 4202 and amendments thereto; and (2) "sales of used mobile
16 homes or manufactured homes" means sales other than the orig-
17 inal retail sale thereof;
18 [(cc) all sales of tangible personal property or services pur-
19 chased for the purpose of and in conjunction with constructing,
20 reconstructing, enlarging or remodeling a business or retail busi-
21 ness which meets the requirements established in K.S.A. 74-50,115
22 and amendments thereto, and the sale and installation of machin-
23 ery and equipment purchased for installation at any such business
24 or retail business. When a person shall contract for the construc-
25 tion, reconstruction, enlargement or remodeling of any such busi-
26 ness or retail business, such person shall obtain from the state and
27 furnish to the contractor an exemption certificate for the project
28 involved, and the contractor may purchase materials, machinery
29 and equipment for incorporation in such project. The contractor
30 shall furnish the number of such certificates to all suppliers from
31 whom such purchases are made, and such suppliers shall execute
32 invoices covering the same bearing the number of such certificate.
33 Upon completion of the project the contractor shall furnish to the
34 owner of the business or retail business a sworn statement, on a
35 form to be provided by the director of taxation, that all purchases
36 so made were entitled to exemption under this subsection. All in-
37 voices shall be held by the contractor for a period of five years and
38 shall be subject to audit by the director of taxation. Any contractor
39 or any agent, employee or subcontractor thereof, who shall use or
40 otherwise dispose of any materials, machinery or equipment pur-
41 chased under such a certificate for any purpose other than that for
42 which such a certificate is issued without the payment of the sales
43 or compensating tax otherwise imposed thereon, shall be guilty of
HB 2216--Am. by HCW
43
1 a misdemeanor and, upon conviction therefor, shall be subject to
2 the penalties provided for in subsection (g) of K.S.A. 79-3615 and
3 amendments thereto. As used in this subsection, "business" and
4 "retail business" have the meanings respectively ascribed thereto
5 by K.S.A. 74-50,114 and amendments thereto;
6 [(dd) all sales of tangible personal property purchased with
7 food stamps issued by the United States department of agriculture;
8 [(ee) all sales of lottery tickets and shares made as part of a
9 lottery operated by the state of Kansas;
10 [(ff) on and after July 1, 1988, all sales of new mobile homes
11 or manufactured homes to the extent of 40% of the gross receipts,
12 determined without regard to any trade-in allowance, received
13 from such sale. As used in this subsection, "mobile homes" and
14 "manufactured homes" shall have the meanings ascribed thereto
15 by K.S.A. 58-4202 and amendments thereto;
16 [(gg) all sales of tangible personal property purchased in ac-
17 cordance with vouchers issued pursuant to the federal special sup-
18 plemental food program for women, infants and children;
19 [(hh) all sales of medical supplies and equipment purchased
20 directly by a nonprofit skilled nursing home or nonprofit inter-
21 mediate nursing care home, as defined by K.S.A. 39-923, and
22 amendments thereto, for the purpose of providing medical serv-
23 ices to residents thereof. This exemption shall not apply to tangible
24 personal property customarily used for human habitation
25 purposes;
26 [(ii) all sales of tangible personal property purchased directly
27 by a nonprofit organization for nonsectarian comprehensive mul-
28 tidiscipline youth development programs and activities provided
29 or sponsored by such organization, and all sales of tangible per-
30 sonal property by or on behalf of any such organization, and all
31 sales of tangible personal property by or on behalf of any other nonprofit
32 organization the proceeds of which are solely expended for the provision
33 or sponsorship of youth development programs and activities. This ex-
34 emption shall not apply to tangible personal property customarily
35 used for human habitation purposes;
36 [(jj) all sales of tangible personal property or services, includ-
37 ing the renting and leasing of tangible personal property, pur-
38 chased directly on behalf of a community-based mental retarda-
39 tion facility or mental health center organized pursuant to K.S.A.
40 19-4001 et seq., and amendments thereto, and licensed in accord-
41 ance with the provisions of K.S.A. 75-3307b and amendments
42 thereto. This exemption shall not apply to tangible personal prop-
43 erty customarily used for human habitation purposes;
HB 2216--Am. by HCW
44
1 [(kk) on and after January 1, 1989, all sales of machinery and equip-
2 ment used directly and primarily for the purposes of manufacturing, as-
3 sembling, processing, finishing, storing, warehousing or distributing ar-
4 ticles of tangible personal property in this state intended for resale by a
5 manufacturing or processing plant or facility or a storage, warehousing or
6 distribution facility, and all sales of repair and replacement parts and
7 accessories purchased for such machinery and equipment:
8 [(1) For purposes of this subsection, machinery and equipment shall
9 be deemed to be used directly and primarily in the manufacture, assem-
10 blage, processing, finishing, storing, warehousing or distributing of tan-
11 gible personal property where such machinery and equipment is used
12 during a manufacturing, assembling, processing or finishing, storing,
13 warehousing or distributing operation:
14 [(A) To effect a direct and immediate physical change upon the tan-
15 gible personal property;
16 [(B) to guide or measure a direct and immediate physical change
17 upon such property where such function is an integral and essential part
18 of tuning, verifying or aligning the component parts of such property;
19 [(C) to test or measure such property where such function is an in-
20 tegral part of the production flow or function;
21 [(D) to transport, convey or handle such property during the manu-
22 facturing, processing, storing, warehousing or distribution operation at
23 the plant or facility; or
24 [(E) to place such property in the container, package or wrapping in
25 which such property is normally sold or transported.
26 [(2) For purposes of this subsection "machinery and equipment used
27 directly and primarily" shall include, but not be limited to:
28 [(A) Mechanical machines or components thereof contributing to a
29 manufacturing, assembling or finishing process;
30 [(B) molds and dies that determine the physical characteristics of the
31 finished product or its packaging material;
32 [(C) testing equipment to determine the quality of the finished
33 product;
34 [(D) computers and related peripheral equipment that directly con-
35 trol or measure the manufacturing process or which are utilized for en-
36 gineering of the finished product; and
37 [(E) computers and related peripheral equipment utilized for re-
38 search and development and product design.
39 [(3) "Machinery and equipment used directly and primarily" shall not
40 include:
41 [(A) Hand tools;
42 [(B) machinery, equipment and tools used in maintaining and re-
43 pairing any type of machinery and equipment;
HB 2216--Am. by HCW
45
1 [(C) transportation equipment not used in the manufacturing, assem-
2 bling, processing, furnishing, storing, warehousing or distributing process
3 at the plant or facility;
4 [(D) office machines and equipment including computers and related
5 peripheral equipment not directly and primarily used in controlling or
6 measuring the manufacturing process;
7 [(E) furniture and buildings; and
8 [(F) machinery and equipment used in administrative, accounting,
9 sales or other such activities of the business;
10 [(4) for purposes of this subsection, "repair and replacement parts
11 and accessories" means all parts and accessories for exempt machinery
12 and equipment, including but not limited to dies, jigs, molds, and patterns
13 which are attached to exempt machinery or which are otherwise used in
14 production, short-lived replaceable parts that can be readily detached
15 from exempt machinery or equipment, such as belts, drill bits, grinding
16 wheels, cutting bars and saws, and other replacement parts for production
17 equipment, including refractory brick and other refractory items for kiln
18 equipment used in production operations;
19 [(1) (A) all sales of machinery and equipment which are used in this
20 state as an integral or essential part of an integrated production operation
21 by a manufacturing or processing plant or facility;
22 [(B) all sales of installation, repair and maintenance services per-
23 formed on such machinery and equipment; and
24 [(C) all sales of repair and replacement parts and accessories pur-
25 chased for such machinery and equipment.
26 [(2) For purposes of this subsection:
27 [(A) "Integrated production operation" means an integrated series of
28 operations engaged in at a manufacturing or processing plant or facility
29 to process, transform or convert tangible personal property by physical,
30 chemical or other means into a different form, composition or character
31 from that in which it originally existed. Integrated production operations
32 shall include: (i) Production line operations, including packaging opera-
33 tions; (ii) preproduction operations to handle, store and treat raw mate-
34 rials; (iii) post production handling, storage, warehousing and distribu-
35 tion operations; and (iv) waste, pollution and environmental control
36 operations, if any;
37 [(B) "production line" means the assemblage of machinery and equip-
38 ment at a manufacturing or processing plant or facility where the actual
39 transformation or processing of tangible personal property occurs;
40 [(C) "manufacturing or processing plant or facility" means a single,
41 fixed location owned or controlled by a manufacturing or processing busi-
42 ness that consists of one or more structures or buildings in a contiguous
43 area where integrated production operations are conducted to manufac-
HB 2216--Am. by HCW
46
1 ture or process tangible personal property to be ultimately sold at retail.
2 A business may operate one or more manufacturing or processing plants
3 or facilities at different locations to manufacture or process a single prod-
4 uct of tangible personal property to be ultimately sold at retail;
5 [(D) "manufacturing or processing business" means a business that
6 utilizes an integrated production operation to manufacture, process, fab-
7 ricate, finish, or assemble items for wholesale and retail distribution as
8 part of what is commonly regarded by the general public as an industrial
9 manufacturing or processing operation or an agricultural commodity
10 processing operation. (i) Industrial manufacturing or processing opera-
11 tions include, by way of illustration but not of limitation, the fabrication
12 of automobiles, airplanes, machinery or transportation equipment, the
13 fabrication of metal, plastic, wood, or paper products, electricity power
14 generation, water treatment, petroleum refining, chemical production,
15 wholesale bottling, newspaper printing, ready mixed concrete production,
16 and the remanufacturing of used parts for wholesale or retail sale. Such
17 processing operations shall include operations at an oil well, gas well, mine
18 or other excavation site where the oil, gas, minerals, coal, clay, stone, sand
19 or gravel that has been extracted from the earth is cleaned, separated,
20 crushed, ground, milled, screened, washed, or otherwise treated or pre-
21 pared before its transmission to a refinery or before any other wholesale
22 or retail distribution. (ii) Agricultural commodity processing operations
23 include, by way of illustration but not of limitation, meat packing, poultry
24 slaughtering and dressing, processing and packaging farm and dairy
25 products in sealed containers for wholesale and retail distribution, feed
26 grinding, grain milling, frozen food processing, and grain handling, clean-
27 ing, blending, fumigation, drying and aeration operations engaged in by
28 grain elevators or other grain storage facilities. (iii) Manufacturing or
29 processing businesses do not include, by way of illustration but not of
30 limitation, nonindustrial businesses whose operations are primarily retail
31 and that produce or process tangible personal property as an incidental
32 part of conducting the retail business, such as retailers who bake, cook or
33 prepare food products in the regular course of their retail trade, grocery
34 stores, meat lockers and meat markets that butcher or dress livestock or
35 poultry in the regular course of their retail trade, contractors who alter,
36 service, repair or improve real property, and retail businesses that clean,
37 service or refurbish and repair tangible personal property for its owner;
38 [(E) "repair and replacement parts and accessories" means all parts
39 and accessories for exempt machinery and equipment, including, but not
40 limited to, dies, jigs, molds, patterns and safety devices that are attached
41 to exempt machinery or that are otherwise used in production, and parts
42 and accessories that require periodic replacement such as belts, drill bits,
43 grinding wheels, grinding balls, cutting bars, saws, refractory brick and
HB 2216--Am. by HCW
47
1 other refractory items for exempt kiln equipment used in production
2 operations;
3 [(F) "primary" or "primarily" mean more than 50% of the time.
4 [(3) For purposes of this subsection, machinery and equipment shall
5 be deemed to be used as an integral or essential part of an integrated
6 production operation when used:
7 [(A) To receive, transport, convey, handle, treat or store raw mate-
8 rials in preparation of its placement on the production line;
9 [(B) to transport, convey, handle or store the property undergoing
10 manufacturing or processing at any point from the beginning of the pro-
11 duction line through any warehousing or distribution operation of the
12 final product that occurs at the plant or facility;
13 [(C) to act upon, effect, promote or otherwise facilitate a physical
14 change to the property undergoing manufacturing or processing;
15 [(D) to guide, control or direct the movement of property undergoing
16 manufacturing or processing;
17 [(E) to test or measure raw materials, the property undergoing man-
18 ufacturing or processing or the finished product, as a necessary part of
19 the manufacturer's integrated production operations;
20 [(F) to plan, manage, control or record the receipt and flow of inven-
21 tories of raw materials, consumables and component parts, the flow of the
22 property undergoing manufacturing or processing and the management
23 of inventories of the finished product;
24 [(G) to produce energy for, lubricate, control the operating of or oth-
25 erwise enable the functioning of other production machinery and equip-
26 ment and the continuation of production operations;
27 [(H) to package the property being manufactured or processed in a
28 container or wrapping in which such property is normally sold or
29 transported;
30 [(I) to transmit or transport electricity, coke, gas, water, steam or
31 similar substances used in production operations from the point of gen-
32 eration, if produced by the manufacturer or processor at the plant site,
33 to that manufacturer's production operation; or, if purchased or delivered
34 from offsite, from the point where the substance enters the site of the plant
35 or facility to that manufacturer's production operations;
36 [(J) to cool, heat, filter, refine or otherwise treat water, steam, acid,
37 oil, solvents or other substances that are used in production operations;
38 [(K) to provide and control an environment required to maintain cer-
39 tain levels of air quality, humidity or temperature in special and limited
40 areas of the plant or facility, where such regulation of temperature or
41 humidity is part of and essential to the production process;
42 [(L) to treat, transport or store waste or other byproducts of produc-
43 tion operations at the plant or facility; or
HB 2216--Am. by HCW
48
1 [(M) to control pollution at the plant or facility where the pollution
2 is produced by the manufacturing or processing operation.
3 [(4) The following machinery, equipment and materials shall be
4 deemed to be exempt even though it may not otherwise qualify as ma-
5 chinery and equipment used as an integral or essential part of an inte-
6 grated production operation: (A) Computers and related peripheral
7 equipment that are utilized by a manufacturing or processing business for
8 engineering of the finished product or for research and development or
9 product design; (B) machinery and equipment that is utilized by a man-
10 ufacturing or processing business to manufacture or rebuild tangible per-
11 sonal property that is used in manufacturing or processing operations,
12 including tools, dies, molds, forms and other parts of qualifying machinery
13 and equipment; (C) oil and gas drilling services and supplies, and drilling,
14 pumping and monitoring equipment, used at a well site or in oil and gas
15 exploration; (D) portable plants for aggregate, concrete, bulk cement and
16 asphalt; (E) industrial fixtures, devices, support facilities and special foun-
17 dations necessary for manufacturing and production operations, and ma-
18 terials and other tangible personal property sold for the purpose of fab-
19 ricating such fixtures, devices, facilities and foundations. An exemption
20 certificate for such purchases shall be signed by the manufacturer or pro-
21 cessor. If the fabricator purchases such material, the fabricator shall also
22 sign the exemption certificate; and (F) a manufacturing or processing
23 business' laboratory equipment that is not located at the plant or facility,
24 but that would otherwise qualify for exemption under subsection (3)(E).
25 [(5) "Machinery and equipment used as an integral or essential part
26 of an integrated production operation" shall not include:
27 [(A) Machinery and equipment used for nonproduction purposes, in-
28 cluding, but not limited to, machinery and equipment used for plant se-
29 curity, fire prevention, first aid, accounting, administration, record keep-
30 ing, advertising, marketing, sales or other related activities, plant
31 cleaning, plant communications, and employee work scheduling;
32 [(B) machinery, equipment and tools used primarily in maintaining
33 and repairing any type of machinery and equipment or the building and
34 plant;
35 [(C) transportation equipment not primarily used in a production,
36 warehousing or material handling operation at the plant or facility;
37 [(D) office machines and equipment including computers and related
38 periheral equipment not used directly and primarily to control or measure
39 the manufacturing process;
40 [(E) furniture and other furnishings;
41 [(F) buildings, other than exempt machinery and equipment that is
42 permanently affixed to or becomes a physical part of the building, and
43 any other part of real estate that is not otherwise exempt;
HB 2216--Am. by HCW
49
1 [(G) building fixtures that are not integral to the manufacturing op-
2 eration, such as utility systems for heating, ventilation, air conditioning,
3 communications, plumbing or electrical;
4 [(H) machinery and equipment used for general plant heating, cooling
5 and lighting;
6 [(I) motor vehicles that are registered for operation on public high-
7 ways; or
8 [(J) employee apparel, except safety and protective apparel that is
9 purchased by an employer and furnished gratuitously to employees who
10 are involved in production or research activities.
11 [(6) Subsections (3) and (5) shall not be construed as exclusive listings
12 of the machinery and equipment that qualify or do not qualify as an
13 integral or essential part of an integrated production operation. When
14 machinery or equipment is used as an integral or essential part of pro-
15 duction operations part of the time and for nonproduction purpose at
16 other times, the primary use of the machinery or equipment shall deter-
17 mine whether or not such machinery or equipment qualifies for
18 exemption.
19 [(7) The secretary of revenue shall adopt rules and regulations nec-
20 essary to administer the provisions of this subsection;
21 [(ll) all sales of educational materials purchased for distribu-
22 tion to the public at no charge by a nonprofit corporation organ-
23 ized for the purpose of encouraging, fostering and conducting pro-
24 grams for the improvement of public health;
25 [(mm) all sales of seeds and tree seedlings; fertilizers, insecti-
26 cides, herbicides, germicides, pesticides and fungicides; and serv-
27 ices, purchased and used for the purpose of producing plants in
28 order to prevent soil erosion on land devoted to agricultural use;
29 [(nn) except as otherwise provided in this act, all sales of serv-
30 ices rendered by an advertising agency or licensed broadcast sta-
31 tion or any member, agent or employee thereof;
32 [(oo) all sales of tangible personal property purchased by a
33 community action group or agency for the exclusive purpose of
34 repairing or weatherizing housing occupied by low income
35 individuals;
36 [(pp) all sales of drill bits and explosives actually utilized in the ex-
37 ploration and production of oil or gas material handling equipment, rack-
38 ing systems and other related machinery and equipment that is used for
39 the handling, movement or storage of tangible personal property in a
40 warehouse or distribution facility in this state; all sales of installation,
41 repair and maintenance services performed on such machinery and equip-
42 ment; and all sales of repair and replacement parts for such machinery
43 and equipment. For purposes of this subsection, a warehouse or distri-
HB 2216--Am. by HCW
50
1 bution facility means a single, fixed location that consists of buildings or
2 structures in a contiguous area where storage or distribution operations
3 are conducted that are separate and apart from the business' retail op-
4 erations, if any, and which do not otherwise qualify for exemption as
5 occurring at a manufacturing or processing plant or facility. Material
6 handling and storage equipment shall include aeration, dust control,
7 cleaning, handling and other such equipment that is used in a public grain
8 warehouse or other commercial grain storage facility, whether used for
9 grain handling, grain storage, grain refining or processing, or other grain
10 treatment operation;
11 [(qq) all sales of tangible personal property and services pur-
12 chased by a nonprofit museum or historical society or any combi-
13 nation thereof, including a nonprofit organization which is organ-
14 ized for the purpose of stimulating public interest in the
15 exploration of space by providing educational information, exhib-
16 its and experiences, which is exempt from federal income taxation
17 pursuant to section 501(c)(3) of the federal internal revenue code
18 of 1986;
19 [(rr) all sales of tangible personal property which will admit the
20 purchaser thereof to any annual event sponsored by a nonprofit
21 organization which is exempt from federal income taxation pur-
22 suant to section 501(c)(3) of the federal internal revenue code of
23 1986;
24 [(ss) all sales of tangible personal property and services pur-
25 chased by a public broadcasting station licensed by the federal
26 communications commission as a noncommercial educational tel-
27 evision or radio station;
28 [(tt) all sales of tangible personal property and services pur-
29 chased by or on behalf of a not-for-profit corporation which is ex-
30 empt from federal income taxation pursuant to section 501(c)(3)
31 of the federal internal revenue code of 1986, for the sole purpose
32 of constructing a Kansas Korean War memorial;
33 [(uu) all sales of tangible personal property and services pur-
34 chased by or on behalf of any rural volunteer fire-fighting organ-
35 ization for use exclusively in the performance of its duties and
36 functions;
37 [(vv) all sales of tangible personal property purchased by any
38 of the following organizations which are exempt from federal in-
39 come taxation pursuant to section 501(c)(3) of the federal internal
40 revenue code of 1986, for the following purposes, and all sales of
41 any such property by or on behalf of any such organization for any
42 such purpose:
43 [(1) The American Heart Association, Kansas Affiliate, Inc. for
HB 2216--Am. by HCW
51
1 the purposes of providing education, training, certification in
2 emergency cardiac care, research and other related services to
3 reduce disability and death from cardiovascular diseases and
4 stroke;
5 [(2) the Kansas Alliance for the Mentally Ill, Inc. for the pur-
6 pose of advocacy for persons with mental illness and to education,
7 research and support for their families;
8 [(3) the Kansas Mental Illness Awareness Council for the pur-
9 poses of advocacy for persons who are mentally ill and to educa-
10 tion, research and support for them and their families;
11 [(4) the American Diabetes Association Kansas Affiliate, Inc.
12 for the purpose of eliminating diabetes through medical research,
13 public education focusing on disease prevention and education,
14 patient education including information on coping with diabetes,
15 and professional education and training;
16 [(5) the American Lung Association of Kansas, Inc. for the pur-
17 pose of eliminating all lung diseases through medical research,
18 public education including information on coping with lung dis-
19 eases, professional education and training related to lung disease
20 and other related services to reduce the incidence of disability and
21 death due to lung disease;
22 [(6) the Kansas Chapters of the Alzheimer's Disease and re-
23 lated disorders association, inc. for the purpose of providing assis-
24 tance and support to persons in Kansas with Alzheimer's disease,
25 and their families and caregivers; and
26 [(7) the National Kidney Foundation of Kansas and Western Missouri
27 for the purposes of providing emotional educational and financial support
28 for the prevention, treatment and public awareness of kidney disease;
29 [(ww) all sales of tangible personal property purchased by the
30 Habitat for Humanity for the exclusive use of being incorporated
31 within a housing project constructed by such organization.;
32 [(xx) all sales of tangible personal property and services pur-
33 chased by a nonprofit zoo which is exempt from federal income
34 taxation pursuant to section 501(c)(3) of the federal internal rev-
35 enue code of 1986, or on behalf of such zoo by an entity itself
36 exempt from federal income taxation pursuant to section 50
37 501(c)(3) of the federal internal revenue code of 1986 contracted
38 with to operate such zoo and all sales of tangible personal property
39 or services purchased by a contractor for the purpose of construct-
40 ing, equipping, reconstructing, maintaining, repairing, enlarging,
41 furnishing or remodeling facilities for any nonprofit zoo which
42 would be exempt from taxation under the provisions of this section
43 if purchased directly by such nonprofit zoo or the entity operating
HB 2216--Am. by HCW
52
1 such zoo. Nothing in this subsection shall be deemed to exempt
2 the purchase of any construction machinery, equipment or tools
3 used in the constructing, equipping, reconstructing, maintaining,
4 repairing, enlarging, furnishing or remodeling facilities for any
5 nonprofit zoo. When any nonprofit zoo shall contract for the pur-
6 pose of constructing, equipping, reconstructing, maintaining, re-
7 pairing, enlarging, furnishing or remodeling facilities, it shall ob-
8 tain from the state and furnish to the contractor an exemption
9 certificate for the project involved, and the contractor may pur-
10 chase materials for incorporation in such project. The contractor
11 shall furnish the number of such certificate to all suppliers from
12 whom such purchases are made, and such suppliers shall execute
13 invoices covering the same bearing the number of such certificate.
14 Upon completion of the project the contractor shall furnish to the
15 nonprofit zoo concerned a sworn statement, on a form to be pro-
16 vided by the director of taxation, that all purchases so made were
17 entitled to exemption under this subsection. All invoices shall be
18 held by the contractor for a period of five years and shall be subject
19 to audit by the director of taxation. If any materials purchased
20 under such a certificate are found not to have been incorporated
21 in the building or other project or not to have been returned for
22 credit or the sales or compensating tax otherwise imposed upon
23 such materials which will not be so incorporated in the building
24 or other project reported and paid by such contractor to the di-
25 rector of taxation not later than the 20th day of the month follow-
26 ing the close of the month in which it shall be determined that
27 such materials will not be used for the purpose for which such
28 certificate was issued, the nonprofit zoo concerned shall be liable
29 for tax on all materials purchased for the project, and upon pay-
30 ment thereof it may recover the same from the contractor together
31 with reasonable attorney fees. Any contractor or any agent, em-
32 ployee or subcontractor thereof, who shall use or otherwise dis-
33 pose of any materials purchased under such a certificate for any
34 purpose other than that for which such a certificate is issued with-
35 out the payment of the sales or compensating tax otherwise im-
36 posed upon such materials, shall be guilty of a misdemeanor and,
37 upon conviction therefor, shall be subject to the penalties provided
38 for in subsection (g) of K.S.A. 79-3615, and amendments thereto;
39 [(yy) all sales of tangible personal property and services pur-
40 chased by a parent-teacher association or organization, and all
41 sales of tangible personal property and services by or on behalf of
42 such association or organization;
43 [(zz) all sales of machinery and equipment purchased by over-
HB 2216--Am. by HCW
53
1 the-air, free access radio or television station which is used directly
2 and primarily for the purpose of producing a broadcast signal or
3 is such that the failure of the machinery or equipment to operate
4 would cause broadcasting to cease. For purposes of this subsec-
5 tion, machinery and equipment shall include, but not be limited
6 to, that required by rules and regulations of the federal commu-
7 nications commission, and all sales of electricity which are essential
8 or necessary for the purpose of producing a broadcast signal or is
9 such that the failure of the electricity would cause broadcasting to
10 cease;
11 [(aaa) all sales of tangible personal property and services pur-
12 chased by a religious organization which is exempt from federal
13 income taxation pursuant to section 501(c)(3) of the federal inter-
14 nal revenue code, and used exclusively for religious purposes; and
15 [(bbb) all sales of food for human consumption by an organi-
16 zation which is exempt from federal income taxation pursuant to
17 section 501(c)(3) of the federal internal revenue code of 1986, pur-
18 suant to a food distribution program which offers such food at a
19 price below cost in exchange for the performance of community
20 service by the purchaser thereof.;
21 [(ccc) all sales of tangible personal property and services purchased
22 to repair or replace tangible personal property or real property which
23 was damaged or destroyed in this state as a result of a weather related
24 event or occurrence which the president of the United States has declared,
25 pursuant to federal law, to be a major disaster, and grants from the federal
26 government to meet disaster related expenses resulting from such event
27 or occurrence have been authorized. No such sale shall be exempt here-
28 under unless occurring within three years after the date of such decla-
29 ration. Sales tax paid on and after October 1, 1998, but prior to the
30 effective date of this act upon the gross receipts received from any such
31 sale shall be refunded if such claim is filed on or before July 1, 2000. Also,
32 in the event that any such sale occurs after any such event or occurrence
33 but before any such declaration, a sales tax refund shall be allowed if
34 claimed within nine months after the date of such declaration. Each claim
35 for a sales tax refund shall be verified and submitted to the director of
36 taxation upon forms furnished by the director and shall be accompanied
37 by any additional documentation required by the director. The director
38 shall review each claim and shall refund that amount of sales tax paid as
39 determined under the provisions of this section. All refunds shall be paid
40 from the sales tax refund fund upon warrants of the director of accounts
41 and reports pursuant to vouchers approved by the director or the direc-
42 tor's designee;
43 [(ddd) all sales of tangible personal property and services purchased
HB 2216--Am. by HCW
54
1 by a primary care clinic or health center the primary purpose of which
2 is to provide services to medically underserved individuals and families,
3 and which is exempt from federal income taxation pursuant to section
4 501(c)(3) of the federal internal revenue code, and all sales of tangible
5 personal property or services purchased by a contractor for the purpose
6 of constructing, equipping, reconstructing, maintaining, repairing, en-
7 larging, furnishing or remodeling facilities for any such clinic or center
8 which would be exempt from taxation under the provisions of this section
9 if purchased directly by such clinic or center. Nothing in this subsection
10 shall be deemed to exempt the purchase of any construction machinery,
11 equipment or tools used in the constructing, equipping, reconstructing,
12 maintaining, repairing, enlarging, furnishing or remodeling facilities for
13 any such clinic or center. When any such clinic or center shall contract
14 for the purpose of constructing, equipping, reconstructing, maintaining,
15 repairing, enlarging, furnishing or remodeling facilities, it shall obtain
16 from the state and furnish to the contractor an exemption certificate for
17 the project involved, and the contractor may purchase materials for in-
18 corporation in such project. The contractor shall furnish the number of
19 such certificate to all suppliers from whom such purchases are made, and
20 such suppliers shall execute invoices covering the same bearing the num-
21 ber of such certificate. Upon completion of the project the contractor shall
22 furnish to such clinic or center concerned a sworn statement, on a form
23 to be provided by the director of taxation, that all purchases so made were
24 entitled to exemption under this subsection. All invoices shall be held by
25 the contractor for a period of five years and shall be subject to audit by
26 the director of taxation. If any materials purchased under such a certifi-
27 cate are found not to have been incorporated in the building or other
28 project or not to have been returned for credit or the sales or compensating
29 tax otherwise imposed upon such materials which will not be so incor-
30 porated in the building or other project reported and paid by such con-
31 tractor to the director of taxation not later than the 20th day of the month
32 following the close of the month in which it shall be determined that such
33 materials will not be used for the purpose for which such certificate was
34 issued, such clinic or center concerned shall be liable for tax on all ma-
35 terials purchased for the project, and upon payment thereof it may recover
36 the same from the contractor together with reasonable attorney fees. Any
37 contractor or any agent, employee or subcontractor thereof, who shall use
38 or otherwise dispose of any materials purchased under such a certificate
39 for any purpose other than that for which such a certificate is issued
40 without the payment of the sales or compensating tax otherwise imposed
41 upon such materials, shall be guilty of a misdemeanor and, upon convic-
42 tion therefor, shall be subject to the penalties provided for in subsection
43 (g) of K.S.A. 79-3615, and amendments thereto;
HB 2216--Am. by HCW
55
1 [(eee) (1) all sales of manual and powered wheelchairs, stairway lifts,
2 braille writers, electronic braille equipment, hearing aids, telephone com-
3 munication devices, assistive listening devices and other aids that enhance
4 an individual's ability to hear, home respiratory equipment and accesso-
5 ries, hospital beds and accessories and ambulatory aids and, if purchased
6 by or on behalf of a person with one or more physical or mental disabilities
7 to enable them to function more independently, all sales of scooters, read-
8 ing machines, electronic print enlargers and magnifiers, electronic alter-
9 native and augmentative communication devices, environmental control
10 units and items used solely to modify motor vehicles to permit the use of
11 such motor vehicles by individuals with disabilities; and (2) all sales of
12 repair and replacement parts for property described in paragraph (1) and
13 all sales of services performed in the installation, maintenance or repair
14 of such property;
15 [(fff) all sales of materials and services purchased by any class II or
16 III railroad as classified by the federal interstate commerce commission
17 for the construction, renovation, repair or replacement of class II or III
18 railroad track and facilities used directly in interstate commerce. In the
19 event any such track or facility for which materials and services were
20 purchased sales tax exempt is not operational for five years succeeding
21 the allowance of such exemption, the total amount of sales tax which would
22 have been payable except for the operation of this subsection shall be
23 recouped in accordance with rules and regulations adopted for such pur-
24 pose by the secretary of revenue;
25 [(ggg) all sales of materials and services purchased for the original
26 construction, reconstruction, repair or replacement of grain storage fa-
27 cilities, cluding rail sidings]; and
28 [(hhh) all sales of tangible personal property and services purchased
29 by or on behalf of the Kansas Academy of Science which is exempt from
30 federal income taxation pursuant to section 501(c)(3) of the federal inter-
31 nal revenue code of 1986, and used solely by such academy for the prep-
32 aration, publication and dissemination of educational materials.]
33 [(iii) all sales of reading material by or on behalf of an elemen-
34 tary or secondary school to a student thereof]
35 [Sec. 13. (a) Upon application to the director of taxation upon
36 forms devised and provided therefor accompanied by any addi-
37 tional documentation required by the director, a portion of the
38 sales tax paid pursuant to the purchase of a motor vehicle which
39 replaces a motor vehicle sold at an isolated or occasional sale oc-
40 curring within 30 days prior or subsequent to the date of such
41 purchase shall be refunded. The amount of such refund shall be
42 equal to the gross receipts received from the sale of the replaced
43 motor vehicle multiplied by the applicable sales tax rate. All re-
HB 2216--Am. by HCW
56
1 funds shall be paid from the sales tax refund fund upon warrants
2 of the director of accounts and reports issued pursuant to vouchers
3 approved by the director.
4 [(b) The provisions of this section shall be deemed to be sup-
5 plemental to the Kansas retailers' sales tax act.]
6 [Sec. 14. K.S.A. 1998 Supp. 79-3635 is hereby amended to read
7 as follows: 79-3635. (a) (1) A claimant and certain other individuals
8 shall be entitled to a refund of retailers' sales taxes paid upon food
9 during the calendar year 1998 and each year thereafter in the
10 amount hereinafter provided. For calendar years 1998 and 1999,
11 there shall be allowed for each member of a household of a claim-
12 ant having income of $12,500 or less, an amount equal to $60. For
13 calendar years 1998 and 1999, there shall be allowed for each mem-
14 ber of a household of a claimant having income of more than
15 $12,500 but not more than $25,000, an amount equal to $30. For
16 calendar year 2000, and all such years thereafter, there shall be allowed
17 for an individual, whether or not such individual qualifies as a claimant,
18 and each member of a household of such individual having an income of
19 $6,000 or less, an amount equal to $60. For calendar year 2000, and all
20 such years thereafter, there shall be allowed for each member of a house-
21 hold of a claimant having an income of more than $6,000 but not more
22 than $12,500, an amount equal to $60. For calendar year 2000, and all
23 such years thereafter, there shall be allowed for each member of a house-
24 hold of a claimant having an income of more than $12,500 but not more
25 than $25,000, an amount equal to $60. All such claims shall be paid
26 from the sales tax refund fund upon warrants of the director of
27 accounts and reports pursuant to vouchers approved by the direc-
28 tor of taxation or by a person or persons designated by the director.
29 [(2) As an alternative to the procedure described by paragraph
30 1, for all taxable years commencing after December 31, 1997,
31 there shall be allowed as a credit against the tax liability of a res-
32 ident individual imposed under the Kansas income tax act an
33 amount equal to $60 or $30, as the case requires, for each member
34 of a household. If the amount of such tax credit exceeds the claim-
35 ant's or individual's income tax liability for such taxable year, such
36 excess amount shall be refunded to the claimant.
37 [(b) A head of household shall make application for refunds for
38 all members of the same household upon a common form provided
39 for the making of joint claims. All claims paid to members of the
40 same household shall be paid as a joint claim by means of a single
41 warrant.
42 [(c) No claim for a refund of taxes under the provisions of
43 K.S.A. 79-3632 et seq. shall be paid or allowed unless such claim is
HB 2216--Am. by HCW
57
1 actually filed with and in the possession of the department of rev-
2 enue on or before April 15 of the year next succeeding the year in
3 which such taxes were paid. The director of taxation may: (1) Ex-
4 tend the time for filing any claim under the provisions of this act
5 when good cause exists therefor; or (2) accept a claim filed after
6 the deadline for filing in the case of sickness, absence or disability
7 of the claimant if such claim has been filed within four years of
8 such deadline.]
9 [New Sec. 15. For all taxable years commencing after Decem-
10 ber 31, 1998, there shall be allowed as a credit against the tax
11 liability imposed under the Kansas income tax act upon an individ-
12 ual who is certificated to instruct and educate students of grades
13 kindergarten through 12 in an accredited school, whether public
14 or otherwise, an amount, not to exceed $500, equal to the purchase
15 costs of equipment, materials or other teaching aids for use in the
16 classroom to assist in the education of the students of such indi-
17 vidual. If the amount of such tax credit exceeds the individual's
18 income tax liability for the appropriate taxable year, such excess
19 amount shall be refunded.
20 [New Sec. 16. For all taxable years commencing after Decem-
21 ber 31, 1998, there shall be allowed as a credit against the tax
22 liability imposed under the Kansas income tax act upon an individ-
23 ual amounts incurred during the taxable year for education ex-
24 penses for all dependents of such individual attending an elemen-
25 tary or secondary school which is located in Kansas which adheres
26 to the provisions of the federal civil rights act of 1964 and the
27 Kansas act against discrimination, and attendance at which satis-
28 fies the requirements of K.S.A. 72-1111, and amendments thereto.
29 As used in this section: "Education expenses" include, but are not
30 limited to, textbooks and other instructional materials and equip-
31 ment and computer hardware and software. The amount of such
32 credit shall be 25% of the amounts paid for education expenses in
33 excess of $250, but shall not exceed $500 expended for all de-
34 pendents in any taxable year. If the amount of such tax credit ex-
35 ceeds the individual's income tax liability for the appropriate tax-
36 able year, such excess amount shall be refunded.
37 [Sec. 17. K.S.A. 1998 Supp. 79-32,117 is hereby amended to
38 read as follows: 79-32,117. (a) The Kansas adjusted gross income
39 of an individual means such individual's federal adjusted gross in-
40 come for the taxable year, with the modifications specified in this
41 section.
42 [(b) There shall be added to federal adjusted gross income:
43 [(i) Interest income less any related expenses directly incurred
HB 2216--Am. by HCW
58
1 in the purchase of state or political subdivision obligations, to the
2 extent that the same is not included in federal adjusted gross in-
3 come, on obligations of any state or political subdivision thereof,
4 but to the extent that interest income on obligations of this state
5 or a political subdivision thereof issued prior to January 1, 1988,
6 is specifically exempt from income tax under the laws of this state
7 authorizing the issuance of such obligations, it shall be excluded
8 from computation of Kansas adjusted gross income whether or not
9 included in federal adjusted gross income. Interest income on ob-
10 ligations of this state or a political subdivision thereof issued after
11 December 31, 1987, shall be excluded from computation of Kansas
12 adjusted gross income whether or not included in federal adjusted
13 gross income.
14 [(ii) Taxes on or measured by income or fees or payments in
15 lieu of income taxes imposed by this state or any other taxing ju-
16 risdiction to the extent deductible in determining federal adjusted
17 gross income and not credited against federal income tax. This
18 paragraph shall not apply to taxes imposed under the provisions
19 of K.S.A. 79-1107 or 79-1108, and amendments thereto, for privi-
20 lege tax year 1995, and all such years thereafter.
21 [(iii) The federal net operating loss deduction.
22 [(iv) Federal income tax refunds received by the taxpayer if the
23 deduction of the taxes being refunded resulted in a tax benefit for
24 Kansas income tax purposes during a prior taxable year. Such re-
25 funds shall be included in income in the year actually received
26 regardless of the method of accounting used by the taxpayer. For
27 purposes hereof, a tax benefit shall be deemed to have resulted if
28 the amount of the tax had been deducted in determining income
29 subject to a Kansas income tax for a prior year regardless of the
30 rate of taxation applied in such prior year to the Kansas taxable
31 income, but only that portion of the refund shall be included as
32 bears the same proportion to the total refund received as the fed-
33 eral taxes deducted in the year to which such refund is attributable
34 bears to the total federal income taxes paid for such year. For
35 purposes of the foregoing sentence, federal taxes shall be consid-
36 ered to have been deducted only to the extent such deduction does
37 not reduce Kansas taxable income below zero.
38 [(v) The amount of any depreciation deduction or business ex-
39 pense deduction claimed on the taxpayer's federal income tax re-
40 turn for any capital expenditure in making any building or facility
41 accessible to the handicapped, for which expenditure the taxpayer
42 claimed the credit allowed by K.S.A. 79-32,177, and amendments
43 thereto.
HB 2216--Am. by HCW
59
1 [(vi) Any amount of designated employee contributions picked
2 up by an employer pursuant to K.S.A. 12-5005, 20-2603, 74-4919
3 and 74-4965, and amendments to such sections.
4 [(vii) The amount of any charitable contribution made to the
5 extent the same is claimed as the basis for the credit allowed pur-
6 suant to K.S.A. 79-32,196, and amendments thereto.
7 [(viii) The amount of any costs incurred for improvements to a
8 swine facility, claimed for deduction in determining federal ad-
9 justed gross income, to the extent the same is claimed as the basis
10 for any credit allowed pursuant to K.S.A. 1998 Supp. 79-32,204
11 and amendments thereto.
12 [(ix) The amount of any ad valorem taxes and assessments paid
13 and the amount of any costs incurred for habitat management or
14 construction and maintenance of improvements on real property,
15 claimed for deduction in determining federal adjusted gross in-
16 come, to the extent the same is claimed as the basis for any credit
17 allowed pursuant to K.S.A. 79-32,203 and amendments thereto.
18 [(x) The amount of any contributions made to an elementary or sec-
19 ondary school to the extent the same is claimed as the basis for the credit
20 allowed pursuant to section 1.
21 [(c) There shall be subtracted from federal adjusted gross
22 income:
23 [(i) Interest or dividend income on obligations or securities of
24 any authority, commission or instrumentality of the United States
25 and its possessions less any related expenses directly incurred in
26 the purchase of such obligations or securities, to the extent in-
27 cluded in federal adjusted gross income but exempt from state
28 income taxes under the laws of the United States.
29 [(ii) Any amounts received which are included in federal ad-
30 justed gross income but which are specifically exempt from Kansas
31 income taxation under the laws of the state of Kansas.
32 [(iii) The portion of any gain or loss from the sale or other
33 disposition of property having a higher adjusted basis for Kansas
34 income tax purposes than for federal income tax purposes on the
35 date such property was sold or disposed of in a transaction in which
36 gain or loss was recognized for purposes of federal income tax that
37 does not exceed such difference in basis, but if a gain is considered
38 a long-term capital gain for federal income tax purposes, the mod-
39 ification shall be limited to that portion of such gain which is in-
40 cluded in federal adjusted gross income.
41 [(iv) The amount necessary to prevent the taxation under this
42 act of any annuity or other amount of income or gain which was
43 properly included in income or gain and was taxed under the laws
HB 2216--Am. by HCW
60
1 of this state for a taxable year prior to the effective date of this act,
2 as amended, to the taxpayer, or to a decedent by reason of whose
3 death the taxpayer acquired the right to receive the income or
4 gain, or to a trust or estate from which the taxpayer received the
5 income or gain.
6 [(v) The amount of any refund or credit for overpayment of
7 taxes on or measured by income or fees or payments in lieu of
8 income taxes imposed by this state, or any taxing jurisdiction, to
9 the extent included in gross income for federal income tax
10 purposes.
11 [(vi) Accumulation distributions received by a taxpayer as a
12 beneficiary of a trust to the extent that the same are included in
13 federal adjusted gross income.
14 [(vii) Amounts received as annuities under the federal civil
15 service retirement system from the civil service retirement and
16 disability fund and other amounts received as retirement benefits
17 in whatever form which were earned for being employed by the
18 federal government or for service in the armed forces of the
19 United States.
20 [(viii) Amounts received by retired railroad employees as a
21 supplemental annuity under the provisions of 45 U.S.C. 228b (a)
22 and 228c (a)(1) et seq.
23 [(ix) Amounts received by retired employees of a city and by
24 retired employees of any board of such city as retirement allow-
25 ances pursuant to K.S.A. 13-14,106, and amendments thereto, or
26 pursuant to any charter ordinance exempting a city from the pro-
27 visions of K.S.A. 13-14,106, and amendments thereto.
28 [(x) For taxable years beginning after December 31, 1976, the
29 amount of the federal tentative jobs tax credit disallowance under
30 the provisions of 26 U.S.C. 280 C. For taxable years ending after
31 December 31, 1978, the amount of the targeted jobs tax credit and
32 work incentive credit disallowances under 26 U.S.C. 280 C.
33 [(xi) For taxable years beginning after December 31, 1986, div-
34 idend income on stock issued by Kansas Venture Capital, Inc.
35 [(xii) For taxable years beginning after December 31, 1989,
36 amounts received by retired employees of a board of public utili-
37 ties as pension and retirement benefits pursuant to K.S.A. 13-1246,
38 13-1246a and 13-1249 and amendments thereto.
39 [(xiii) For taxable years beginning after December 31, 1993,
40 the amount of income earned on contributions deposited to an
41 individual development account under K.S.A. 79-32,117h, and
42 amendments thereto.
43 [(xiv) For all taxable years commencing after December 31,
HB 2216--Am. by HCW
61
1 1996, that portion of any income of a bank organized under the
2 laws of this state or any other state, a national banking association
3 organized under the laws of the United States, an association or-
4 ganized under the savings and loan code of this state or any other
5 state, or a federal savings association organized under the laws of
6 the United States, for which an election as an S corporation under
7 subchapter S of the federal internal revenue code is in effect,
8 which accrues to the taxpayer who is a stockholder of such cor-
9 poration and which is not distributed to the stockholders as divi-
10 dends of the corporation.
11 [(d) There shall be added to or subtracted from federal ad-
12 justed gross income the taxpayer's share, as beneficiary of an estate
13 or trust, of the Kansas fiduciary adjustment determined under
14 K.S.A. 79-32,135, and amendments thereto.
15 [(e) The amount of modifications required to be made under
16 this section by a partner which relates to items of income, gain,
17 loss, deduction or credit of a partnership shall be determined un-
18 der K.S.A. 79-32,131, and amendments thereto, to the extent that
19 such items affect federal adjusted gross income of the partner.]
20 [Sec. 18. K.S.A. 1998 Supp. 72-6431 is hereby amended to
21 read as follows: 72-6431. (a) The board of each district shall levy
22 an ad valorem tax upon the taxable tangible property of the district
23 in the school years specified in subsection (b) for the purpose of:
24 [(1) Financing that portion of the district's general fund budget
25 which is not financed from any other source provided by law;
26 [(2) paying a portion of the costs of operating and maintaining
27 public schools in partial fulfillment of the constitutional obligation
28 of the legislature to finance the educational interests of the state;
29 and
30 [(3) with respect to any redevelopment district established
31 prior to July 1, 1997, pursuant to K.S.A. 12-1771, and amendments
32 thereto, paying a portion of the principal and interest on bonds
33 issued by cities under authority of K.S.A. 12-1774, and amend-
34 ments thereto, for the financing of redevelopment projects upon
35 property located within the district.
36 [(b) The tax required under subsection (a) shall be levied at a
37 rate of 20 mills in the 1998-99 school year and 18 mills in the 1999-
38 2000 school year and 15 mills in the 2000-2001 school year.
39 [(c) The proceeds from the tax levied by a district under au-
40 thority of this section, except the proceeds of such tax levied for
41 the purpose of paying a portion of the principal and interest on
42 bonds issued by cities under authority of K.S.A. 12-1774, and
43 amendments thereto, for the financing of redevelopment projects
HB 2216--Am. by HCW
62
1 upon property located within the district, shall be deposited in the
2 general fund of the district.
3 [(d) On June 1 of each year, the amount, if any, by which a
4 district's local effort exceeds the amount of the district's state fi-
5 nancial aid, as determined by the state board, shall be remitted to
6 the state treasurer. Upon receipt of any such remittance, the state
7 treasurer shall deposit the same in the state treasury to the credit
8 of the state school district finance fund.
9 [(e) No district shall proceed under K.S.A. 79-1964, 79-1964a
10 or 79-1964b, and amendments to such sections.]
11 [Sec. 19. K.S.A. 75-37,116 is hereby amended to read as fol-
12 lows: 75-37,116. As used in K.S.A. 75-37,116 through 75-37,119,
13 and amendments thereto:
14 [(a) "Alternative fuel" has the meaning provided by 42 U.S.C.
15 13211.
16 [(b) "Alternative-fueled motor vehicle" means a motor vehicle
17 that operates on an alternative fuel and that, meets or exceeds the
18 clean fuel vehicle standards in the federal clean air act amend-
19 ments of 1990, Title II and meets one of the following categories:
20 [(1) Bi-fuel motor vehicle: A motor vehicle with two separate fuel
21 systems designed to run on either an alternative fuel or conventional fuel,
22 using only one fuel at a time;
23 [(2) dedicated motor vehicle: A motor vehicle with an engine designed
24 to operate on a single alternative fuel only; or
25 [(3) flexible fuel motor vehicle: A motor vehicle that may operate on
26 a blend of an alternative fuel with a conventional fuel, such as E-85 (85%
27 ethanol and 15% gasoline) or M-85 (85% methanol and 15% gasoline),
28 as long as such motor vehicle is capable of operating on at least an 85%
29 alternative fuel blend.
30 [(c) "Alternative fuel fueling station" means the property which
31 is directly related to the delivery of alternative fuel into the fuel
32 tank of a motor vehicle propelled by such fuel, including the com-
33 pression equipment and, storage vessels and dispensers for such fuel
34 at the point where such fuel is delivered, but only if such property is
35 primarily used to deliver such fuel for use in a qualified alternative-fueled
36 motor vehicle.
37 [(d) "Government agency" means a county, a city, a school dis-
38 trict or another governmental unit, including a public transit
39 agency.
40 [(e) "Government fleet" means a fleet of 10 or more motor
41 vehicles owned and operated by a government agency.
42 [(f) "Incremental cost" means the cost that results from sub-
43 tracting the manufacturer's list price of the motor vehicle operating
HB 2216--Am. by HCW
63
1 on conventional gasoline or diesel fuel from the manufacturer's
2 list price of the same model motor vehicle designed to operate on
3 an alternate alternative fuel.
4 [(g) "Conversion cost" means the cost that results from modifying a
5 motor vehicle which is propelled by gasoline or diesel to be propelled by
6 an alternative fuel.
7 [(g) (h) "Secretary" means the secretary of administration.
8 [Sec. 20. K.S.A. 75-37,117 is hereby amended to read as fol-
9 lows: 75-37,117. (a) There is hereby established the alternative fu-
10 els loan program for the purpose of making loans to government
11 agencies which own and operate motor vehicles to encourage and
12 assist them to:
13 [(1) Purchase new alternative-motor fueled alternative-fueled motor
14 vehicles;
15 [(2) convert existing motor vehicles which operate on gasoline
16 and diesel fuel to operate on alternative fuels; and
17 [(3) construct motor vehicle fueling facilities to serve alterna-
18 tive-fueled motor vehicles.
19 [(b) The alternative-fuels loan program shall be administered
20 by the secretary. The secretary shall adopt rules and regulations
21 establishing procedures, criteria and conditions for making loans
22 from the alternative-fuels government fleet loan fund and such
23 other rules and regulations as necessary to operate the alternative-
24 fuels loan program.
25 [Sec. 21. K.S.A. 75-37,119 is hereby amended to read as fol-
26 lows: 75-37,119. (a) In accordance with the provisions of this sec-
27 tion, the secretary is hereby authorized to enter into loan agree-
28 ments with government agencies for the purposes stated in K.S.A.
29 75-37,117, and amendments thereto, and to loan moneys in the al-
30 ternative-fuels government fleet loan fund in accordance with such
31 agreements.
32 [(b) Loans made from the alternative-fuels government fleet
33 loan fund may only be for the following amounts:
34 [(1) For the incremental cost of purchasing a new alternative-
35 fueled motor vehicle:
36 [(A) A maximum of $2,000 $3,000 per motor vehicle for motor
37 vehicles having a gross vehicle weight of 10,000 lbs. or less; (B) a
38 maximum of $5,000 per motor vehicle for motor vehicles having a
39 gross vehicle weight of more than 10,000 lbs. but less than 26,000
40 lbs.; and (C) a maximum of $50,000 for motor vehicles having a
41 gross vehicle weight of 26,000 lbs. or more;
42 [(2) for the conversion of a new or used motor vehicle designed
43 to operate on conventional gasoline or diesel fuel to operate on an
HB 2216--Am. by HCW
64
1 alternative fuel:
2 [(A) A maximum of $2,000 $3,000 per motor vehicle for motor
3 vehicles having a gross vehicle weight of 10,000 lbs. or less; (B) a
4 maximum of $5,000 per motor vehicle for motor vehicles having a
5 gross weight of more than 10,000 lbs. but less than 26,000 lbs.; and
6 (C) a maximum of $50,000 for motor vehicles having a gross vehicle
7 weight of 26,000 lbs. or more; and
8 [(3) a maximum of $100,000 $200,000 for the construction of
9 each alternative-fuel fueling stations station;
10 [(c) No government agency shall be entitled to receive an ag-
11 gregate amount of more than $100,000 in loans for new alterna-
12 tive-fueled motor vehicle purchases or motor vehicle conversions in
13 any fiscal year, nor shall any government agency be entitled to
14 receive an aggregate amount of more than $100,000 $200,000 in
15 loans for construction of alternative-fuel fueling stations in any
16 fiscal year.
17 [(d) Government agencies receiving loans from the alternative-
18 fuels government fleet loan fund shall, as a condition of receiving and
19 using the loans:
20 [(1) Agree to use the alternative fuel for which any alternative-
21 fueled motor vehicle which is purchased or converted using loan
22 proceeds;
23 [(2) agree to notify the secretary in writing if a motor vehicle
24 converted using loan proceeds becomes inoperable through me-
25 chanical failure or accident and to pursue a remedy outlined in
26 rules and regulations;
27 [(3) provide reasonable data requested by the secretary on the
28 performance of alternative-fueled motor vehicles purchased or
29 converted with loan proceeds;
30 [(4) submit alternative-fueled motor vehicles purchased or con-
31 verted with loan proceeds to reasonable inspections by the secre-
32 tary as required by rules and regulations; and
33 [(5) make alternative-fuel fueling stations constructed with
34 loan proceeds available to other government alternative-fueled
35 fleets and, within the capacity of the fueling facility, to public al-
36 ternative-fueled motor vehicle operators.
37 [(e) Each loan agreement entered into under this section shall
38 fix the terms of repayment and shall provide for interest payable
39 on the loan. Such interest may be at fixed or variable rates. Such
40 terms of repayment shall be fixed to require a loan repayment
41 schedule not to exceed four years. When developing repayment
42 schedules for loans, the secretary shall consider the projected sav-
43 ings to the government agency resulting from the use of an alter-
HB 2216--Am. by HCW
65
1 native fuel.
2 [(f) The secretary shall develop uniform application forms to
3 be used for all loans.
4 [(g) The secretary shall evaluate the plans developed by the
5 applicant government agency for converting its fleet to operate on
6 alternative fuels and shall give preference in making loans to those
7 government agencies which are prepared to make substantial in-
8 vestments of their own funds in converting their fleets to operate
9 on alternative fuels and which are prepared to work cooperatively
10 with the state, other government agencies and private sector per-
11 sons in developing an alternative-fuels fueling infrastructure in the
12 state.
13 [(h) The secretary may utilize the collection procedures pro-
14 vided in K.S.A. 75-6201 et seq., and amendments thereto, to collect
15 delinquent loan payments by deducting the delinquent amount
16 from payments from state agencies to the government agency that
17 is delinquent in its loan repayment.
18 [Sec. 22. K.S.A. 79-32,201 is hereby amended to read as fol-
19 lows: 79-32,201. (a) Any taxpayer who makes expenditures for a
20 qualified alternative-fueled motor vehicle property or alternative-
21 fuel fueling station shall be allowed a credit against the income tax
22 imposed by article 32 of chapter 79 of the Kansas Statutes Anno-
23 tated, as follows:
24 [(1) For any qualified alternative-fueled motor vehicle property
25 placed in service on or after January 1, 1996, and before January
26 1, 1999 2005, an amount equal to 50% of the total amount expended
27 incremental cost or conversion cost for each qualified alternative-fu-
28 eled motor vehicle property but not to exceed $2,500 $3,000 for each
29 such motor vehicle with a gross vehicle weight of less than 10,000 lbs.;
30 $5,000 for a heavy duty motor vehicle with a gross vehicle weight of
31 greater than 10,000 lbs. but less than 26,000 lbs.; and $50,000 for motor
32 vehicles having a gross vehicle weight of greater than 26,000 lbs.;
33 [(2) for any qualified alternative-fueled motor vehicle property
34 placed in service on or after January 1, 1999 2005, an amount equal
35 to 40% of the total amount expended incremental cost or conversion cost
36 for each qualified alternative-fueled motor vehicle property, but
37 not to exceed $2,000 $2,400 for each such motor vehicle with a gross
38 vehicle weight of less than 10,000 lbs.; $4,000 for a heavy duty motor
39 vehicle with a gross vehicle weight of greater than 10,000 lbs. but less
40 than 26,000 lbs.; and $40,000 for motor vehicles having a gross vehicle
41 weight of greater than 26,000 lbs.;
42 [(3) for any qualified alternative-fuel fueling station placed in service
43 on or after January 1, 1996, and before January 1, 2005, an amount equal
HB 2216--Am. by HCW
66
1 to 50% of the total amount expended for each qualified alternative-fuel
2 fueling station but not to exceed $200,000 for each fueling station;
3 [(4) for any qualified alternative-fuel fueling station placed in service
4 on or after January 1, 2005, an amount equal to 40% of the total amount
5 expended for each qualified alternative-fuel fueling station, but not to
6 exceed $160,000 for each fueling station.
7 [(b) If no credit has been claimed pursuant to subsection (a), a
8 credit in an amount not exceeding the lesser of 5% of the cost of
9 the vehicle or $750 shall be allowed to a taxpayer who purchases
10 a motor vehicle equipped by the vehicle manufacturer with quali-
11 fied alternative-fueled motor vehicle property an alternative fuel system
12 and who is unable or elects not to determine the exact basis at-
13 tributable to such property. The credit under this subsection shall
14 be allowed only to the first individual to take title to such motor
15 vehicle, other than for resale.
16 [(c) The tax credit under subsection (a) or (b) shall be deducted
17 from the taxpayer's income tax liability for the taxable year in
18 which the expenditures are made by the taxpayer. If the amount
19 of the tax credit exceeds the taxpayer's income tax liability for the
20 taxable year, the amount which exceeds the tax liability may be
21 carried over for deduction from the taxpayer's income tax liability
22 in the next succeeding taxable year or years until the total amount
23 of the tax credit has been deducted from tax liability, except that
24 no such tax credit shall be carried over for deduction after the
25 third taxable year succeeding the taxable year in which the ex-
26 penditures are made.
27 [(d) As used in this section:
28 [(1) "Alternative fuel" has the meaning provided by 42 U.S.C.
29 13211.
30 [(2) "Qualified alternative-fueled motor vehicle property" means:
31 [(A) Equipment installed to modify a motor vehicle which is pro-
32 pelled by gasoline so that the vehicle may be propelled by an alternative
33 fuel;
34 [(B) a motor vehicle originally equipped to be propelled only by an
35 alternative fuel, but only to the extent of the portion of the basis of such
36 motor vehicle which is attributable to the storage of such fuel, the delivery
37 to the engine of such motor vehicle of such fuel and the exhaust of gases
38 from combustion of such fuel; or
39 [(C) property which is directly related to the delivery of an alternative
40 fuel into the fuel tank of a motor vehicle propelled by such fuel, including
41 compression equipment and storage tanks for such fuel at the point where
42 such fuel is so delivered but only if such property is not used to deliver
43 such fuel into any other type of storage tank or receptacle and such fuel
HB 2216--Am. by HCW
67
1 is not used for any purpose other than to propel a motor vehicle.
2 [(2) "Qualified alternative-fueled motor vehicle" means a motor ve-
3 hicle that operates on an alternative fuel, meets or exceeds the clean fuel
4 vehicle standards in the federal clean air act amendments of 1990, Title
5 II and meets one of the following categories:
6 [(A) Bi-fuel motor vehicle: A motor vehicle with two separate fuel
7 systems designed to run on either an alternative fuel or conventional fuel,
8 using only one fuel at a time;
9 [(B) dedicated motor vehicle: A motor vehicle with an engine designed
10 to operate on a single alternative fuel only; or
11 [(C) flexible fuel motor vehicle: A motor vehicle that may operate on
12 a blend of an alternative fuel with a conventional fuel, such as E-85 (85%
13 ethanol and 15% gasoline) or M-85 (85% methanol and 15% gasoline),
14 as long as such motor vehicle is capable of operating on at least an 85%
15 alternative fuel blend.
16 [(3) "Qualified alternative-fuel fueling station" means the property
17 which is directly related to the delivery of alternative fuel into the fuel
18 tank of a motor vehicle propelled by such fuel, including the compression
19 equipment, storage vessels and dispensers for such fuel at the point where
20 such fuel is delivered but only if such property is primarily used to deliver
21 such fuel for use in a qualified alternative-fueled motor vehicle.
22 [(4) "Incremental cost" means the cost that results from subtracting
23 the manufacturer's list price of the motor vehicle operating on conven-
24 tional gasoline or diesel fuel from the manufacturer's list price of the same
25 model motor vehicle designed to operate on an alternative fuel.
26 [(5) "Conversion cost" means the cost that results from modifying a
27 motor vehicle which is propelled by gasoline or diesel to be propelled by
28 an alternative fuel.
29 [(3) (6) "Taxpayer" means any person who owns and operates
30 a fleet of 10 or more motor vehicles and the average fuel consumption
31 for such fleet of motor vehicles is equal to or greater than 2,000 gallons
32 per year qualified alternative-fueled vehicle licensed in the state of Kansas
33 or who makes an expenditure for a qualified alternative-fuel fueling
34 station.
35 [(4) (7) "Person" means every natural person, association, part-
36 nership, limited liability company, limited partnership or
37 corporation.
38 [(e) The provisions of this section shall apply to all taxable years
39 commencing after December 31, 1995.
40 [(f) The provisions of this section shall become effective on and after
41 January 1, 1996.
42 [Sec. 23. K.S.A. 79-32,202 is hereby amended to read as fol-
43 lows: 79-32,202. (a) For all taxable years commencing after De-
HB 2216--Am. by HCW
68
1 cember 31, 1996 1998, there shall be allowed as a credit against the
2 tax liability of a resident individual imposed under the Kansas in-
3 come tax act an amount equal to 25% 50% of the amount of the
4 credit allowed against such taxpayer's federal income tax liability
5 pursuant to section 23 determined without regard to subsection
6 (c) thereof of the federal internal revenue code for the taxable year
7 in which such credit was claimed against the taxpayer's federal
8 income tax liability.
9 [(b) For all taxable years commencing after December 31, 1996
10 1998, there shall be allowed as a credit against the tax liability of
11 a resident individual imposed under the Kansas income tax act an
12 amount equal to $1,500 $3,000 for the taxable year in which occurs
13 the lawful adoption of a child in the custody of the secretary of
14 social and rehabilitation services or a child with special needs,
15 whether or not such individual is reimbursed for all or part of
16 qualified adoption expenses or has received a public or private
17 grant therefor. As used in this subsection, terms and phrases shall
18 have the meanings ascribed thereto by the provisions of section 23
19 of the federal internal revenue code. No credit shall be allowed
20 under subsection (a) for any qualified adoption expenses incurred
21 in the adoption of a child described by this subsection.
22 [(c) The credit allowed by subsections (a) and (b) shall not ex-
23 ceed the amount of the tax imposed by K.S.A. 79-32,110, and
24 amendments thereto, reduced by the sum of any other credits al-
25 lowable pursuant to law. If the amount of such tax credit exceeds
26 the taxpayer's income tax liability for such taxable year, the amount
27 thereof which exceeds such tax liability may be carried over for
28 deduction from the taxpayer's income tax liability in the next suc-
29 ceeding taxable year or years until the total amount of the tax
30 credits has been deducted from tax liability, except that no such
31 tax credit shall be carried over for deduction after the fifth taxable
32 year succeeding the taxable year in which the credit was claimed.
33 [Sec. 24. K.S.A. 1998 Supp. 79-32,206 is hereby amended to
34 read as follows: 79-32,206. For all taxable years commencing after
35 December 31, 1997, there shall be allowed as a credit against the
36 tax liability of a taxpayer imposed under the Kansas income tax act,
37 the premiums tax upon insurance companies imposed pursuant to
38 K.S.A. 40-252, and amendments thereto, and the privilege tax as
39 measured by net income of financial institutions imposed pursuant
40 to article 11 of chapter 79 of the Kansas Statutes Annotated, an
41 amount equal to 15% of the property tax levied for property tax
42 year 1998, and 20% of the property tax levied for property tax year 1999,
43 and all such years thereafter, actually and timely paid during an
HB 2216--Am. by HCW
69
1 income, premiums or privilege taxable year upon commercial and
2 industrial machinery and equipment classified for property taxa-
3 tion purposes pursuant to section 1 of article 11 of the Kansas
4 constitution in subclass (5) or (6) of class 2 and machinery and
5 equipment classified for such purposes in subclass (2) of class 2.
6 For all taxable years commencing after December 31, 1997, and if the
7 amount of such tax credit exceeds the taxpayer's income tax, pre-
8 miums tax or privilege tax liability for the taxable year, the amount
9 thereof which exceeds such tax liability shall be refunded to the
10 taxpayer. If the taxpayer is a corporation having an election in
11 effect under subchapter S of the federal internal revenue code, a
12 partnership or a limited liability company, the credit provided by
13 this section shall be claimed by the shareholders of such corpora-
14 tion, the partners of such partnership or the members of such lim-
15 ited liability company in the same manner as such shareholders,
16 partners or members account for their proportionate shares of the
17 income or loss of the corporation, partnership or limited liability
18 company.
19 [New Sec. 25. (a) For all taxable years commencing after De-
20 cember 31, 1999, there shall be allowed as a credit against the tax
21 liability of a resident individual imposed under the Kansas income
22 tax act, an amount equal to 25% of the amount of the credit allowed
23 against such individual's federal income tax liability pursuant to
24 section 24 of the federal internal revenue code for the taxable year
25 for which such credit was claimed against the individual's federal
26 income tax liability.
27 [(b) The credit allowed by subsection (a) shall not exceed the
28 amount of tax imposed by K.S.A. 79-32,110, and amendments
29 thereto, reduced by the sum of any other credits allowable pur-
30 suant to law.
31 [Sec. 26. K.S.A. 1998 Supp. 79-4217 is hereby amended to
32 read as follows: 79-4217. (a) There is hereby imposed an excise tax
33 upon the severance and production of coal, oil or gas from the
34 earth or water in this state for sale, transport, storage, profit or
35 commercial use, subject to the following provisions of this section.
36 Such tax shall be borne ratably by all persons within the term "pro-
37 ducer" as such term is defined in K.S.A. 79-4216, and amendments
38 thereto, in proportion to their respective beneficial interest in the
39 coal, oil or gas severed. Such tax shall be applied equally to all
40 portions of the gross value of each barrel of oil severed and subject
41 to such tax and to the gross value of the gas severed and subject
42 to such tax. The rate of such tax shall be 8% of the gross value of
43 all oil or gas severed from the earth or water in this state and
HB 2216--Am. by HCW
70
1 subject to the tax imposed under this act. The rate of such tax with
2 respect to coal shall be $1 per ton. For the purposes of the tax
3 imposed hereunder the amount of oil or gas produced shall be
4 measured or determined: (1) In the case of oil, by tank tables com-
5 piled to show 100% of the full capacity of tanks without deduction
6 for overage or losses in handling; allowance for any reasonable and
7 bona fide deduction for basic sediment and water, and for correc-
8 tion of temperature to 60 degrees Fahrenheit will be allowed; and
9 if the amount of oil severed has been measured or determined by
10 tank tables compiled to show less than 100% of the full capacity of
11 tanks, such amount shall be raised to a basis of 100% for the pur-
12 pose of the tax imposed by this act; and (2) in the case of gas, by
13 meter readings showing 100% of the full volume expressed in cu-
14 bic feet at a standard base and flowing temperature of 60 degrees
15 Fahrenheit, and at the absolute pressure at which the gas is sold
16 and purchased; correction to be made for pressure according to
17 Boyle's law, and used for specific gravity according to the gravity
18 at which the gas is sold and purchased, or if not so specified, ac-
19 cording to the test made by the balance method.
20 [(b) The following shall be exempt from the tax imposed under
21 this section:
22 [(1) The severance and production of gas which is: (A) Injected
23 into the earth for the purpose of lifting oil, recycling or repres-
24 suring; (B) used for fuel in connection with the operation and de-
25 velopment for, or production of, oil or gas in the lease or produc-
26 tion unit where severed; (C) lawfully vented or flared; (D) severed
27 from a well having an average daily production during a calendar
28 month having a gross value of not more than $87 per day, which
29 well has not been significantly curtailed by reason of mechanical
30 failure or other disruption of production; in the event that the
31 production of gas from more than one well is gauged by a common
32 meter, eligibility for exemption hereunder shall be determined by
33 computing the gross value of the average daily combined produc-
34 tion from all such wells and dividing the same by the number of
35 wells gauged by such meter; (E) inadvertently lost on the lease or
36 production unit by reason of leaks, blowouts or other accidental
37 losses; (F) used or consumed for domestic or agricultural purposes
38 on the lease or production unit from which it is severed; or (G)
39 placed in underground storage for recovery at a later date and
40 which was either originally severed outside of the state of Kansas,
41 or as to which the tax levied pursuant to this act has been paid;
42 [(2) the severance and production of oil which is: (A) From a
43 lease or production unit whose average daily production is five
HB 2216--Am. by HCW
71
1 barrels or less per producing well, which well or wells have not
2 been significantly curtailed by reason of mechanical failure or
3 other disruption of production; (B) from a lease or production unit,
4 the producing well or wells upon which have a completion depth
5 of 2,000 feet or more, and whose average daily production is six
6 barrels or less per producing well or, if the price of oil as deter-
7 mined pursuant to subsection (d) is $16 or less, whose average daily
8 production is seven barrels or less per producing well, or, if the
9 price of oil as determined pursuant to subsection (d) is $15 or less,
10 whose average daily production is eight barrels or less per pro-
11 ducing well, or, if the price of oil as determined pursuant to sub-
12 section (d) is $14 or less, whose average daily production is nine
13 barrels or less per producing well, or, if the price of oil as deter-
14 mined pursuant to subsection (d) is $13 or less, whose average daily
15 production is 10 barrels or less per producing well, which well or
16 wells have not been significantly curtailed by reason of mechanical
17 failure or other disruption of production; (C) from a lease or pro-
18 duction unit, whose production results from a tertiary recovery
19 process. "Tertiary recovery process" means the process or proc-
20 esses described in subparagraphs (1) through (9) of 10 C.F.R.
21 212.78(c) as in effect on June 1, 1979; (D) from a lease or produc-
22 tion unit, the producing well or wells upon which have a comple-
23 tion depth of less than 2,000 feet and whose average daily pro-
24 duction resulting from a water flood process, is six barrels or less
25 per producing well, which well or wells have not been significantly
26 curtailed by reason of mechanical failure or other disruption of
27 production; (E) from a lease or production unit, the producing well
28 or wells upon which have a completion depth of 2,000 feet or more,
29 and whose average daily production resulting from a water flood
30 process, is seven barrels or less per producing well or, if the price
31 of oil as determined pursuant to subsection (d) is $16 or less, whose
32 average daily production is eight barrels or less per producing
33 well, or, if the price of oil as determined pursuant to subsection
34 (d) is $15 or less, whose average daily production is nine barrels
35 or less per producing well, or, if the price of oil as determined
36 pursuant to subsection (d) is $14 or less, whose average daily pro-
37 duction is 10 barrels or less per producing well, which well or wells
38 have not been significantly curtailed by reason of mechanical fail-
39 ure or other disruption of production; (F) test, frac or swab oil
40 which is sold or exchanged for value; or (G) inadvertently lost on
41 the lease or production unit by reason of leaks or other accidental
42 means;
43 [(3) (A) any taxpayer applying for an exemption pursuant to
HB 2216--Am. by HCW
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1 subsection (b)(2)(A) and (B) shall make application annually to the
2 director of taxation therefor. Exemptions granted pursuant to sub-
3 section (b)(2)(A) and (B) shall be valid for a period of one year
4 following the date of certification thereof by the director of taxa-
5 tion; (B) any taxpayer applying for an exemption pursuant to sub-
6 section (b)(2)(D) or (E) shall make application annually to the di-
7 rector of taxation therefor. Such application shall be accompanied
8 by proof of the approval of an application for the utilization of a
9 water flood process therefor by the corporation commission pur-
10 suant to rules and regulations adopted under the authority of
11 K.S.A. 55-152 and amendments thereto and proof that the oil pro-
12 duced therefrom is kept in a separate tank battery and that sepa-
13 rate books and records are maintained therefor. Such exemption
14 shall be valid for a period of one year following the date of certi-
15 fication thereof by the director of taxation; and (C) notwithstand-
16 ing the provisions of paragraph (A) or (B), any exemption in effect
17 on the effective date of this act affected by the amendments to
18 subsection (b)(2) by this act shall be redetermined in accordance
19 with such amendments. Any such exemption, and any new exemp-
20 tion established by such amendments and applied for after the
21 effective date of this shall be valid for a period commencing with
22 May 1, 1998, and ending on April 30, 1999.
23 [(4) the severance and production of gas or oil from any pool
24 from which oil or gas was first produced on or after April 1, 1983,
25 as determined by the state corporation commission and certified
26 to the director of taxation, and continuing for a period of 24
27 months from the month in which oil or gas was first produced from
28 such pool as evidenced by an affidavit of completion of a well, filed
29 with the state corporation commission and certified to the director
30 of taxation. Exemptions granted for production from any well pur-
31 suant to this paragraph shall be valid for a period of 24 months
32 following the month in which oil or gas was first produced from
33 such pool. The term "pool" means an underground accumulation
34 of oil or gas in a single and separate natural reservoir character-
35 ized by a single pressure system so that production from one part
36 of the pool affects the reservoir pressure throughout its extent;
37 [(5) the severance and production of oil or gas from a three-
38 year inactive well, as determined by the state corporation com-
39 mission and certified to the director of taxation, for a period of 10
40 years after the date of receipt of such certification. As used in this
41 paragraph, "three-year inactive well" means any well that has not
42 produced oil or gas in more than one month in the three years
43 prior to the date of application to the state corporation commission
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1 for certification as a three-year inactive well. An application for
2 certification as a three-year inactive well shall be in such form and
3 contain such information as required by the state corporation com-
4 mission, and shall be made prior to July 1, 1996. The commission
5 may revoke a certification if information indicates that a certified
6 well was not a three-year inactive well or if other lease production
7 is credited to the certified well. Upon notice to the operator that
8 the certification for a well has been revoked, the exemption shall
9 not be applied to the production from that well from the date of
10 revocation;
11 [(6) (A) The incremental severance and production of oil or
12 gas which results from a production enhancement project begun
13 on or after July 1, 1998, shall be exempt for a period of seven years
14 from the startup date of such project. As used in this paragraph
15 (6):
16 [(1) "Incremental severance and production" means the
17 amount of oil or natural gas which is produced as the result of a
18 production enhancement project which is in excess of the base
19 production of oil or natural gas, and is determined by subtracting
20 the base production from the total monthly production after the
21 production enhancement projects is completed.
22 [(2) "Base production" means the average monthly amount of
23 production for the twelve-month period immediately prior to the
24 production enhancement project beginning date, minus the
25 monthly rate of production decline for the well or project for each
26 month beginning 180 days prior to the project beginning date. The
27 monthly rate of production decline shall be equal to the average
28 extrapolated monthly decline rate for the well or project for the
29 twelve-month period immediately prior to the production en-
30 hancement project beginning date. Such monthly rate of produc-
31 tion decline shall be continued as the decline that would have oc-
32 curred except for the enhancement project. The calculation of the
33 base production amount shall be evidenced by an affidavit and
34 supporting documentation filed by the applying taxpayer with the
35 state corporation commission.
36 [(3) "Workover" means any downhole operation in an existing
37 oil or gas well that is designed to sustain, restore or increase the
38 production rate or ultimate recovery of oil or gas, including but
39 not limited to acidizing, reperforation, fracture treatment, sand/
40 paraffin/scale removal or other wellbore cleanouts, casing repair,
41 squeeze cementing, initial installation, or enhancement of artifi-
42 cial lifts including plunger lifts, rods, pumps, submersible pumps
43 and coiled tubing velocity strings, downsizing existing tubing to
HB 2216--Am. by HCW
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1 reduce well loading, downhole commingling, bacteria treatments,
2 polymer treatments, upgrading the size of pumping unit equip-
3 ment, setting bridge plugs to isolate water production zones, or
4 any combination of the aforementioned operations; "workover"
5 shall not mean the routine maintenance, routine repair, or like for-
6 like replacement of downhole equipment such as rods, pumps, tub-
7 ing packers or other mechanical device.
8 [(4) "Production enhancement project" means performing or
9 causing to be performed the following:
10 [(i) Workover;
11 [(ii) recompletion to a different producing zone in the same
12 well bore, except recompletions in formations and zones subject
13 to a state corporation commission proration order;
14 [(iii) secondary recovery projects;
15 [(iv) addition of mechanical devices to dewater a gas or oil well;
16 [(v) replacement or enhancement of surface equipment;
17 [(vi) installation or enhancement of compression equipment,
18 line looping or other techniques or equipment which increases
19 production from a well or a group of wells in a project;
20 [(vii) new discoveries of oil or gas which are discovered as a
21 result of the use of new technology, including, but not limited to,
22 three dimensional seismic studies.
23 [(B) The state corporation commission shall adopt rules and
24 regulations necessary to efficiently and properly administer the
25 provisions of this paragraph (6) including rules and regulations for
26 the qualification of production enhancement projects, the proce-
27 dures for determining the monthly rate of production decline, cri-
28 teria for determining the share of incremental production attrib-
29 utable to each well when a production enhancement project
30 includes a group of wells, criteria for determining the start up date
31 for any project for which an exemption is claimed, and determin-
32 ing new qualifying technologies for the purposes of paragraph
33 (6)(A)(4)(vii).
34 [(C) Any taxpayer applying for an exemption pursuant to this
35 paragraph (6) shall make application to the director of taxation.
36 Such application shall be accompanied by a state corporation com-
37 mission certification that the production for which an exemption
38 is sought results from a qualified production enhancement project
39 and certification of the base production for the enhanced wells or
40 group of wells, and the rate of decline to be applied to that base
41 production. The secretary of revenue shall provide credit for any
42 taxes paid between the project startup date and the certification
43 of qualifications by the commission.
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1 [(D) The exemptions provided for in this paragraph (6) shall
2 not apply for 12 months beginning July 1 of the year subsequent
3 to any calendar year during which: (1) In the case of oil, the sec-
4 retary of revenue determines that the weighted average price of
5 Kansas oil at the wellhead has exceeded $20.00 per barrel; or (2)
6 in the case of natural gas the secretary of revenue determines that
7 the weighted average price of Kansas gas at the wellhead has ex-
8 ceeded $2.50 per Mcf.
9 [(E) The provisions of this paragraph (6) shall not affect any
10 other exemption allowable pursuant to this section; and
11 [(7) the severance and production of coal or oil occurring on and after
12 July 1, 1999; and
13 [(7) (8) for the calendar year 1988, and any year thereafter, the
14 severance or production of the first 350,000 tons of coal from any
15 mine as certified by the state geological survey.
16 [(c) No exemption shall be granted pursuant to subsection
17 (b)(3) or (4) to any person who does not have a valid operator's
18 license issued by the state corporation commission, and no refund
19 of tax shall be made to any taxpayer attributable to any production
20 in a period when such taxpayer did not hold a valid operator's
21 license issued by the state corporation commission.
22 [(d) On April 15, 1988, and on April 15 of each year thereafter,
23 the secretary of revenue shall determine from statistics compiled
24 and provided by the United States department of energy, the av-
25 erage price per barrel paid by the first purchaser of crude oil in
26 this state for the six-month period ending on December 31 of the
27 preceding year. Such price shall be used for the purpose of deter-
28 mining exemptions allowed by subsection (b)(2)(B) or (E) for the
29 twelve-month period commencing on May 1 of such year and end-
30 ing on April 30 of the next succeeding year.]
31 [Sec. 27. K.S.A. 79-5105 is hereby amended to read as follows:
32 79-5105. (a) A tax is hereby levied upon every motor vehicle, as
33 the same is defined by K.S.A. 79-5101, and amendments thereto,
34 in an amount which shall be determined in the manner hereinafter
35 prescribed, except that: (1) (A) For 1995, the tax on any motorcycle
36 shall not be less than $6 and the tax on any other motor vehicle shall not
37 be less than $12; and (B) the tax on each motor vehicle the age of which
38 is 15 years or older shall not be more than $12; and (2) for For 1996,
39 and each year thereafter: (A) The tax on any motorcycle shall not
40 be less than $12 and the tax on any other motor vehicle shall not
41 be less than $24, except as otherwise provided by clause (B) and
42 (C); (B) the tax on any motorcycle the model year of which is 1980
43 or earlier shall be $6 and the tax on any other motor vehicle the
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1 model year of which is 1980 or earlier shall be $12; and (C) if the
2 tax on any motorcycle in 1995 was more than $6 but less than $12,
3 the tax shall be determined for 1996 and each year thereafter in
4 the manner hereinafter prescribed but shall not be less than $6,
5 and if the tax on any other motor vehicle in 1995 was more than
6 $12 but less than $24, the tax shall be determined for 1996 and
7 each year thereafter in the manner hereinafter prescribed but
8 shall not be less than $12; and (2) the minimum amounts established
9 by paragraph (1) shall be reduced in accordance with the following: (A)
10 By 25% in the year 2001; (B) by 50% in the year 2002; (C) by 75% in
11 the year 2003; and (D) by 100% in the year 2004.
12 [(b) The amount of such tax on a motor vehicle shall be com-
13 puted by: (1) Determining the amount representing the midpoint
14 of the values included within the class in which such motor vehicle
15 is classified under K.S.A. 79-5102 or 79-5103, and amendments
16 thereto, except that the midpoint of class 20 shall be $21,000 plus
17 $2,000 for each $2,000 or portion thereof by which the trade-in
18 value of the vehicle exceeds $22,000; (2) if the model year of the
19 motor vehicle is a year other than the year for which the tax is
20 levied, by reducing such midpoint amount by an amount equal to
21 16% in 1995, and all years prior thereto, and 15% in 1996, and all
22 years thereafter, of the remaining balance for each year of differ-
23 ence between the model year of the motor vehicle and the year
24 for which the tax is levied if the model year of the motor vehicle
25 is 1981 or a later year or (B) the remaining balance for each year
26 of difference between the year 1980 and the year for which the
27 tax is levied if the model year of the motor vehicle is 1980 or any
28 year prior thereto; (3) by multiplying the amount determined after
29 application of clause (2) above by 30% during calendar year 1995,
30 28.5% during the calendar year 1996, 26.5% during the calendar
31 year 1997, 24.5% during the calendar year 1998, 22.5% during the
32 calendar year 1999, and 20% during 20% during the calendar year
33 2000, 15% during the calendar year 2001, 10% during the calendar year
34 2002, 5% during the calendar year 2003, and 0% during all calendar
35 years thereafter, which shall constitute the taxable value of the
36 motor vehicle; and (4) by multiplying the taxable value of the mo-
37 tor vehicle produced under clause (3) above by the county average
38 tax rate.
39 [(c) The "county average tax rate" means the total amount of
40 general property taxes levied within the county by the state, county
41 and all other taxing subdivisions levying such taxes within such
42 county in the second calendar year before the calendar year in
43 which the owner's full registration year begins divided by the total
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77
1 assessed tangible valuation of property within such county as of
2 November 1 of such second calendar year before the calendar year
3 in which the owner's full registration year begins as certified by
4 the secretary of revenue, except that: (1) As of November 1, 1994,
5 such rate shall be computed without regard to 11.429% of the gen-
6 eral property taxes levied by school districts pursuant to K.S.A. 72-
7 6431, and amendments thereto; (2) as of November 1, 1995, such
8 rate shall be computed without regard to 31.429% of the general
9 property taxes levied by school districts pursuant to K.S.A. 72-
10 6431, and amendments thereto; (3) as of November 1, 1996, such
11 rate shall be computed without regard to 54.286% of the general
12 property taxes levied by school districts pursuant to K.S.A. 72-
13 6431, and amendments thereto; (4) as of November 1, 1997, such
14 rate shall be computed without regard to 70.36% of the general
15 property taxes levied by school districts pursuant to K.S.A. 72-
16 6431, and amendments thereto; and (5) as of November 1, 1998,
17 and such date in all years thereafter, such rate shall be computed
18 without regard to the general property taxes levied by school dis-
19 tricts pursuant to K.S.A. 72-6431, and amendments thereto.
20 [(d) (1) There is hereby established in the state treasury the motor
21 vehicle tax replacement fund. All expenditures from such fund to the sev-
22 eral county treasurers shall be made by the 10th of every month upon
23 warrants of the director of accounts and reports pursuant to vouchers
24 approved by the secretary of revenue in the amount calculated pursuant
25 to paragraph (2).
26 [(2) For the purpose of reimbursing taxing subdivisions for the
27 amount of revenue lost because of the amendments by this act to subsec-
28 tion (a) and (b), the secretary of revenue shall calculate and certify to the
29 director of accounts and reports by the 10th day of every month such
30 amount. For all applicable tax years, such amount shall be equal to the
31 difference between the tax computed without regard to the amendments
32 by this act to subsections (a) and (b) and the tax computed with regard
33 to such amendments. Upon receipt of such certification, the director of
34 accounts and reports shall transfer the certified amount from the state
35 general fund to the motor vehicle tax replacement fund. In addition the
36 secretary of revenue shall calculate the amount to be reimbursed to each
37 county.
38 [(3) All moneys received under the provisions of this subsection shall
39 be allocated and distributed to the appropriate taxing subdivision in the
40 same manner as provided in K.S.A. 79-5109, and amendments thereto.
41 Moneys received by taxing subdivisions from such taxes shall be appor-
42 tioned among and credited to tax levy funds in the same manner as pro-
43 vided in K.S.A. 79-5110, and amendments thereto. The county treasurer
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1 shall prepare estimates and notify taxing subdivisions of distribution for
2 the purpose of budget preparation in the same manner as provided in
3 K.S.A. 79-5111, and amendments thereto.
4 [Sec. 28. K.S.A. 79-5105 is hereby repealed.]
5 Sec. 2. [29.] This act shall take effect and be in force from and after
6 its publication in the statute book.
7