Session of 1999
         
HOUSE BILL No. 2273
         
By Representative Tanner
         
(By request)
          
2-4
          
10             AN  ACT relating to sales taxation; exempting certain sales of food for
11             human consumption therefrom; amending K.S.A. 1998 Supp. 79-3603
12             and repealing the existing section; also repealing K.S.A. 79-3632
13             through 79-3639.
14      
15       Be it enacted by the Legislature of the State of Kansas:
16             Section  1. K.S.A. 1998 Supp. 79-3603 is hereby amended to read as
17       follows: 79-3603. For the privilege of engaging in the business of selling
18       tangible personal property at retail in this state or rendering or furnishing
19       any of the services taxable under this act, there is hereby levied and there
20       shall be collected and paid a tax at the rate of 4.9% upon:
21             (a) The gross receipts received from the sale of tangible personal
22       property at retail within this state;
23             (b)  (1) the gross receipts from intrastate telephone or telegraph serv-
24       ices and (2) the gross receipts received from the sale of interstate tele-
25       phone or telegraph services, which (A) originate within this state and
26       terminate outside the state and are billed to a customer's telephone num-
27       ber or account in this state; or (B) originate outside this state and ter-
28       minate within this state and are billed to a customer's telephone number
29       or account in this state except that the sale of interstate telephone or
30       telegraph service does not include: (A) Any interstate incoming or out-
31       going wide area telephone service or wide area transmission type service
32       which entitles the subscriber to make or receive an unlimited number of
33       communications to or from persons having telephone service in a speci-
34       fied area which is outside the state in which the station provided this
35       service is located; (B) any interstate private communications service to
36       the persons contracting for the receipt of that service that entitles the
37       purchaser to exclusive or priority use of a communications channel or
38       group of channels between exchanges; (C) any value-added nonvoice
39       service in which computer processing applications are used to act on the
40       form, content, code or protocol of the information to be transmitted; (D)
41       any telecommunication service to a provider of telecommunication serv-
42       ices which will be used to render telecommunications services, including
43       carrier access services; or (E) any service or transaction defined in this

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  1       section among entities classified as members of an affiliated group as
  2       provided by federal law (U.S.C. Section 1504). For the purposes of this
  3       subsection the term gross receipts does not include purchases of tele-
  4       phone, telegraph or telecommunications using a prepaid telephone call-
  5       ing card or pre-paid authorization number. As used in this subsection, a
  6       pre-paid telephone calling card or pre-paid authorization number means
  7       the right to exclusively make telephone calls, paid for in advance, with
  8       the prepaid value measured in minutes or other time units, that enables
  9       the origination of calls using an access number or authorization code or
10       both, whether manually or electronically dialed;
11             (c) the gross receipts from the sale or furnishing of gas, water, elec-
12       tricity and heat, which sale is not otherwise exempt from taxation under
13       the provisions of this act, and whether furnished by municipally or pri-
14       vately owned utilities;
15             (d) the gross receipts from the sale of meals or drinks furnished at
16       any private club, drinking establishment, catered event, restaurant, eating
17       house, dining car, hotel, drugstore or other place where meals or drinks
18       are regularly sold to the public;
19             (e) the gross receipts from the sale of admissions to any place pro-
20       viding amusement, entertainment or recreation services including admis-
21       sions to state, county, district and local fairs, but such tax shall not be
22       levied and collected upon the gross receipts received from sales of ad-
23       missions to any cultural and historical event which occurs triennially;
24             (f) the gross receipts from the operation of any coin-operated device
25       dispensing or providing tangible personal property, amusement or other
26       services except laundry services, whether automatic or manually operated;
27             (g) the gross receipts from the service of renting of rooms by hotels,
28       as defined by K.S.A. 36-501 and amendments thereto, or by accommo-
29       dation brokers, as defined by K.S.A. 12-1692, and amendments thereto;
30             (h) the gross receipts from the service of renting or leasing of tangible
31       personal property except such tax shall not apply to the renting or leasing
32       of machinery, equipment or other personal property owned by a city and
33       purchased from the proceeds of industrial revenue bonds issued prior to
34       July 1, 1973, in accordance with the provisions of K.S.A. 12-1740 through
35       12-1749, and amendments thereto, and any city or lessee renting or leas-
36       ing such machinery, equipment or other personal property purchased
37       with the proceeds of such bonds who shall have paid a tax under the
38       provisions of this section upon sales made prior to July 1, 1973, shall be
39       entitled to a refund from the sales tax refund fund of all taxes paid
40       thereon;
41             (i) the gross receipts from the rendering of dry cleaning, pressing,
42       dyeing and laundry services except laundry services rendered through a
43       coin-operated device whether automatic or manually operated;

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  1             (j) the gross receipts from the rendering of the services of washing
  2       and washing and waxing of vehicles;
  3             (k) the gross receipts from cable, community antennae and other sub-
  4       scriber radio and television services;
  5             (l) the gross receipts received from the sales of tangible personal
  6       property to all contractors, subcontractors or repairmen of materials and
  7       supplies for use by them in erecting structures for others, or building on,
  8       or otherwise improving, altering, or repairing real or personal property
  9       of others;
10             (m) the gross receipts received from fees and charges by public and
11       private clubs, drinking establishments, organizations and businesses for
12       participation in sports, games and other recreational activities, but such
13       tax shall not be levied and collected upon the gross receipts received from:
14       (1) Fees and charges by any political subdivision, by any organization
15       exempt from property taxation pursuant to paragraph Ninth of K.S.A. 79-
16       201, and amendments thereto, or by any youth recreation organization
17       exclusively providing services to persons 18 years of age or younger which
18       is exempt from federal income taxation pursuant to section 501(c)(3) of
19       the federal internal revenue code of 1986, for participation in sports,
20       games and other recreational activities; and (2) entry fees and charges for
21       participation in a special event or tournament sanctioned by a national
22       sporting association to which spectators are charged an admission which
23       is taxable pursuant to subsection (e);
24             (n) the gross receipts received from dues charged by public and pri-
25       vate clubs, drinking establishments, organizations and businesses, pay-
26       ment of which entitles a member to the use of facilities for recreation or
27       entertainment, but such tax shall not be levied and collected upon the
28       gross receipts received from: (1) Dues charged by any organization ex-
29       empt from property taxation pursuant to paragraphs Eighth and Ninth of
30       K.S.A. 79-201, and amendments thereto; and (2) sales of memberships
31       in a nonprofit organization which is exempt from federal income taxation
32       pursuant to section 501 (c)(3) of the federal internal revenue code of
33       1986, and whose purpose is to support the operation of a nonprofit zoo;
34             (o) the gross receipts received from the isolated or occasional sale of
35       motor vehicles or trailers but not including: (1) The transfer of motor
36       vehicles or trailers by a person to a corporation solely in exchange for
37       stock securities in such corporation; or (2) the transfer of motor vehicles
38       or trailers by one corporation to another when all of the assets of such
39       corporation are transferred to such other corporation; or (3) the sale of
40       motor vehicles or trailers which are subject to taxation pursuant to the
41       provisions of K.S.A. 79-5101 et seq., and amendments thereto, by an
42       immediate family member to another immediate family member. For the
43       purposes of clause (3), immediate family member means lineal ascendants

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  1       or descendants, and their spouses. In determining the base for computing
  2       the tax on such isolated or occasional sale, the fair market value of any
  3       motor vehicle or trailer traded in by the purchaser to the seller may be
  4       deducted from the selling price;
  5             (p) the gross receipts received for the service of installing or applying
  6       tangible personal property which when installed or applied is not being
  7       held for sale in the regular course of business, and whether or not such
  8       tangible personal property when installed or applied remains tangible
  9       personal property or becomes a part of real estate, except that no tax shall
10       be imposed upon the service of installing or applying tangible personal
11       property in connection with the original construction of a building or
12       facility, the original construction, reconstruction, restoration, remodeling,
13       renovation, repair or replacement of a residence or the construction, re-
14       construction, restoration, replacement or repair of a bridge or highway.
15             For the purposes of this subsection:
16             (1) "Original construction" shall mean the first or initial construction
17       of a new building or facility. The term "original construction" shall include
18       the addition of an entire room or floor to any existing building or facility,
19       the completion of any unfinished portion of any existing building or fa-
20       cility and the restoration, reconstruction or replacement of a building or
21       facility damaged or destroyed by fire, flood, tornado, lightning, explosion
22       or earthquake, but such term, except with regard to a residence, shall not
23       include replacement, remodeling, restoration, renovation or reconstruc-
24       tion under any other circumstances;
25             (2) "building" shall mean only those enclosures within which individ-
26       uals customarily are employed, or which are customarily used to house
27       machinery, equipment or other property, and including the land improve-
28       ments immediately surrounding such building;
29             (3) "facility" shall mean a mill, plant, refinery, oil or gas well, water
30       well, feedlot or any conveyance, transmission or distribution line of any
31       cooperative, nonprofit, membership corporation organized under or sub-
32       ject to the provisions of K.S.A. 17-4601 et seq., and amendments thereto,
33       or of any municipal or quasi-municipal corporation, including the land
34       improvements immediately surrounding such facility; and
35             (4) "residence" shall mean only those enclosures within which indi-
36       viduals customarily live;
37             (q) the gross receipts received for the service of repairing, servicing,
38       altering or maintaining tangible personal property, except computer soft-
39       ware described in subsection (s), which when such services are rendered
40       is not being held for sale in the regular course of business, and whether
41       or not any tangible personal property is transferred in connection there-
42       with. The tax imposed by this subsection shall be applicable to the services
43       of repairing, servicing, altering or maintaining an item of tangible personal

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  1       property which has been and is fastened to, connected with or built into
  2       real property;
  3             (r) the gross receipts from fees or charges made under service or
  4       maintenance agreement contracts for services, charges for the providing
  5       of which are taxable under the provisions of subsection (p) or (q);
  6             (s) the gross receipts received from the sale of computer software,
  7       and the sale of the services of modifying, altering, updating or maintaining
  8       computer software. As used in this subsection, "computer software"
  9       means information and directions loaded into a computer which dictate
10       different functions to be performed by the computer. Computer software
11       includes any canned or prewritten program which is held or existing for
12       general or repeated sale, even if the program was originally developed
13       for a single end user as custom computer software. The sale of computer
14       software or services does not include: (1) The initial sale of any custom
15       computer program which is originally developed for the exclusive use of
16       a single end user; or (2) those services rendered in the modification of
17       computer software when the modification is developed exclusively for a
18       single end user only to the extent of the modification and only to the
19       extent that the actual amount charged for the modification is separately
20       stated on invoices, statements and other billing documents provided to
21       the end user. The services of modification, alteration, updating and main-
22       tenance of computer software shall only include the modification, alter-
23       ation, updating and maintenance of computer software taxable under this
24       subsection whether or not the services are actually provided; and
25             (t) the gross receipts received for telephone answering services, in-
26       cluding mobile phone services, beeper services and other similar services;
27       and
28             (u) the gross receipts received from the sale of prepaid telephone
29       calling cards or pre-paid authorization numbers and the recharge of such
30       cards or numbers. A pre-paid telephone calling card or pre-paid author-
31       ization number means the right to exclusively make telephone calls, paid
32       for in advance, with the prepaid value measured in minutes or other time
33       units, that enables the origination of calls using an access number or
34       authorization code or both, whether manually or electronically dialed. If
35       the dale or recharge of such card or number does not take place at the
36       vendor's place of business, it shall be conclusively determined to take
37       place at the customer's shipping address; if there is no item shipped then
38       it shall be the customer's billing address.; and
39             (v) the gross receipts received from sales of food for human con-
40       sumption which shall be taxed at the rate of 3.9% on and after July 1,
41       1999, but before July 1, 2000, 2.9% on and after July 1, 2000, but before
42       July 1, 2001, 1.9% on and after July 1, 2001, but before July 1, 2002, .9%
43       on and after July 1, 2002, but before July 1, 2003, and all such sales shall

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  1       be exempt thereafter. As used in this subsection, "food for human con-
  2       sumption" means only that food which is eligible for purchase with food
  3       stamps issued by the United States department of agriculture pursuant to
  4       regulations in effect on January 1, 1998, regardless of whether the retailer
  5       from which the food is purchased is participating in the food stamp pro-
  6       gram. Such phrase shall not include: (1) Meals prepared for immediate
  7       consumption on or off the premises of the retailer; or (2) food sold through
  8       vending machines.  
  9       Sec.  2. K.S.A. 1998 Supp. 79-3603 is hereby repealed.
10             Sec.  3. On and after April 16, 2003, K.S.A. 79-3632 through 79-3639
11       are hereby repealed.
12        Sec.  4. This act shall take effect and be in force from and after its
13       publication in the statute book.