Session of 1999
SENATE BILL No. 377
By Special Committee on Assessment and Taxation
12-15
9 AN ACT
relating to sales taxation; concerning treatment of certain
con-
10 tractor sales and
purchases; amending K.S.A. 1999 Supp. 79-3602 and
11 79-3603 and repealing
the existing sections.
12
13 Be it enacted by the Legislature of the
State of Kansas:
14 Section
1. K.S.A. 1999 Supp. 79-3602 is hereby amended to read as
15 follows: 79-3602. (a) "Persons" means any
individual, firm, copartnership,
16 joint adventure, association, corporation,
estate or trust, receiver or trus-
17 tee, or any group or combination acting as
a unit, and the plural as well
18 as the singular number; and shall
specifically mean any city or other po-
19 litical subdivision of the state of Kansas
engaging in a business or provid-
20 ing a service specifically taxable under
the provisions of this act.
21 (b) "Director"
means the state director of taxation.
22 (c) "Sale" or
"sales" means the exchange of tangible personal prop-
23 erty, as well as the sale thereof for
money, and every transaction, condi-
24 tional or otherwise, for a consideration,
constituting a sale, including the
25 sale or furnishing of electrical energy,
gas, water, services or entertain-
26 ment taxable under the terms of this act
and including, except as provided
27 in the following provision, the sale of the
use of tangible personal property
28 by way of a lease, license to use or the
rental thereof regardless of the
29 method by which the title, possession or
right to use the tangible personal
30 property is transferred. The term "sale" or
"sales" shall not mean the sale
31 of the use of any tangible personal
property used as a dwelling by way of
32 a lease or rental thereof for a term of
more than 28 consecutive days.
33 (d) "Retailer"
means a person regularly engaged in the business of
34 selling tangible personal property at
retail or furnishing electrical energy,
35 gas, water, services or entertainment, and
selling only to the user or con-
36 sumer and not for resale.
37 (e) "Retail sale"
or "sale at retail" means all sales made within the
38 state of tangible personal property or
electrical energy, gas, water, services
39 or entertainment for use or consumption and
not for resale.
40 (f) "Tangible
personal property" means corporeal personal property.
41 Such term shall include: (1) Any computer
software program which is not
42 a custom computer software program, as
described by subsection (s) of
43 K.S.A. 79-3603, and amendments thereto; and
(2) any prepaid telephone
2
1 calling card or prepaid authorization
number, or recharge of such card
2 or number, as described by subsection
(b) of K.S.A. 79-3603, and amend-
3 ments thereto.
4
(g) "Selling price" means the total cost to the consumer
exclusive of
5 discounts allowed and credited, but
including freight and transportation
6 charges from retailer to
consumer.
7 (h) "Gross
receipts" means the total selling price or the amount re-
8 ceived as defined in this act, in
money, credits, property or other consid-
9 eration valued in money from sales at
retail within this state; and em-
10 braced within the provisions of this act.
The taxpayer, may take credit in
11 the report of gross receipts for: (1) An
amount equal to the selling price
12 of property returned by the purchaser when
the full sale price thereof,
13 including the tax collected, is refunded in
cash or by credit; and (2) an
14 amount equal to the allowance given for the
trade-in of property.
15 (i) "Taxpayer"
means any person obligated to account to the director
16 for taxes collected under the terms of this
act.
17 (j) "Isolated or
occasional sale" means the nonrecurring sale of tan-
18 gible personal property, or services
taxable hereunder by a person not
19 engaged at the time of such sale in the
business of selling such property
20 or services. Any religious organization
which makes a nonrecurring sale
21 of tangible personal property acquired for
the purpose of resale shall be
22 deemed to be not engaged at the time of
such sale in the business of
23 selling such property. Such term shall
include: (1) Any sale by a bank,
24 savings and loan institution, credit union
or any finance company licensed
25 under the provisions of the Kansas uniform
consumer credit code of tan-
26 gible personal property which has been
repossessed by any such entity;
27 and (2) any sale of tangible personal
property made by an auctioneer or
28 agent on behalf of not more than two
principals or households if such
29 sale is nonrecurring and any such principal
or household is not engaged
30 at the time of such sale in the business of
selling tangible personal
31 property.
32 (k) "Service"
means those services described in and taxed under the
33 provisions of K.S.A. 79-3603 and amendments
thereto.
34 (l) "Ingredient
or component part" means tangible personal property
35 which is necessary or essential to, and
which is actually used in and be-
36 comes an integral and material part of
tangible personal property or serv-
37 ices produced, manufactured or compounded
for sale by the producer,
38 manufacturer or compounder in its regular
course of business. The fol-
39 lowing items of tangible personal property
are hereby declared to be
40 ingredients or component parts, but the
listing of such property shall not
41 be deemed to be exclusive nor shall such
listing be construed to be a
42 restriction upon, or an indication of, the
type or types of property to be
43 included within the definition of
"ingredient or component part" as
3
1 herein set forth:
2
(1) Containers, labels and shipping cases used in the
distribution of
3 property produced, manufactured or
compounded for sale which are not
4 to be returned to the producer,
manufacturer or compounder for reuse.
5
(2) Containers, labels, shipping cases, paper bags, drinking
straws,
6 paper plates, paper cups, twine and
wrapping paper used in the distri-
7 bution and sale of property taxable
under the provisions of this act by
8 wholesalers and retailers and which
is not to be returned to such whole-
9 saler or retailer for reuse.
10 (3) Seeds and
seedlings for the production of plants and plant prod-
11 ucts produced for resale.
12 (4) Paper and ink
used in the publication of newspapers.
13 (5) Fertilizer
used in the production of plants and plant products
14 produced for resale.
15 (6) Feed for
animals, fowl and aquatic plants and animals, the primary
16 purpose of which is use in agriculture or
aquaculture, as defined in K.S.A.
17 47-1901, and amendments thereto, the
production of food for human
18 consumption, the production of animal,
dairy, poultry or aquatic plant
19 and animal products, fiber, fur, or the
production of offspring for use for
20 any such purpose or purposes.
21 (m) "Property
which is consumed" means tangible personal property
22 which is essential or necessary to and
which is used in the actual process
23 of and consumed, depleted or dissipated
within one year in (1) the pro-
24 duction, manufacture, processing, mining,
drilling, refining or compound-
25 ing of tangible personal property, (2) the
providing of services, (3) the
26 irrigation of crops, for sale in the
regular course of business, or (4) the
27 storage or processing of grain by a public
grain warehouse or other grain
28 storage facility, and which is not reusable
for such purpose. The following
29 is a listing of tangible personal property,
included by way of illustration
30 but not of limitation, which qualifies as
property which is consumed:
31 (A) Insecticides,
herbicides, germicides, pesticides, fungicides, fu-
32 migants, antibiotics, biologicals,
pharmaceuticals, vitamins and chemicals
33 for use in commercial or agricultural
production, processing or storage of
34 fruit, vegetables, feeds, seeds, grains,
animals or animal products whether
35 fed, injected, applied, combined with or
otherwise used;
36 (B) electricity,
gas and water; and
37 (C) petroleum
products, lubricants, chemicals, solvents, reagents and
38 catalysts.
39 (n) "Political
subdivision" means any municipality, agency or subdi-
40 vision of the state which is, or shall
hereafter be, authorized to levy taxes
41 upon tangible property within the state or
which certifies a levy to a
42 municipality, agency or subdivision of the
state which is, or shall hereafter
43 be, authorized to levy taxes upon tangible
property within the state. Such
4
1 term also shall include any public
building commission, housing, airport,
2 port, metropolitan transit or similar
authority established pursuant to law.
3
(o) "Municipal corporation" means any city incorporated under
the
4 laws of Kansas.
5
(p) "Quasi-municipal corporation" means any county,
township,
6 school district, drainage district or
any other governmental subdivision in
7 the state of Kansas having authority
to receive or hold moneys or funds.
8
(q) "Nonprofit blood bank" means any nonprofit place,
organization,
9 institution or establishment that is
operated wholly or in part for the
10 purpose of obtaining, storing, processing,
preparing for transfusing, fur-
11 nishing, donating or distributing human
blood or parts or fractions of
12 single blood units or products derived from
single blood units, whether
13 or not any remuneration is paid therefor,
or whether such procedures are
14 done for direct therapeutic use or for
storage for future use of such
15 products.
16
(r) "Contractor, subcontractor or repairman" means a
person who
17 agrees to furnish and install
tangible personal property or install tangible
18 personal property at a specified
price. A person who maintains an inven-
19 tory of tangible personal property
which enables such person to furnish
20 and install the tangible personal
property or install the tangible personal
21 property shall not be deemed a
contractor, subcontractor or repairman
22 but shall be deemed a
retailer.
23
(s) "Educational institution" means any nonprofit
school, college and
24 university that offers education at a level
above the twelfth grade, and
25 conducts regular classes and courses of
study required for accreditation
26 by, or membership in, the North Central
Association of Colleges and
27 Schools, the state board of education, or
that otherwise qualify as an
28 "educational institution," as defined by
K.S.A. 74-50,103, and amend-
29 ments thereto. Such phrase shall include:
(1) A group of educational in-
30 stitutions that operates exclusively for an
educational purpose; (2) non-
31 profit endowment associations and
foundations organized and operated
32 exclusively to receive, hold, invest and
administer moneys and property
33 as a permanent fund for the support and
sole benefit of an educational
34 institution; (3) nonprofit trusts,
foundations and other entities organized
35 and operated principally to hold and own
receipts from intercollegiate
36 sporting events and to disburse such
receipts, as well as grants and gifts,
37 in the interest of collegiate and
intercollegiate athletic programs for the
38 support and sole benefit of an educational
institution; and (4) nonprofit
39 trusts, foundations and other entities
organized and operated for the pri-
40 mary purpose of encouraging, fostering and
conducting scholarly inves-
41 tigations and industrial and other types of
research for the support and
42 sole benefit of an educational
institution.
43 Sec.
2. K.S.A. 1999 Supp. 79-3603 is hereby amended to read as
5
1 follows: 79-3603. For the privilege
of engaging in the business of selling
2 tangible personal property at retail
in this state or rendering or furnishing
3 any of the services taxable under
this act, there is hereby levied and there
4 shall be collected and paid a tax at
the rate of 4.9% and, within a rede-
5 velopment district established
pursuant to K.S.A. 74-8921, and amend-
6 ments thereto, there is hereby levied
and there shall be collected and
7 paid an additional tax at the rate of
2% until the earlier of the date the
8 bonds issued to finance or refinance
the redevelopment project have been
9 paid in full or the final scheduled
maturity of the first series of bonds
10 issued to finance any part of the project
upon:
11 (a) The gross
receipts received from the sale of tangible personal
12 property at retail within this state;
13 (b) (1) the
gross receipts from intrastate telephone or telegraph serv-
14 ices and (2) the gross receipts received
from the sale of interstate tele-
15 phone or telegraph services, which (A)
originate within this state and
16 terminate outside the state and are billed
to a customer's telephone num-
17 ber or account in this state; or (B)
originate outside this state and ter-
18 minate within this state and are billed to
a customer's telephone number
19 or account in this state except that the
sale of interstate telephone or
20 telegraph service does not include: (A) Any
interstate incoming or out-
21 going wide area telephone service or wide
area transmission type service
22 which entitles the subscriber to make or
receive an unlimited number of
23 communications to or from persons having
telephone service in a speci-
24 fied area which is outside the state in
which the station provided this
25 service is located; (B) any interstate
private communications service to
26 the persons contracting for the receipt of
that service that entitles the
27 purchaser to exclusive or priority use of a
communications channel or
28 group of channels between exchanges; (C)
any value-added nonvoice
29 service in which computer processing
applications are used to act on the
30 form, content, code or protocol of the
information to be transmitted; (D)
31 any telecommunication service to a provider
of telecommunication serv-
32 ices which will be used to render
telecommunications services, including
33 carrier access services; or (E) any service
or transaction defined in this
34 section among entities classified as
members of an affiliated group as
35 provided by federal law (U.S.C. Section
1504). For the purposes of this
36 subsection the term gross receipts does not
include purchases of tele-
37 phone, telegraph or telecommunications
using a prepaid telephone call-
38 ing card or pre-paid authorization number.
As used in this subsection, a
39 pre-paid telephone calling card or pre-paid
authorization number means
40 the right to exclusively make telephone
calls, paid for in advance, with
41 the prepaid value measured in minutes or
other time units, that enables
42 the origination of calls using an access
number or authorization code or
43 both, whether manually or electronically
dialed;
6
1 (c) the
gross receipts from the sale or furnishing of gas, water, elec-
2 tricity and heat, which sale is not
otherwise exempt from taxation under
3 the provisions of this act, and
whether furnished by municipally or pri-
4 vately owned utilities;
5 (d) the
gross receipts from the sale of meals or drinks furnished at
6 any private club, drinking
establishment, catered event, restaurant, eating
7 house, dining car, hotel, drugstore
or other place where meals or drinks
8 are regularly sold to the public;
9 (e) the
gross receipts from the sale of admissions to any place pro-
10 viding amusement, entertainment or
recreation services including admis-
11 sions to state, county, district and local
fairs, but such tax shall not be
12 levied and collected upon the gross
receipts received from sales of ad-
13 missions to any cultural and historical
event which occurs triennially;
14 (f) the gross
receipts from the operation of any coin-operated device
15 dispensing or providing tangible personal
property, amusement or other
16 services except laundry services, whether
automatic or manually operated;
17 (g) the gross
receipts from the service of renting of rooms by hotels,
18 as defined by K.S.A. 36-501 and amendments
thereto, or by accommo-
19 dation brokers, as defined by K.S.A.
12-1692, and amendments thereto;
20 (h) the gross
receipts from the service of renting or leasing of tangible
21 personal property except such tax shall not
apply to the renting or leasing
22 of machinery, equipment or other personal
property owned by a city and
23 purchased from the proceeds of industrial
revenue bonds issued prior to
24 July 1, 1973, in accordance with the
provisions of K.S.A. 12-1740 through
25 12-1749, and amendments thereto, and any
city or lessee renting or leas-
26 ing such machinery, equipment or other
personal property purchased
27 with the proceeds of such bonds who shall
have paid a tax under the
28 provisions of this section upon sales made
prior to July 1, 1973, shall be
29 entitled to a refund from the sales tax
refund fund of all taxes paid
30 thereon;
31 (i) the gross
receipts from the rendering of dry cleaning, pressing,
32 dyeing and laundry services except laundry
services rendered through a
33 coin-operated device whether automatic or
manually operated;
34 (j) the gross
receipts from the rendering of the services of washing
35 and washing and waxing of vehicles;
36 (k) the gross
receipts from cable, community antennae and other sub-
37 scriber radio and television services;
38 (l)
(1) except as otherwise provided by paragraph (2), the
gross re-
39 ceipts received from the sales of tangible
personal property to all con-
40 tractors, subcontractors or repairmen
of materials and supplies for use by
41 them in erecting structures for
others, or building on, or otherwise im-
42 proving, altering, or repairing real or
personal property of others;.
43 (2) Any such
contractor, subcontractor or repairman who maintains
7
1 an inventory of such property both
for sale at retail and for use by them
2 for the purposes described by
paragraph (1) shall be deemed a retailer
3 with respect to purchases for and
sales from such inventory, except that
4 the gross receipts received from
any such sale, other than a sale at retail,
5 shall be equal to the total
purchase price paid for such property and the
6 tax imposed thereon shall be paid
by the deemed retailer;
7 (m) the
gross receipts received from fees and charges by public and
8 private clubs, drinking
establishments, organizations and businesses for
9 participation in sports, games and
other recreational activities, but such
10 tax shall not be levied and collected upon
the gross receipts received from:
11 (1) Fees and charges by any political
subdivision, by any organization
12 exempt from property taxation pursuant to
paragraph Ninth of K.S.A. 79-
13 201, and amendments thereto, or by any
youth recreation organization
14 exclusively providing services to persons
18 years of age or younger which
15 is exempt from federal income taxation
pursuant to section 501(c)(3) of
16 the federal internal revenue code of 1986,
for participation in sports,
17 games and other recreational activities;
and (2) entry fees and charges for
18 participation in a special event or
tournament sanctioned by a national
19 sporting association to which spectators
are charged an admission which
20 is taxable pursuant to subsection (e);
21 (n) the gross
receipts received from dues charged by public and pri-
22 vate clubs, drinking establishments,
organizations and businesses, pay-
23 ment of which entitles a member to the use
of facilities for recreation or
24 entertainment, but such tax shall not be
levied and collected upon the
25 gross receipts received from: (1) Dues
charged by any organization ex-
26 empt from property taxation pursuant to
paragraphs Eighth and Ninth of
27 K.S.A. 79-201, and amendments thereto; and
(2) sales of memberships
28 in a nonprofit organization which is exempt
from federal income taxation
29 pursuant to section 501 (c)(3) of the
federal internal revenue code of
30 1986, and whose purpose is to support the
operation of a nonprofit zoo;
31 (o) the gross
receipts received from the isolated or occasional sale of
32 motor vehicles or trailers but not
including: (1) The transfer of motor
33 vehicles or trailers by a person to a
corporation solely in exchange for
34 stock securities in such corporation; or
(2) the transfer of motor vehicles
35 or trailers by one corporation to another
when all of the assets of such
36 corporation are transferred to such other
corporation; or (3) the sale of
37 motor vehicles or trailers which are
subject to taxation pursuant to the
38 provisions of K.S.A. 79-5101 et seq., and
amendments thereto, by an
39 immediate family member to another
immediate family member. For the
40 purposes of clause (3), immediate family
member means lineal ascendants
41 or descendants, and their spouses. In
determining the base for computing
42 the tax on such isolated or occasional
sale, the fair market value of any
43 motor vehicle or trailer traded in by the
purchaser to the seller may be
8
1 deducted from the selling price;
2 (p) the
gross receipts received for the service of installing or
applying
3 tangible personal property which when
installed or applied is not being
4 held for sale in the regular course
of business, and whether or not such
5 tangible personal property when
installed or applied remains tangible
6 personal property or becomes a part
of real estate, except that no tax shall
7 be imposed upon the service of
installing or applying tangible personal
8 property in connection with the
original construction of a building or
9 facility, the original construction,
reconstruction, restoration, remodeling,
10 renovation, repair or replacement of a
residence or the construction, re-
11 construction, restoration, replacement or
repair of a bridge or highway.
12 For the purposes of
this subsection:
13 (1) "Original
construction" shall mean the first or initial construction
14 of a new building or facility. The term
"original construction" shall include
15 the addition of an entire room or floor to
any existing building or facility,
16 the completion of any unfinished portion of
any existing building or fa-
17 cility and the restoration, reconstruction
or replacement of a building or
18 facility damaged or destroyed by fire,
flood, tornado, lightning, explosion
19 or earthquake, but such term, except with
regard to a residence, shall not
20 include replacement, remodeling,
restoration, renovation or reconstruc-
21 tion under any other circumstances;
22 (2) "building"
shall mean only those enclosures within which individ-
23 uals customarily are employed, or which are
customarily used to house
24 machinery, equipment or other property, and
including the land improve-
25 ments immediately surrounding such
building;
26 (3) "facility"
shall mean a mill, plant, refinery, oil or gas well, water
27 well, feedlot or any conveyance,
transmission or distribution line of any
28 cooperative, nonprofit, membership
corporation organized under or sub-
29 ject to the provisions of K.S.A. 17-4601 et
seq., and amendments thereto,
30 or of any municipal or quasi-municipal
corporation, including the land
31 improvements immediately surrounding such
facility; and
32 (4) "residence"
shall mean only those enclosures within which indi-
33 viduals customarily live;
34 (q) the gross
receipts received for the service of repairing, servicing,
35 altering or maintaining tangible personal
property, except computer soft-
36 ware described in subsection (s), which
when such services are rendered
37 is not being held for sale in the regular
course of business, and whether
38 or not any tangible personal property is
transferred in connection there-
39 with. The tax imposed by this subsection
shall be applicable to the services
40 of repairing, servicing, altering or
maintaining an item of tangible personal
41 property which has been and is fastened to,
connected with or built into
42 real property;
43 (r) the gross
receipts from fees or charges made under service or
9
1 maintenance agreement contracts for
services, charges for the providing
2 of which are taxable under the
provisions of subsection (p) or (q);
3 (s) the
gross receipts received from the sale of computer software,
4 and the sale of the services of
modifying, altering, updating or maintaining
5 computer software. As used in this
subsection, "computer software"
6 means information and directions
loaded into a computer which dictate
7 different functions to be performed
by the computer. Computer software
8 includes any canned or prewritten
program which is held or existing for
9 general or repeated sale, even if the
program was originally developed
10 for a single end user as custom computer
software. The sale of computer
11 software or services does not include: (1)
The initial sale of any custom
12 computer program which is originally
developed for the exclusive use of
13 a single end user; or (2) those services
rendered in the modification of
14 computer software when the modification is
developed exclusively for a
15 single end user only to the extent of the
modification and only to the
16 extent that the actual amount charged for
the modification is separately
17 stated on invoices, statements and other
billing documents provided to
18 the end user. The services of modification,
alteration, updating and main-
19 tenance of computer software shall only
include the modification, alter-
20 ation, updating and maintenance of computer
software taxable under this
21 subsection whether or not the services are
actually provided; and
22 (t) the gross
receipts received for telephone answering services, in-
23 cluding mobile phone services, beeper
services and other similar services;
24 and
25 (u) the gross
receipts received from the sale of prepaid telephone
26 calling cards or pre-paid authorization
numbers and the recharge of such
27 cards or numbers. A pre-paid telephone
calling card or pre-paid author-
28 ization number means the right to
exclusively make telephone calls, paid
29 for in advance, with the prepaid value
measured in minutes or other time
30 units, that enables the origination of
calls using an access number or
31 authorization code or both, whether
manually or electronically dialed. If
32 the sale or recharge of such card or number
does not take place at the
33 vendor's place of business, it shall be
conclusively determined to take
34 place at the customer's shipping address;
if there is no item shipped then
35 it shall be the customer's billing
address.
36 Sec. 3. K.S.A. 1999 Supp.
79-3602 and 79-3603 are hereby repealed.
37 Sec. 4. This act shall
take effect and be in force from and after its
38 publication in the statute book.