[As Amended by House Committee of the Whole]
         
As Amended by House Committee
         
Session of 1999
         
HOUSE BILL No. 2530
         
By Committee on Appropriations
         
2-23
         
11             AN  ACT concerning taxation; concerning the Kansas community services
12             program come taxation; relating to certain credits therefrom];
13             amending K.S.A. 79-32,197 and K.S.A. 1998 Supp. 79-32,195 and 79-
14             32,196 and repealing the existing sections.
15      
16       Be it enacted by the Legislature of the State of Kansas:
17             Section  1. K.S.A. 1998 Supp. 79-32,195 is hereby amended to read
18       as follows: 79-32,195. As used in this act, the following words and phrases
19       shall have the meanings ascribed to them herein: (a) "Business firm"
20       means any business entity authorized to do business in the state of Kansas
21       which is subject to the state income tax imposed by the provisions of the
22       Kansas income tax act, any national banking association, state bank, trust
23       company or savings and loan association paying an annual tax on its net
24       income pursuant to article 11 of chapter 79 of the Kansas Statutes An-
25       notated, or any insurance company paying the premium tax and privilege
26       fees imposed pursuant to K.S.A. 40-252, and amendments thereto;
27             (b) "community services" means:
28             (1) The conduct of activities which meet a demonstrated community
29       need and which are designed to achieve improved educational and social
30       services for Kansas children and their families, and which are coordinated
31       with communities including, but not limited to, social and human services
32       organizations that address the causes of poverty through programs and
33       services that assist low income persons in the areas of employment, food,
34       housing, emergency assistance and health care;
35             (2) crime prevention; and
36             (3) health care services.
37             (c) "crime prevention" means any nongovernmental activity which
38       aids in the prevention of crime in an impoverished area.
39             (d) "community service organization" means any organization per-
40       forming community services in Kansas and which:
41             (1) Has obtained a ruling from the internal revenue service of the
42       United States department of the treasury that such organization is exempt

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  1       from income taxation under the provisions of section 501(c)(3) of the
  2       federal internal revenue code; or
  3             (2) is incorporated in the state of Kansas or another state as a non-
  4       stock, nonprofit corporation; or
  5             (3) has been designated as a community development corporation by
  6       the United States government under the provisions of title VII of the
  7       economic opportunity act of 1964; or
  8             (4) is chartered by the United States congress.
  9        (e) "Contributions" shall mean and include the donation of
10       cash, services or property other than used clothing. Stocks and
11       bonds contributed shall be valued at the stock market price on the
12       date of transfer. Services contributed shall be valued at the stan-
13       dard billing rate for not-for-profit clients. Personal property items
14       contributed shall be valued at the lesser of its fair market value or
15       cost to the donor and may be inclusive of costs incurred in making
16       the contribution, but shall not include sales tax. Contributions of
17       real estate are allowable for credit only when title thereto is in fee
18       simple absolute and is clear of any encumbrances. The amount of
19       credit allowable shall be based upon the lesser of two current in-
20       dependent appraisals conducted by state licensed appraisers.
21             (e) (f) "health care services" shall include, but not be limited to, the
22       following: Services provided by local health departments, city, county or
23       district hospitals, city or county nursing homes, or other residential insti-
24       tutions, preventive health care services offered by a community service
25       organization including immunizations, prenatal care, the postponement
26       of entry into nursing homes by home health care services, and community
27       based services for persons with a disability, mental health services, indi-
28       gent health care, physician or health care worker recruitment, health ed-
29       ucation, emergency medical services, services provided by rural health
30       clinics, integration of health care services, home health services and serv-
31       ices provided by rural health networks.
32             (f) (g) "rural community" means any city having a population of fewer
33       than 15,000 located in a county that is not part of a standard metropolitan
34       statistical area as defined by the United States department of commerce
35       or its successor agency. However, any such city located in a county de-
36       fined as a standard metropolitan statistical area shall be deemed a rural
37       community if a substantial number of persons in such county derive their
38       income from agriculture and, in any county where there is only one city
39       within the county which has a population of more than 15,000 and which
40       classifies as a standard metropolitan statistical area, all other cities in that
41       county having a population of less than 15,000 shall be deemed a rural
42       community.
43             Sec.  2. K.S.A. 1998 Supp. 79-32,196 is hereby amended to read as

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  1       follows: 79-32,196. For taxable years commencing after December 31,
  2       1997, any business firm which contributes to a community service organ-
  3       ization or governmental entity which engages in the activities of providing
  4       community services, shall be allowed a credit, as provided in K.S.A. 79-
  5       32,197, and amendments thereto, against the tax imposed by the Kansas
  6       income tax act, the tax on net income of national banking associations,
  7       state banks, trust companies or savings and loan associations imposed
  8       under article 11 of chapter 79 of the Kansas Statutes Annotated, or the
  9       premium tax or privilege fees imposed pursuant to K.S.A. 40-252, and
10       amendments thereto, if the proposal of the provider of community serv-
11       ices is approved pursuant to K.S.A. 79-32,198, and amendments thereto.
12       Any business firm which makes such a contribution after the effective
13       date of this act and prior to July 1, 1998, shall be allowed a credit in
14       accordance with this act, as if the contribution had been made in calendar
15       year 1997, for the firm's tax liability for taxable years commencing after
16       December 31, 1996. Notwithstanding any other provisions of this section,
17       no business firm shall claim more than one credit for the same contri-
18       bution. Notwithstanding any provision of law to the contrary, any tax-
19       payer may sell, assign, exchange, convey or otherwise transfer tax credits
20       allowed in this section. Such taxpayer, hereinafter the assignor for the
21       purpose of this subsection, may sell, assign, exchange or otherwise transfer
22       earned tax credit. The taxpayer acquiring earned credits, hereinafter the
23       assignee for the purpose of this subsection, may use the acquired credits
24       to offset up to 100% of the tax liabilities otherwise imposed against the
25       business firm's income tax liability under the Kansas income tax act. Un-
26       used credits claimed by the assignee may be carried forward for up to
27       five years, provided all such credits shall be claimed within 10 years fol-
28       lowing the tax years in which the contribution was made. The assignor
29       shall enter into a written agreement with the assignee establishing the
30       terms and conditions of the agreement and shall perfect such transfer by
31       notifying the director of community development of the department of
32       commerce and housing in writing within 30 calendar days following the
33       effective date of the transfer and shall provide any information as may be
34       required by director of community development of the department of com-
35       merce and housing to administer and carry out the provisions of this
36       section. Notwithstanding any other provision of law to the contrary, the
37       amount received by the assignor of such tax credit shall be taxable as
38       income of the assignor, and the excess of the par value of such credit over
39       the amount paid by the assignee for such credit shall be taxable as income
40       of the assignee. As used in this section "contribution" means cash or non-
41       cash assets including, but not limited to, real and personal property, ma-
42       terials, supplies, equipment, transportation, securities, technical assis-
43       tance, labor services and professional services.

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  1        New Sec.  2. Any business firm or business entity not subject
  2       to Kansas income, privilege or premiums tax, hereinafter desig-
  3       nated the assignor, may sell, assign, convey or otherwise transfer
  4       tax credits allowed and earned pursuant to K.S.A. 79-32,196, and
  5       amendments thereto. Such credits shall be deemed to be allowed
  6       and earned by any such business entity which is only disqualified
  7       therefrom by reason of not being subject to such Kansas taxes. The
  8       business firm acquiring earned credits, hereinafter designated the
  9       assignee, may use the amount of the acquired credits to offset up
10       to 100% of its income, privilege or premiums tax liability for the
11       taxable year in which such acquisition was made. Only the full
12       credit amount for any one contribution may be transferred and
13       such credit may be transferred one time. Unused credit amounts
14       claimed by the assignee may be carried forward for up to five
15       years, except that all such amounts shall be claimed within 10 years
16       following the tax year in which the contribution was made. The
17       assignor shall enter into a written agreement with the assignee
18       establishing the terms and conditions of the agreement and shall
19       perfect such transfer by notifying the director of community de-
20       velopment of the department of commerce and housing in writing
21       within 30 calendar days following the effective date of the transfer
22       and shall provide any information as may be required by the di-
23       rector of community development of the department of commerce
24       and housing to administer and carry out the provisions of this sec-
25       tion. The amount received by the assignor of such tax credit shall
26       be taxable as income of the assignor, and the excess of the value
27       of such credit over the amount paid by the assignee for such credit
28       shall be taxable as income of the assignee.
29             Sec.  3. K.S.A. 79-32,197 is hereby amended to read as follows: 79-
30       32,197. The amount of credit allowed pursuant to K.S.A. 79-32,196, and
31       amendments thereto, shall not exceed 50% of the total amount contrib-
32       uted during the taxable year by the business firm to a community service
33       organization or governmental entity for programs approved pursuant to
34       K.S.A. 79-32,198, and amendments thereto. The amount of credit allowed
35       pursuant to K.S.A. 79-32,196, and amendments thereto, shall not exceed
36       70% of the total amount contributed during the taxable year by the busi-
37       ness firm in a rural community to a community service organization or
38       governmental entity located therein for programs approved pursuant to
39       K.S.A. 79-32,198, and amendments thereto. Any tax credit not used for
40       the taxable year the contribution was made may be carried over to any
41       succeeding taxable year until the total amount of the credit is used. If the
42       amount of the credit allowed by K.S.A. 1998 Supp. 79-32,196, and amend-
43       ments thereto, exceeds the taxpayer's income tax liability imposed under

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  1       the Kansas income tax act, such excess amount shall be refunded to the
  2       taxpayer. In no event shall the total amount of credits allowed under this
  3       section exceed $5,000,000 $10,000,000 for any one fiscal year.
  4             [New Sec.  4. For all taxable years commencing after Decem-
  5       ber 31, 1997, there shall be allowed as a credit against the tax
  6       liability of a taxpayer imposed under the Kansas income tax act,
  7       an amount equal to the total amount of property tax levied for
  8       property tax year 1998, and all such years thereafter, actually and
  9       timely paid by the taxpayer which is attributable to the working
10       interest of an oil lease the average daily production per well from
11       which is 15 barrels or less, or a natural gas lease the average daily
12       production per well from which is 90 mcf or less. No credit shall
13       be allowed for property tax paid upon machinery and equipment
14       attributable to the working interest for which a credit is claimed
15       pursuant to K.S.A. 1998 Supp. 79-32,206, and amendments
16       thereto. If the amount of such tax credit exceeds the taxpayer's
17       income tax liability for the taxable year, the amount thereof which
18       exceeds such tax liability shall be refunded to the taxpayer. If the
19       taxpayer is a corporation having an election in effect under sub-
20       chapter S of the federal internal revenue code, a partnership or a
21       limited liability company, the credit provided by this section shall
22       be claimed by the shareholders of such corporation, the partners
23       of such partnership or the members of such limited liability com-
24       pany in the same manner as such shareholders, partners and mem-
25       bers account for their proportionate shares of the income or loss
26       of the corporation, partnership or limited liability company unless
27       an election is made and filed with the Kansas department of rev-
28       enue by any such corporation, partnership or company to have
29       such credit to be claimed otherwise by a shareholder, partner or
30       member thereof.]
31             New Sec.  4. [5.] The provisions of [sections 1 through 3 of] this
32       act shall be applicable to all taxable years commencing after De-
33       cember 31, 1998.
34        Sec.  4. 5. [6.] K.S.A. 79-32,197 and K.S.A. 1998 Supp. 79-32,195 and
35       79-32,196 are hereby repealed.
36        Sec.  5. 6. [7.] This act shall take effect and be in force from and after
37       its publication in the statute book [Kansas register].