Session 2000
Effective: July 1, 2000
SENATE BILL No. 59
An  Act relating to excise taxation; amending K.S.A. 1999 Supp. 12-187, 12-188, 12-189,
      12-1694, 12-1698, 12-2536, 75-5133, 79-3602, 79-3603, 79-3606, as amended by section
      1 of 2000 House Bill No. 2011, 79-3633 and 79-3635 and repealing the existing sections;
      also repealing K.S.A. 1999 Supp. 12-189c.

Be it enacted by the Legislature of the State of Kansas:

      Section  1. K.S.A. 1999 Supp. 12-187 is hereby amended to read as
follows: 12-187. (a) (1) No city shall impose a retailers' sales tax under
the provisions of this act without the governing body of such city having
first submitted such proposition to and having received the approval of a
majority of the electors of the city voting thereon at an election called
and held therefor. The governing body of any city may submit the ques-
tion of imposing a retailers' sales tax and the governing body shall be
required to submit the question upon submission of a petition signed by
electors of such city equal in number to not less than 10% of the electors
of such city.

      (2) The governing body of any class B city located in any county which
does not impose a countywide retailers' sales tax pursuant to paragraph
(5) of subsection (b) may submit the question of imposing a retailers' sales
tax at the rate of .25%, .5%, .75% or 1% and pledging the revenue re-
ceived therefrom for the purpose of financing the provision of health care
services, as enumerated in the question, to the electors at an election
called and held thereon. The tax imposed pursuant to this paragraph shall
be deemed to be in addition to the rate limitations prescribed in K.S.A.
12-189, and amendments thereto. As used in this paragraph, health care
services shall include but not be limited to the following: Local health
departments, city, county or district hospitals, city or county nursing
homes, preventive health care services including immunizations, prenatal
care and the postponement of entry into nursing homes by home health
care services, mental health services, indigent health care, physician or
health care worker recruitment, health education, emergency medical
services, rural health clinics, integration of health care services, home
health services and rural health networks.

      (b)  (1) The board of county commissioners of any county may submit
the question of imposing a countywide retailers' sales tax to the electors
at an election called and held thereon, and any such board shall be re-
quired to submit the question upon submission of a petition signed by
electors of such county equal in number to not less than 10% of the
electors of such county who voted at the last preceding general election
for the office of secretary of state, or upon receiving resolutions request-
ing such an election passed by not less than 2/3 of the membership of the
governing body of each of one or more cities within such county which
contains a population of not less than 25% of the entire population of the
county, or upon receiving resolutions requesting such an election passed
by 2/3 of the membership of the governing body of each of one or more
taxing subdivisions within such county which levy not less than 25% of
the property taxes levied by all taxing subdivisions within the county.

      (2) The board of county commissioners of Atchison, Barton, Butler,
Cowley, Cherokee, Crawford, Ford, Jefferson, Lyon, Montgomery, Ne-
osho, Osage, Ottawa, Riley, Saline, Seward, Wabaunsee, Wilson and Wy-
andotte counties may submit the question of imposing a countywide re-
tailers' sales tax and pledging the revenue received therefrom for the
purpose of financing the construction or remodeling of a courthouse, jail,
law enforcement center facility or other county administrative facility, to
the electors at an election called and held thereon. The tax imposed pur-
suant to this paragraph shall expire when sales tax sufficient to pay all of
the costs incurred in the financing of such facility has been collected by
retailers as determined by the secretary of revenue. Nothing in this par-
agraph shall be construed to allow the rate of tax imposed by Butler,
Cowley, Lyon, Montgomery or, Neosho, Riley or Wilson county pursuant
to this paragraph to exceed or be imposed at any rate other than the rates
prescribed in K.S.A. 12-189, and amendments thereto.

      (3)  (A) Except as otherwise provided in this paragraph, the result of
the election held on November 8, 1988, on the question submitted by
the board of county commissioners of Jackson county for the purpose of
increasing its countywide retailers' sales tax by 1% is hereby declared
valid, and the revenue received therefrom by the county shall be ex-
pended solely for the purpose of financing the Banner Creek reservoir
project. The tax imposed pursuant to this paragraph shall take effect on
the effective date of this act and shall expire not later than five years after
such date.

      (B) The result of the election held on November 8, 1994, on the
question submitted by the board of county commissioners of Ottawa
county for the purpose of increasing its countywide retailers' sales tax by
1% is hereby declared valid, and the revenue received therefrom by the
county shall be expended solely for the purpose of financing the erection,
construction and furnishing of a law enforcement center and jail facility.

      (4) The board of county commissioners of Finney and Ford counties
may submit the question of imposing a countywide retailers' sales tax at
the rate of .25% and pledging the revenue received therefrom for the
purpose of financing all or any portion of the cost to be paid by Finney
or Ford county for construction of highway projects identified as system
enhancements under the provisions of paragraph (5) of subsection (b) of
K.S.A. 68-2314, and amendments thereto, to the electors at an election
called and held thereon. Such election shall be called and held in the
manner provided by the general bond law. The tax imposed pursuant to
this paragraph shall expire upon the payment of all costs authorized pur-
suant to this paragraph in the financing of such highway projects. Nothing
in this paragraph shall be construed to allow the rate of tax imposed by
Finney or Ford county pursuant to this paragraph to exceed the maximum
rate prescribed in K.S.A. 12-189, and amendments thereto. If any funds
remain upon the payment of all costs authorized pursuant to this para-
graph in the financing of such highway projects in Finney county, the
state treasurer shall remit such funds to the treasurer of Finney county
and upon receipt of such moneys shall be deposited to the credit of the
county road and bridge fund. If any funds remain upon the payment of
all costs authorized pursuant to this paragraph in the financing of such
highway projects in Ford county, the state treasurer shall remit such funds
to the treasurer of Ford county and upon receipt of such moneys shall
be deposited to the credit of the county road and bridge fund.

      (5) The board of county commissioners of any county may submit the
question of imposing a retailers' sales tax at the rate of .25%, .5%, .75%
or 1% and pledging the revenue received therefrom for the purpose of
financing the provision of health care services, as enumerated in the ques-
tion, to the electors at an election called and held thereon. Whenever any
county imposes a tax pursuant to this paragraph, any tax imposed pursuant
to paragraph (2) of subsection (a) by any city located in such county shall
expire upon the effective date of the imposition of the countywide tax,
and thereafter the state treasurer shall remit to each such city that portion
of the countywide tax revenue collected by retailers within such city as
certified by the director of taxation. The tax imposed pursuant to this
paragraph shall be deemed to be in addition to the rate limitations pre-
scribed in K.S.A. 12-189, and amendments thereto. As used in this par-
agraph, health care services shall include but not be limited to the follow-
ing: Local health departments, city or county hospitals, city or county
nursing homes, preventive health care services including immunizations,
prenatal care and the postponement of entry into nursing homes by home
care services, mental health services, indigent health care, physician or
health care worker recruitment, health education, emergency medical
services, rural health clinics, integration of health care services, home
health services and rural health networks.

      (6) The board of county commissioners of Allen county may submit the
question of imposing a countywide retailers' sales tax at the rate of .5% and
pledging the revenue received therefrom for the purpose of financing the
costs of operation and construction of a solid waste disposal area or the
modification of an existing landfill to comply with federal regulations to the
electors at an election called and held thereon. The tax imposed pursuant
to this paragraph shall expire upon the payment of all costs incurred in the
financing of the project undertaken. Nothing in this paragraph shall be
construed to allow the rate of tax imposed by Allen county pursuant to this
paragraph to exceed or be imposed at any rate other than the rates pre-
scribed in K.S.A. 12-189 and amendments thereto.

      (7) The board of county commissioners of Clay, Dickinson and Mi-
ami county may submit the question of imposing a countywide retailers'
sales tax at the rate of .50% in the case of Clay and Dickinson county and
at a rate of up to 1% in the case of Miami county, and pledging the
revenue received therefrom for the purpose of financing the costs of
roadway construction and improvement to the electors at an election
called and held thereon. The tax imposed pursuant to this paragraph shall
expire after five years from the date such tax is first collected.

      (8) The board of county commissioners of Sherman county may sub-
mit the question of imposing a countywide retailers' sales tax at the rate
of .25%, .5% or .75% and pledging the revenue therefrom for the purpose
of financing the costs of the county roads 64 and 65 construction and
improvement project. The tax imposed pursuant to this paragraph shall
expire upon payment of all costs authorized pursuant to this paragraph
in the financing of such project.

      (9) The board of county commissioners of Cowley and, Russell and
Woodson county may submit the question of imposing a countywide re-
tailers' sales tax at the rate of .5% in the case of Russell and Woodson
county and at a rate of up to .25%, in the case of Cowley county and
pledging the revenue received therefrom for the purpose of financing
economic development initiatives or public infrastructure projects. The
tax imposed pursuant to this paragraph shall expire after five years from
the date such tax is first collected.

      (10) The board of county commissioners of Franklin county may sub-
mit the question of imposing a countywide retailers' sales tax at the rate
of .25% and pledging the revenue received therefrom for the purpose of
financing recreational facilities. The tax imposed pursuant to this para-
graph shall expire upon payment of all costs authorized in financing such
facilities.

      (c) The boards of county commissioners of any two or more contig-
uous counties, upon adoption of a joint resolution by such boards, may
submit the question of imposing a retailers' sales tax within such counties
to the electors of such counties at an election called and held thereon
and such boards of any two or more contiguous counties shall be required
to submit such question upon submission of a petition in each of such
counties, signed by a number of electors of each of such counties where
submitted equal in number to not less than 10% of the electors of each
of such counties who voted at the last preceding general election for the
office of secretary of state, or upon receiving resolutions requesting such
an election passed by not less than 2/3 of the membership of the governing
body of each of one or more cities within each of such counties which
contains a population of not less than 25% of the entire population of
each of such counties, or upon receiving resolutions requesting such an
election passed by 2/3 of the membership of the governing body of each
of one or more taxing subdivisions within each of such counties which
levy not less than 25% of the property taxes levied by all taxing subdivi-
sions within each of such counties.

      (d) Any city retailers' sales tax in the amount of .5% being levied by
a city on July 1, 1990, shall continue in effect until repealed in the manner
provided herein for the adoption and approval of such tax or until re-
pealed by the adoption of an ordinance so providing. In addition to any
city retailers' sales tax being levied by a city on July 1, 1990, any such city
may adopt an additional city retailers' sales tax in the amount of .25% or
.5%, provided that such additional tax is adopted and approved in the
manner provided for the adoption and approval of a city retailers' sales
tax. Any countywide retailers' sales tax in the amount of .5% or 1% in
effect on July 1, 1990, shall continue in effect until repealed in the manner
provided herein for the adoption and approval of such tax.

      (e) A class D city shall have the same power to levy and collect a city
retailers' sales tax that a class A city is authorized to levy and collect and
in addition, the governing body of any class D city may submit the ques-
tion of imposing an additional city retailers' sales tax in the amount of
.125%, .25%, .5% or .75% and pledging the revenue received therefrom
for economic development initiatives, strategic planning initiatives or for
public infrastructure projects including buildings to the electors at an
election called and held thereon. Any additional sales tax imposed pur-
suant to this paragraph shall expire no later than five years from the date
of imposition thereof, except that any such tax imposed by any class D
city after the effective date of this act shall expire no later than 10 years
from the date of imposition thereof.

      (f) Any city or county proposing to adopt a retailers' sales tax shall
give notice of its intention to submit such proposition for approval by the
electors in the manner required by K.S.A. 10-120, and amendments
thereto. The notices shall state the time of the election and the rate and
effective date of the proposed tax. If a majority of the electors voting
thereon at such election fail to approve the proposition, such proposition
may be resubmitted under the conditions and in the manner provided in
this act for submission of the proposition. If a majority of the electors
voting thereon at such election shall approve the levying of such tax, the
governing body of any such city or county shall provide by ordinance or
resolution, as the case may be, for the levy of the tax. Any repeal of such
tax or any reduction or increase in the rate thereof, within the limits
prescribed by K.S.A. 12-189, and amendments thereto, shall be accom-
plished in the manner provided herein for the adoption and approval of
such tax except that the repeal of any such city retailers' sales tax may be
accomplished by the adoption of an ordinance so providing.

      (g) The sufficiency of the number of signers of any petition filed
under this section shall be determined by the county election officer.
Every election held under this act shall be conducted by the county elec-
tion officer.

      (h) The governing body of the city or county proposing to levy any
retailers' sales tax shall specify the purpose or purposes for which the
revenue would be used, and a statement generally describing such pur-
pose or purposes shall be included as a part of the ballot proposition.

      Sec.  2. K.S.A. 1999 Supp. 12-188 is hereby amended to read as fol-
lows: 12-188. The following classes of cities are hereby established for
the purpose of imposing limitations and prohibitions upon the levying of
sales and excise taxes or taxes in the nature of an excise upon sales or
transfers of personal or real property or the use thereof, or the rendering
or furnishing of services by cities as authorized and provided by article
12, section 5, of the constitution of the state of Kansas:

      Class A cities. All cities in the state of Kansas which have the authority
to levy and collect excise taxes or taxes in the nature of an excise upon
the sales or transfers of personal or real property or the use thereof, or
the rendering or furnishing of services by cities.

      Class B cities. All cities in the state of Kansas which have the authority
to levy and collect excise taxes or taxes in the nature of an excise upon
the sales or transfers of personal or real property or the use thereof, or
the rendering or furnishing of services for the purpose of financing the
provision of health care services.

      Class C cities. All cities in the state of Kansas having a population of
more than 290,000 located in a county having a population of more than
350,000 which has the authority to levy and collect excise taxes or taxes
in the nature of an excise upon the sales or transfers of personal or real
property or the use thereof, or the rendering or furnishing of services.

      Class D cities. All cities in the state of Kansas located in Cowley, Ellis,
Ellsworth, Finney, Harper, Johnson, Labette, Lyon, Montgomery, Osage
or, Reno or Woodson county or in both Riley and Pottawatomie counties
which have the authority to levy and collect excise taxes or taxes in the
nature of an excise upon the sales or transfers of personal or real property
or the use thereof, or the rendering or furnishing of services.

      Sec.  3. K.S.A. 1999 Supp. 12-189 is hereby amended to read as fol-
lows: 12-189. Except as otherwise provided by paragraph (2) of subsection
(a) of K.S.A. 12-187, and amendments thereto, the rate of any class A,
class B or class C city retailers' sales tax shall be fixed in the amount of
.25%, .5%, .75% or 1% which amount shall be determined by the gov-
erning body of the city. Except as otherwise provided by paragraph (2)
of subsection (a) of K.S.A. 12-187, and amendments thereto, the rate of
any class D city retailers' sales tax shall be fixed in the amount of .25%,
.5%, .75%, 1%, 1.125%, 1.25%, 1.5% or 1.75%. The rate of any county-
wide retailers' sales tax shall be fixed in an amount of either .25%, .5%,
.75% or 1% which amount shall be determined by the board of county
commissioners, except that:

      (a) The board of county commissioners of Wabaunsee county, for the
purposes of paragraph (2) of subsection (b) of K.S.A. 12-187, and amend-
ments thereto, may fix such rate at 1.25%; the board of county commis-
sioners of Osage county, for the purposes of paragraph (2) of subsection
(b) of K.S.A. 12-187, and amendments thereto, may fix such rate at 1.25%
or 1.5%; the board of county commissioners of Cherokee, Crawford,
Ford, Saline, Seward or Wyandotte county, for the purposes of paragraph
(2) of subsection (b) of K.S.A. 12-187, and amendments thereto, may fix
such rate at 1.5%, the board of county commissioners of Atchison county,
for the purposes of paragraph (2) of subsection (b) of K.S.A. 12-187, and
amendments thereto, may fix such rate at 1.5% or 1.75% and the board
of county commissioners of Barton, Jefferson or Ottawa county, for the
purposes of paragraph (2) of subsection (b) of K.S.A. 12-187, and amend-
ments thereto, may fix such rate at 2%;

      (b) the board of county commissioners of Jackson county, for the
purposes of paragraph (3) of subsection (b) of K.S.A. 12-187, and amend-
ments thereto, may fix such rate at 2%;

      (c) the boards of county commissioners of Finney and Ford counties,
for the purposes of paragraph (4) of subsection (b) of K.S.A. 12-187, and
amendments thereto, may fix such rate at .25%;

      (d) the board of county commissioners of any county for the purposes
of paragraph (5) of subsection (b) of K.S.A. 12-187, and amendments
thereto, may fix such rate at a percentage which is equal to the sum of
the rate allowed to be imposed by a board of county commissioners on
the effective date of this act plus .25%, .5%, .75% or 1%, as the case
requires;

      (e) the board of county commissioners of Dickinson county, for the
purposes of paragraph (7) of subsection (b) of K.S.A. 12-187, and amend-
ments thereto, may fix such rate at 1.5%, and the board of county com-
missioners of Miami county, for the purposes of paragraph (7) of subsec-
tion (b) of K.S.A. 12-187, and amendments thereto, may fix such rate at
1.25%, 1.5%, 1.75% or 2%;

      (f) the board of county commissioners of Sherman county, for the
purposes of paragraph (8) of subsection (b) of K.S.A. 12-187, and amend-
ments thereto, may fix such rate at 1.5%, 1.75% or 2%; or

      (g) the board of county commissioners of Russell county for the pur-
poses of paragraph (9) of subsection (b) of K.S.A. 12-187, and amend-
ments thereto, may fix such rate at 1.5%; or

      (h) the board of county commissioners of Franklin county, for the
purposes of paragraph (10) of subsection (b) of K.S.A. 12-187, and amend-
ments thereto, may fix such rate at 1.75%.

      Any county or city levying a retailers' sales tax is hereby prohibited
from administering or collecting such tax locally, but shall utilize the serv-
ices of the state department of revenue to administer, enforce and collect
such tax. Except as otherwise specifically provided in K.S.A. 12-189a, and
amendments thereto, such tax shall be identical in its application, and
exemptions therefrom, to the Kansas retailers' sales tax act and all laws
and administrative rules and regulations of the state department of rev-
enue relating to the Kansas retailers' sales tax shall apply to such local
sales tax insofar as such laws and rules and regulations may be made
applicable. The state director of taxation is hereby authorized to admin-
ister, enforce and collect such local sales taxes and to adopt such rules
and regulations as may be necessary for the efficient and effective ad-
ministration and enforcement thereof.

      Upon receipt of a certified copy of an ordinance or resolution author-
izing the levy of a local retailers' sales tax, the state director of taxation
shall cause such taxes to be collected within or without the boundaries of
such taxing subdivision at the same time and in the same manner provided
for the collection of the state retailers' sales tax. All moneys collected by
the director of taxation under the provisions of this section shall be cred-
ited to a county and city retailers' sales tax fund which fund is hereby
established in the state treasury. Any refund due on any county or city
retailers' sales tax collected pursuant to this act shall be paid out of the
sales tax refund fund and reimbursed by the director of taxation from
collections of local retailers' sales tax revenue. Except for local retailers'
sales tax revenue required to be deposited in the redevelopment bond fund
established under K.S.A. 1999 Supp. 74-8927, and amendments thereto,
all local retailers' sales tax revenue collected within any county or city
pursuant to this act shall be apportioned and remitted at least quarterly
by the state treasurer, on instruction from the director of taxation, to the
treasurer of such county or city.

      The director of taxation shall provide, upon request by a city or county
clerk or treasurer of any city or county levying a local retailers' sales tax,
a monthly report monthly reports identifying each retailer having a place
of business in such city or county and setting forth the tax liability and
the amount of such tax remitted by each retailer during the preceding
month and identifying each business location maintained by the retailer
within such city or county. Such report shall be made available to the
clerk or treasurer of such city or county within a reasonable time after it
has been requested from the director of taxation. The director of taxation
shall be allowed to assess a reasonable fee for the issuance of such report.
Information received by any city or county pursuant to this section shall
be confidential, and it shall be unlawful for any officer or employee of
such city or county to divulge any such information in employee is a class
B misdemeanor, and such officer or employee shall be dismissed from
office.

      Sec.  4. K.S.A. 1999 Supp. 12-1694 is hereby amended to read as
follows: 12-1694. (a) Any tax levied and collected pursuant to K.S.A. 12-
1693, and amendments thereto, shall become due and payable by the
business monthly, on or before the 25th day of the month immediately
succeeding the month in which it is collected, with the first payment due
and payable on or before the 25th day of the month specified in the
resolution of the governing body which levies the tax, but any person
filing an annual or quarterly return under the Kansas retailers' sales tax
act, as prescribed in K.S.A. 79-3607, and amendments thereto, may, with
the approval of the secretary of revenue and upon such conditions as the
secretary of revenue may prescribe, pay the tax required by this act on
the same basis and at the same time such person pays the retailer's sales
tax. Each business shall make a true report to the department of revenue,
on a form prescribed by the secretary of revenue, providing such infor-
mation as may be necessary to determine the amounts to which any such
tax shall apply for all gross rental receipts for the applicable month or
months, which report shall be accompanied by the tax disclosed thereby.
Records of gross rental receipts shall be kept separate and apart from the
records of other retail sales made by a business in order to facilitate the
examination of books and records as provided herein.

      (b) The secretary of revenue or the secretary's authorized represen-
tative shall have the right at all reasonable times during business hours
to make such examination and inspection of the books and records of a
business as may be necessary to determine the accuracy of such reports.

      (c) The secretary of revenue is hereby authorized to administer and
collect any transient guest tax levied pursuant to this act and to adopt
such rules and regulations as may be necessary for the efficient and ef-
fective administration and enforcement of the collection thereof. When-
ever any business liable to pay any transient guest tax refuses or neglects
to pay the same, the amount, including any penalty, shall be collected in
the manner prescribed for the collection of the retailers' sales tax by
K.S.A. 79-3617, and amendments thereto. All of the taxes collected under
the provisions of this act shall be paid into the state treasury daily by the
secretary of revenue, and the state treasurer shall place 2% of all taxes so
collected in the state general fund to defray the expenses of the depart-
ment in administration and enforcement of the collection thereof. The
remainder of such taxes shall be credited to the county and city transient
guest tax fund, which fund is hereby established. All moneys in the county
and city transient guest tax fund shall be remitted at least quarterly by
the state treasurer, on instruction from the secretary of revenue, to the
treasurers of those cities which, by virtue of their participation in the
election provided for in K.S.A. 12-1693, and amendments thereto, are
qualified to receive disbursements from such transient guest tax fund for
the amount collected within such city, and to the treasurer of such county
for the amount collected in the unincorporated areas of such county.

      (d) The director of taxation shall provide, upon request by a city or
county clerk or treasurer of any city or county levying a transient guest
tax, a monthly report monthly reports identifying each person doing busi-
ness in such city or county to which such tax is applicable and setting
forth the tax liability and the amount of such tax remitted by such busi-
ness during the preceding month, and identifying each business location
maintained by the person within such city or county. Such report shall
be made available to the clerk or treasurer of such city or county within
a reasonable time after it has been requested from the director of taxation.
The director of taxation shall be allowed to assess a reasonable fee for the
issuance of such report. Information received by any city or county pur-
suant to this section shall be kept confidential, and it shall be unlawful
for any officer or employee of such city or county to divulge any such
information in any manner. Any violation of this paragraph by a city or
county officer or employee is a class B misdemeanor, and such officer or
employee shall be dismissed from office.

      (e) All such moneys received by the county treasurer or city treasurer
from disbursements from the county and city transient guest tax fund
shall be credited to the tourism and convention promotion fund of such
county or city and shall only be expended for convention and tourism
promotion, except that not more than 20% of the moneys credited to
such fund shall be expended for tourism promotion.

      Sec.  5. K.S.A. 1999 Supp. 12-1698 is hereby amended to read as
follows: 12-1698. (a) Any tax levied and collected pursuant to K.S.A. 12-
1697, and amendments thereto, shall become due and payable by the
business monthly, on or before the 25th day of the month immediately
succeeding the month in which it is collected, with the first payment due
and payable on or before the 25th day of the month specified in the
resolution of the governing body which levies the tax, but any person
filing an annual or quarterly return under the Kansas retailers' sales tax
act, as prescribed in K.S.A. 79-3607, and amendments thereto, shall, upon
such conditions as the secretary of revenue may prescribe, pay the tax
required by this act on the same basis and at the same time such person
pays the retailers' sales tax. Each business shall make a true report to the
department of revenue, on a form prescribed by the secretary of revenue,
providing such information as may be necessary to determine the amounts
to which any such tax shall apply for all gross rental receipts for the
applicable month or months, which report shall be accompanied by the
tax disclosed thereby. Records of gross rental receipts shall be kept sep-
arate and apart from the records of other retail sales made by a business
in order to facilitate the examination of books and records as provided
herein.

      (b) The secretary of revenue or the secretary's authorized represen-
tative shall have the right at all reasonable times during business hours
to make such examination and inspection of the books and records of a
business as may be necessary to determine the accuracy of such reports.

      (c) The secretary of revenue is hereby authorized to administer and
collect any transient guest tax levied pursuant to this act and to adopt
such rules and regulations as may be necessary for the efficient and ef-
fective administration and enforcement of the collection thereof. When-
ever any business liable to pay any transient guest tax refuses or neglects
to pay the same, the amount, including any penalty, shall be collected in
the manner prescribed for the collection of the retailers' sales tax by
K.S.A. 79-3617, and amendments thereto. All of the taxes collected under
the provisions of this act shall be paid into the state treasury daily by the
secretary of revenue, and the state treasurer shall place 2% of all taxes so
collected in the state general fund to defray the expenses of the depart-
ment in administration and enforcement of the collection thereof. The
remainder of such taxes shall be credited to the county or city transient
guest tax fund, which fund is hereby established. All moneys in the county
or city transient guest tax fund shall be remitted at least quarterly by the
state treasurer to the county or city treasurer of each county or city levying
a transient guest tax under the provisions of this act in the proportion, as
certified by the director of taxation, that the amount collected from such
tax in each such county or city bears to the total amount collected from
such taxes in all counties or cities for the period covered by the distri-
bution.

      (d) The director of taxation shall provide, upon request by a city or
county clerk or treasurer of any city or county levying a transient guest
tax, a monthly report monthly reports identifying each person doing busi-
ness in such city or county to which such tax is applicable and setting
forth the tax liability and the amount of such tax remitted by such busi-
ness during the preceding month, and identifying each business location
maintained by the person within such city or county. Such report shall
be made available to the clerk or treasurer of such city or county within
a reasonable time after it has been requested from the director of taxation.
The director of taxation shall be allowed to assess a reasonable fee for the
issuance of such report. Information received by any city or county pur-
suant to this section shall be kept confidential, and it shall be unlawful
for any officer or employee of such city or county to divulge any such
information in any manner. Any violation of this paragraph by a city or
county officer or employee is a class B misdemeanor, and such officer or
employee shall be dismissed from office.

      (e) Except as otherwise provided in K.S.A. 12-1774, and amendments
thereto, all such moneys received by the county or city treasurer from
disbursements from the county or city transient guest tax fund shall be
credited to the tourism and convention promotion fund of such county
or city and shall only be expended for convention and tourism promotion.

      Sec.  6. K.S.A. 1999 Supp. 12-2536 is hereby amended to read as
follows: 12-2536. The Kansas and Missouri metropolitan culture district
compact is hereby enacted into law and entered into by the state of Kansas
with the state of Missouri legally joining therein, in the form substantially
as follows:

Kansas and Missouri Metropolitan Culture District Compact Article I.--Agreement and Pledge       The states of Kansas and Missouri agree to and pledge, each to the
other, faithful cooperation in the future planning and development of the
metropolitan culture district, holding in high trust for the benefit of its
people and of the nation, the special blessings and natural advantages
thereof.

Article II.--Policy and Purpose       The party states, desiring by common action to fully utilize and improve
their cultural facilities, coordinate the services of their cultural organi-
zations, enhance the cultural activities of their citizens, and achieve solid
financial support for such cultural facilities, organizations and activities,
declare that it is the policy of each state to realize such desires on a basis
of cooperation with one another, thereby serving the best interests of
their citizenry and effecting economies in capital expenditures and op-
erational costs. The purpose of this compact is to provide for the creation
of a metropolitan culture district as the means to implementation of the
policy herein declared with the most beneficial and economical use of
human and material resources.

Article III.--Definitions       As used in this compact, unless the context clearly requires otherwise:

      (a) "Metropolitan culture district" means a political subdivision of the
states of Kansas and Missouri which is created under and pursuant to the
provisions of this compact and which is composed of the counties in the
states of Kansas and Missouri which act to create or to become a part of
the district in accordance with the provisions of Article IV.

      (b) "Commission" means the governing body of the metropolitan cul-
ture district.

      (c) "Cultural activities" means sports or activities which contribute to
or enhance the aesthetic, artistic, historical, intellectual or social devel-
opment or appreciation of members of the general public.

      (d) "Cultural organizations" means nonprofit and tax exempt social,
civic or community organizations and associations which are dedicated to
the development, provision, operation, supervision, promotion or support
of cultural activities in which members of the general public may engage
or participate.

      (e) "Cultural facilities" means facilities operated or used for sports
or participation or engagement in cultural activities by members of the
general public.

Article IV.--The District       (a) The counties in Kansas and Missouri eligible to create and initially
compose the metropolitan culture district shall be those counties which
meet one or more of the following criteria: (1) The county has a popu-
lation in excess of 300,000, and is adjacent to the state line; (2) the county
contains a part of a city with a population according to the most recent
federal census of at least 400,000; or (3) the county is contiguous to any
county described in provisions (1) or (2) of this subpart (a). The counties
of Johnson in Kansas and Jackson in Missouri shall be sine qua non to
the creation and initial composition of the district. Additional counties in
Kansas and Missouri shall be eligible to become a part of the metropolitan
culture district if such counties are contiguous to any one or more of the
counties which compose the district and within 60 miles of the counties
required by this article to establish the district.

      (b)  (1) Whenever the governing body of any county which is eligible
to create or become a part of the metropolitan culture district shall de-
termine that creation of or participation in the district is in the best in-
terests of the citizens of the county and that the levy of a tax to provide
on a cooperative basis with another county or other counties for financial
support of the district would be economically practical and cost beneficial
to the citizens of the county, the governing body may adopt by majority
vote a resolution authorizing the same.

      (2) Whenever a petition, signed by not less than the number of qual-
ified electors of an eligible county equal to 5% of the number of ballots
cast and counted at the last preceding gubernatorial election held in the
county and requesting adoption of a resolution authorizing creation of or
participation in the metropolitan culture district and the levy of a tax for
the purpose of contributing to the financial support of the district, is filed
with the governing body of the county, the governing body shall adopt
such a resolution.

      (3) Implementation of a resolution adopted under this subpart (b)
shall be conditioned upon approval of the resolution by a majority of the
qualified electors of the county voting at an election conducted for such
purpose.

      (c)  (1) Upon adoption of a resolution pursuant to subpart (b)(1) or
subpart (b)(2), the governing body of the county shall request, within 36
months after adoption of the resolution, the county election officer to
submit to the qualified electors of the county the question of whether
the governing body shall be authorized to implement the resolution. The
resolution shall be printed on the ballot and in the notice of election. The
question shall be submitted to the electors of the county at the primary
or general election next following the date of the request filed with the
county election officer. If a majority of the qualified electors are opposed
to implementation of the resolution authorizing creation of or participa-
tion in the district and the levy of a tax for financial support thereof, the
same shall not be implemented. The governing body of the county may
renew procedures for authorization to create or become a part of the
district and to levy a tax for financial support thereof at any time following
rejection of the question.

      (2) The ballot for the proposition in any county shall be substantially
the following form:
  "Shall a retail sales tax of __________________________________                   [ ]Yes
                                            (insert amount, not to exceed 1/4 cent)                         [ ] No
be levied and collected in Kansas and Missouri metropolitan cultural dis-
trict consisting of the county(ies) of __________________________for
                                                            (insert name of counties)
the support of cultural facilities and organizations within the district?"
      The governing body of the county may place additional language on
the ballot to describe the use or allocation of the funds.

      (d)  (1) The metropolitan culture district shall be created when im-
plementation of a resolution authorizing the creation of the district and
the levy of a tax for contribution to the financial support thereof is ap-
proved by respective majorities of the qualified electors of at least Johnson
county, Kansas, and Jackson county, Missouri.

      (2) When implementation of a resolution authorizing participation in
the metropolitan culture district and the levy of a tax for contribution to
the financial support thereof is approved by a majority of the qualified
electors of any county eligible to become a part of the district, the gov-
erning body of the county shall proceed with the performance of all things
necessary and incidental to participation in the district.

      (3) Any question for the levy of a tax submitted after July 1, 2000,
may be submitted to the electors of the county at the primary or general
election next following the date of the request filed with the county election
officer; at a special election called and held as otherwise provided by law;
at an election called and held on the first Tuesday after the first Monday
in February, except in presidential election years; at an election called and
held on the first Tuesday after the first Monday in March, June, August
or November; or at an election called and held on the first Tuesday in
April, except that no question for a tax levy may be submitted to the
electors prior to January 1, 2002.

      (4) No question shall be submitted to the electors authorizing the levy
of a tax the proceeds of which will be exclusively dedicated to sports or
sports facilities.

      (e) Any of the counties composing the metropolitan culture district
may withdraw from the district by adoption of a resolution and approval
of the resolution by a majority of the qualified electors of the county, all
in the same manner provided in this Article IV for creating or becoming
a part of the metropolitan culture district. The governing body of a with-
drawing county shall provide for the sending of formal written notice of
withdrawal from the district to the governing body of the other county
or each of the other counties comprising the district. Actual withdrawal
shall not take effect until 90 days after notice has been sent. A withdraw-
ing county shall not be relieved from any obligation which such county
may have assumed or incurred by reason of being a part of the district,
including, but not limited to, the retirement of any outstanding bonded
indebtedness of the district.

Article V.--The Commission       (a) The metropolitan culture district shall be governed by the met-
ropolitan culture commission which shall be a body corporate and politic
and which shall be composed of resident electors of the states of Kansas
and Missouri, respectively, as follows: (1) A member of the governing
body of each county which is a part of the district, who shall be appointed
by majority vote of such governing body; (2) a member of the governing
body of each city, with a population according to the most recent federal
census of at least 50,000, located in whole or in part within each county
which is a part of the district, who shall be appointed by majority vote of
such governing body; and (3) two members of the governing body of a
county with a consolidated or unified county government and city of the
first class which is a part of the district, who shall be appointed by ma-
jority vote of such governing body; (3) (4) a member of the arts commis-
sion of Kansas or the Kansas commission for the humanities, who shall
be appointed by the governor of Kansas; and (5) a member of the arts
commission of Missouri or the Missouri humanities council, who shall be
appointed by the governor of Missouri. To the extent possible, the gu-
bernatorial appointees to the commission shall be residents of the district.
The term of each commissioner initially appointed by a county governing
body shall expire concurrently with such commissioner's tenure as a
county officer or three years after the date of appointment as a commis-
sioner, whichever occurs sooner. The term of each commissioner suc-
ceeding a commissioner initially appointed by a county governing body
shall expire concurrently with such successor commissioner's tenure as a
county officer or four years after the date of appointment as a commis-
sioner, whichever occurs sooner. The term of each commissioner initially
appointed by a city governing body shall expire concurrently with such
commissioner's tenure as a city officer or two years after the date of
appointment as a commissioner, whichever occurs sooner. The term of
each commissioner succeeding a commissioner initially appointed by a
city governing body shall expire concurrently with such successor com-
missioner's tenure as a city officer or four years after the date of appoint-
ment as a commissioner, whichever occurs sooner. The term of each
commissioner appointed by the governor of Kansas or the governor of
Missouri shall expire concurrently with the term of the appointing gov-
ernor, the commissioner's tenure as a state officer, or four years after the
date of appointment as a commissioner of the district, whichever occurs
sooner. Any vacancy occurring in a commissioner position for reasons
other than expiration of terms of office shall be filled for the unexpired
term by appointment in the same manner that the original appointment
was made. Any commissioner may be removed for cause by the appoint-
ing authority of the commissioner.

      (b) The commission shall select annually, from its membership, a
chairperson, a vice-chairperson, and a treasurer. The treasurer shall be
bonded in such amounts as the commission may require.

      (c) The commission may appoint such officers, agents and employees
as it may require for the performance of its duties, and shall determine
the qualifications and duties and fix the compensation of such officers,
agents and employees.

      (d) The commission shall fix the time and place at which its meetings
shall be held. Meetings shall be held within the district and shall be open
to the public. Public notice shall be given of all meetings.

      (e) A majority of the commissioners from each state shall constitute,
in the aggregate, a quorum for the transaction of business. No action of
the commission shall be binding unless taken at a meeting at which at
least a quorum is present, and unless a majority of the commissioners
from each state, present at such meeting, shall vote in favor thereof. No
action of the commission taken at a meeting thereof shall be binding
unless the subject of such action is included in a written agenda for such
meeting, the agenda and notice of meeting having been mailed to each
commissioner by postage paid first-class mail at least 14 calendar days
prior to the meeting.

      (f) The commissioners from each state shall be subject to the provi-
sions of the laws of the states of Kansas and Missouri, respectively, which
relate to conflicts of interest of public officers and employees. If any
commissioner has a direct or indirect financial interest in any cultural
facility, organization or activity supported by the district or commission
or in any other business transaction of the district or commission, the
commissioner shall disclose such interest in writing to the other commis-
sioners and shall abstain from voting on any matter relating to such fa-
cility, organization or activity or to such business transaction.

      (g) If any action at law or equity, or other legal proceeding, shall be
brought against any commissioner for any act or omission arising out of
the performance of duties as a commissioner, the commissioner shall be
indemnified in whole and held harmless by the commission for any judg-
ment or decree entered against the commissioner and, further, shall be
defended at the cost and expense of the commission in any such pro-
ceeding.

Article VI.--Powers and Duties of the Commission       (a) The commission shall adopt a seal and suitable bylaws governing
its management and procedure.

      (b) The commission has the power to contract and to be contracted
with, and to sue and to be sued.

      (c) The commission may receive for any of its purposes and functions
any contributions or moneys appropriated by counties or cities and may
solicit and receive any and all donations, and grants of money, equipment,
supplies, materials and services from any state or the United States or
any agency thereof, or from any institution, foundation, organization, per-
son, firm or corporation, and may utilize and dispose of the same.

      (d) Upon receipt of recommendations from the advisory committee
provided in subsection (g), the commission may provide donations, con-
tributions and grants or other support, financial or otherwise, for or in
aid of cultural organizations, facilities or activities in counties which are
part of the district. In determining whether to provide any such support
the commission shall consider the following factors:

      (1) Economic impact upon the district;

      (2) cultural benefit to citizens of the district and to the general public;

      (3) contribution to the quality of life and popular image of the district;

      (4) contribution to the geographical balance of cultural facilities and
activities within and outside the district;

      (5) the breadth of popular appeal within and outside the district;

      (6) the needs of the community as identified in an objective cultural
needs assessment study of the metropolitan area; and

      (7) any other factor deemed appropriate by the commission.

      (e) The commission may own and acquire by gift, purchase, lease or
devise cultural facilities within the territory of the district. The commis-
sion may plan, construct, operate and maintain and contract for the op-
eration and maintenance of cultural facilities within the territory of the
district. The commission may sell, lease or otherwise dispose of cultural
facilities within the territory of the district.

      (f) At any time following five years from and after the creation of the
metropolitan cultural district as provided in paragraph (1) of subsection
(d) of article IV, the commission, may borrow moneys for the planning,
construction, equipping, operation, maintenance, repair, extension, ex-
pansion, or improvement of any cultural facility and, in that regard, the
commission at such time may:

      (1) Issue notes, bonds or other instruments in writing of the com-
mission in evidence of the sum or sums to be borrowed. No notes, bonds
or other instruments in writing shall be issued pursuant to this subsection
until the issuance of such notes, bonds or instruments has been submitted
to and approved by a majority of the qualified electors of the district
voting at an election called and held thereon. Such election shall be called
and held in the manner provided by the general bond law;

      (2) issue refunding notes, bonds or other instruments in writing for
the purpose of refunding, extending or unifying the whole or any part of
its outstanding indebtedness from time to time, whether evidenced by
notes, bonds or other instruments in writing. Such refunding notes, bonds
or other instruments in writing shall not exceed in amount the principal
of the outstanding indebtedness to be refunded and the accrued interest
thereon to the date of such refunding;

      (3) provide that all notes, bonds and other instruments in writing
issued hereunder shall or may be payable, both as to principal and inter-
est, from sales tax revenues authorized under this compact and disbursed
to the district by counties comprising the district, admissions and other
revenues collected from the use of any cultural facility or facilities con-
structed hereunder, or from any other resources of the commission, and
further may be secured by a mortgage or deed of trust upon any property
interest of the commission; and

      (4) prescribe the details of all notes, bonds or other instruments in
writing, and of the issuance and sale thereof. The commission shall have
the power to enter into covenants with the holders of such notes, bonds
or other instruments in writing, not inconsistent with the powers granted
herein, without further legislative authority.

      (g) The commission shall appoint an advisory committee composed
of members of the general public consisting of an equal number of per-
sons from both the states of Kansas and Missouri who have demonstrated
interest, expertise, knowledge or experience in cultural organizations or
activities. The advisory committee shall make recommendations annually
to the commission regarding donations, contributions and grants or other
support, financial or otherwise, for or in aid of cultural organizations,
facilities and activities in counties which are part of the district.

      (h) The commission may provide for actual and necessary expenses
of commissioners and advisory committee members incurred in the per-
formance of their official duties.

      (i) The commission shall cause to be prepared annually a report on
the operations and transactions conducted by the commission during the
preceding year. The report shall be submitted to the legislatures and
governors of the compacting states, to the governing bodies of the coun-
ties comprising the district, and to the governing body of each city that
appoints a commissioner. The commission shall publish the annual report
in the official county newspaper of each of the counties comprising the
district.

      (j) The commission has the power to apply to the congress of the
United States for its consent and approval of the compact. In the absence
of the consent of congress and until consent is secured, the compact is
binding upon the states of Kansas and Missouri in all respects permitted
by law for the two states, without the consent of congress, for the purposes
enumerated and in the manner provided in the compact.

      (k) The commission has the power to perform all other necessary and
incidental functions and duties and to exercise all other necessary and
appropriate powers not inconsistent with the constitution or laws of the
United States or of either of the states of Kansas or Missouri to effectuate
the same.

Article VII.--Finance       (a) The moneys necessary to finance the operation of the metropol-
itan culture district and the execution of the powers, duties and respon-
sibilities of the commission shall be appropriated to the commission by
the counties comprising the district. The moneys to be appropriated to
the commission shall be raised by the governing bodies of the respective
counties by the levy of taxes as authorized by the legislatures of the re-
spective party states.

      (b) The commission shall not incur any indebtedness or obligation of
any kind; nor shall the commission pledge the credit of either or any of
the counties comprising the district or either of the states party to this
compact, except as authorized by article VI. The budget of the district
shall be prepared, adopted and published as provided by law for other
political subdivisions of the party states. No budget shall be adopted by
the commission until it has been submitted to and reviewed by the gov-
erning bodies of the counties comprising the district and the governing
body of each city represented on the commission.

      (c) The commission shall keep accurate accounts of all receipts and
disbursements. The receipts and disbursements of the commission shall
be audited yearly by a certified or licensed public accountant and the
report of the audit shall be included in and become part of the annual
report of the commission.

      (d) The accounts of the commission shall be open at any reasonable
time for inspection by duly authorized representatives of the compacting
states, the counties comprising the district, the cities that appoint a com-
missioner, and other persons authorized by the commission.

Article VIII.--Entry into Force       (a) This compact shall enter into force and become effective and
binding upon the states of Kansas and Missouri when it has been enacted
into law by the legislatures of the respective states.

      (b) Amendments to the compact shall become effective upon enact-
ment by the legislatures of the respective states.

Article IX.--Termination       This compact shall continue in force and remain binding upon a party
state until its legislature shall have enacted a statute repealing the same
and providing for the sending of formal written notice of enactment of
such statute to the legislature of the other party state. Upon enactment
of such a statute by the legislature of either party state, the sending of
notice thereof to the other party state, and payment of any obligations
which the metropolitan culture district commission may have incurred
prior to the effective date of such statute, including, but not limited to,
the retirement of any outstanding bonded indebtedness of the district,
the agreement of the party states embodied in the compact shall be
deemed fully executed, the compact shall be null and void and of no
further force or effect, the metropolitan culture district shall be dissolved,
and the metropolitan culture district commission shall be abolished.

Article X.--Construction and Severability       The provisions of this compact shall be liberally construed and shall be
severable. If any phrase, clause, sentence or provision of this compact is
declared to be contrary to the constitution of either of the party states or
of the United States or the applicability thereof to any government,
agency, person or circumstance is held invalid, the validity of the remain-
der of this compact and the applicability thereof to any government,
agency, person or circumstance shall not be affected thereby. If this com-
pact shall be held contrary to the constitution of either of the states party
thereto, the compact shall thereby be nullified and voided and of no
further force or effect.

      Sec.  7. K.S.A. 1999 Supp. 75-5133 is hereby amended to read as
follows: 75-5133. (a) Except as otherwise more specifically provided by
law, all information received by the director of taxation from applications
for licensure or registration made or returns or reports filed under the
provisions of any law imposing any excise tax administered by the director,
or from any investigation conducted under such provisions, shall be con-
fidential, and it shall be unlawful for any officer or employee of the de-
partment of revenue to divulge any such information except in accordance
with other provisions of law respecting the enforcement and collection of
such tax, in accordance with proper judicial order and as provided in
K.S.A. 74-2424, and amendments thereto.

      (b) Nothing in this section shall be construed to prohibit the publi-
cation of statistics, so classified as to prevent identification of particular
reports or returns and the items thereof, or the inspection of returns by
the attorney general. Nothing in this section shall prohibit the post auditor
from access to all such excise tax reports or returns in accordance with
and subject to the provisions of subsection (g) of K.S.A. 46-1106, and
amendments thereto. Nothing in this section shall be construed to pro-
hibit the disclosure of taxpayer information from excise tax returns to
persons or entities contracting with the secretary of revenue where the
secretary has determined disclosure of such information is essential for
completion of the contract and has taken appropriate steps to preserve
confidentiality.

      (c) Notwithstanding the foregoing provisions of this section, the di-
rector of taxation may provide: (1) Such information from returns and
reports filed under article 42 of chapter 79 of the Kansas Statutes An-
notated to county appraisers as is necessary to insure proper valuations
of property. Information from such returns and reports may also be ex-
changed with any other state agency administering and collecting con-
servation or other taxes and fees imposed on or measured by mineral
production; and (2) such information from returns and applications for
registration filed pursuant to K.S.A. 12-187, and amendments thereto, and
K.S.A. 79-3601, and amendments thereto, to a city or county treasurer or
clerk to explain the basis of statistics contained in reports required by
K.S.A. 12-189, and amendments thereto, 12-1694, and amendments
thereto, and 12-1698, and amendments thereto.

      (d) Nothing in this section shall prohibit the disclosure of the follow-
ing oil and gas production statistics received by the department of revenue
in accordance with K.S.A. 79-4216 et seq. and amendments thereto: Vol-
umes of production by well name, well number, operator's name and
identification number assigned by the state corporation commission, lease
name, leasehold property description, county of production or zone of
production, name of purchaser and purchaser's tax identification number
assigned by the department of revenue, name of transporter, field code
number or lease code, tax period, exempt production volumes by well
name or lease, or any combination of this information.

      (d) (e) Any person receiving any information under the provisions of
subsection (b) or, (c) or (d) shall be subject to the confidentiality provi-
sions of subsection (a) and to the penalty provisions of subsection (e) (f).

      (e) (f) Any violation of this section shall be a class B nonperson mis-
demeanor, and if the offender is an officer or employee of this state, such
officer or employee shall be dismissed from office.

      Sec.  8. K.S.A. 1999 Supp. 79-3602 is hereby amended to read as
follows: 79-3602. (a) "Persons" means any individual, firm, copartnership,
joint adventure, association, corporation, estate or trust, receiver or trus-
tee, or any group or combination acting as a unit, and the plural as well
as the singular number; and shall specifically mean any city or other po-
litical subdivision of the state of Kansas engaging in a business or provid-
ing a service specifically taxable under the provisions of this act.

      (b) "Director" means the state director of taxation.

      (c) "Sale" or "sales" means the exchange of tangible personal prop-
erty, as well as the sale thereof for money, and every transaction, condi-
tional or otherwise, for a consideration, constituting a sale, including the
sale or furnishing of electrical energy, gas, water, services or entertain-
ment taxable under the terms of this act and including, except as provided
in the following provision, the sale of the use of tangible personal property
by way of a lease, license to use or the rental thereof regardless of the
method by which the title, possession or right to use the tangible personal
property is transferred. The term "sale" or "sales" shall not mean the sale
of the use of any tangible personal property used as a dwelling by way of
a lease or rental thereof for a term of more than 28 consecutive days.

      (d) "Retailer" means a person regularly engaged in the business of
selling tangible personal property at retail or furnishing electrical energy,
gas, water, services or entertainment, and selling only to the user or con-
sumer and not for resale.

      (e) "Retail sale" or "sale at retail" means all sales made within the
state of tangible personal property or electrical energy, gas, water, services
or entertainment for use or consumption and not for resale.

      (f) "Tangible personal property" means corporeal personal property.
Such term shall include: (1) Any computer software program which is not
a custom computer software program, as described by subsection (s) of
K.S.A. 79-3603, and amendments thereto; and (2) any prepaid telephone
calling card or prepaid authorization number, or recharge of such card
or number, as described by subsection (b) of K.S.A. 79-3603, and amend-
ments thereto.

      (g) "Selling price" means the total cost to the consumer exclusive of
discounts allowed and credited, but including freight and transportation
charges from retailer to consumer.

      (h) "Gross receipts" means the total selling price or the amount re-
ceived as defined in this act, in money, credits, property or other consid-
eration valued in money from sales at retail within this state; and em-
braced within the provisions of this act. The taxpayer, may take credit in
the report of gross receipts for: (1) An amount equal to the selling price
of property returned by the purchaser when the full sale price thereof,
including the tax collected, is refunded in cash or by credit; and (2) an
amount equal to the allowance given for the trade-in of property.

      (i) "Taxpayer" means any person obligated to account to the director
for taxes collected under the terms of this act.

      (j) "Isolated or occasional sale" means the nonrecurring sale of tan-
gible personal property, or services taxable hereunder by a person not
engaged at the time of such sale in the business of selling such property
or services. Any religious organization which makes a nonrecurring sale
of tangible personal property acquired for the purpose of resale shall be
deemed to be not engaged at the time of such sale in the business of
selling such property. Such term shall include: (1) Any sale by a bank,
savings and loan institution, credit union or any finance company licensed
under the provisions of the Kansas uniform consumer credit code of tan-
gible personal property which has been repossessed by any such entity;
and (2) any sale of tangible personal property made by an auctioneer or
agent on behalf of not more than two principals or households if such
sale is nonrecurring and any such principal or household is not engaged
at the time of such sale in the business of selling tangible personal prop-
erty.

      (k) "Service" means those services described in and taxed under the
provisions of K.S.A. 79-3603 and amendments thereto.

      (l) "Ingredient or component part" means tangible personal property
which is necessary or essential to, and which is actually used in and be-
comes an integral and material part of tangible personal property or serv-
ices produced, manufactured or compounded for sale by the producer,
manufacturer or compounder in its regular course of business. The fol-
lowing items of tangible personal property are hereby declared to be
ingredients or component parts, but the listing of such property shall not
be deemed to be exclusive nor shall such listing be construed to be a
restriction upon, or an indication of, the type or types of property to be
included within the definition of "ingredient or component part" as
herein set forth:

      (1) Containers, labels and shipping cases used in the distribution of
property produced, manufactured or compounded for sale which are not
to be returned to the producer, manufacturer or compounder for reuse.

      (2) Containers, labels, shipping cases, paper bags, drinking straws,
paper plates, paper cups, twine and wrapping paper used in the distri-
bution and sale of property taxable under the provisions of this act by
wholesalers and retailers and which is not to be returned to such whole-
saler or retailer for reuse.

      (3) Seeds and seedlings for the production of plants and plant prod-
ucts produced for resale.

      (4) Paper and ink used in the publication of newspapers.

      (5) Fertilizer used in the production of plants and plant products
produced for resale.

      (6) Feed for animals, fowl and aquatic plants and animals, the primary
purpose of which is use in agriculture or aquaculture, as defined in K.S.A.
47-1901, and amendments thereto, the production of food for human
consumption, the production of animal, dairy, poultry or aquatic plant
and animal products, fiber, fur, or the production of offspring for use for
any such purpose or purposes.

      (m) "Property which is consumed" means tangible personal property
which is essential or necessary to and which is used in the actual process
of and consumed, depleted or dissipated within one year in (1) the pro-
duction, manufacture, processing, mining, drilling, refining or compound-
ing of tangible personal property, (2) the providing of services, (3) the
irrigation of crops, for sale in the regular course of business, or (4) the
storage or processing of grain by a public grain warehouse or other grain
storage facility, and which is not reusable for such purpose. The following
is a listing of tangible personal property, included by way of illustration
but not of limitation, which qualifies as property which is consumed:

      (A) Insecticides, herbicides, germicides, pesticides, fungicides, fu-
migants, antibiotics, biologicals, pharmaceuticals, vitamins and chemicals
for use in commercial or agricultural production, processing or storage of
fruit, vegetables, feeds, seeds, grains, animals or animal products whether
fed, injected, applied, combined with or otherwise used;

      (B) electricity, gas and water; and

      (C) petroleum products, lubricants, chemicals, solvents, reagents and
catalysts.

      (n) "Political subdivision" means any municipality, agency or subdi-
vision of the state which is, or shall hereafter be, authorized to levy taxes
upon tangible property within the state or which certifies a levy to a
municipality, agency or subdivision of the state which is, or shall hereafter
be, authorized to levy taxes upon tangible property within the state. Such
term also shall include any public building commission, housing, airport,
port, metropolitan transit or similar authority established pursuant to law.

      (o) "Municipal corporation" means any city incorporated under the
laws of Kansas.

      (p) "Quasi-municipal corporation" means any county, township,
school district, drainage district or any other governmental subdivision in
the state of Kansas having authority to receive or hold moneys or funds.

      (q) "Nonprofit blood bank" means any nonprofit place, organization,
institution or establishment that is operated wholly or in part for the
purpose of obtaining, storing, processing, preparing for transfusing, fur-
nishing, donating or distributing human blood or parts or fractions of
single blood units or products derived from single blood units, whether
or not any remuneration is paid therefor, or whether such procedures are
done for direct therapeutic use or for storage for future use of such prod-
ucts.

      (r) "Contractor, subcontractor or repairman" means a person who
agrees to furnish and install tangible personal property or install tangible
personal property at a specified price. A person who maintains an inven-
tory of tangible personal property which enables such person to furnish
and install the tangible personal property or install the tangible personal
property shall not be deemed a contractor, subcontractor or repairman
but shall be deemed a retailer.

      (s) "Educational institution" means any nonprofit school, college and
university that offers education at a level above the twelfth grade, and
conducts regular classes and courses of study required for accreditation
by, or membership in, the North Central Association of Colleges and
Schools, the state board of education, or that otherwise qualify as an
"educational institution," as defined by K.S.A. 74-50,103, and amend-
ments thereto. Such phrase shall include: (1) A group of educational in-
stitutions that operates exclusively for an educational purpose; (2) non-
profit endowment associations and foundations organized and operated
exclusively to receive, hold, invest and administer moneys and property
as a permanent fund for the support and sole benefit of an educational
institution; (3) nonprofit trusts, foundations and other entities organized
and operated principally to hold and own receipts from intercollegiate
sporting events and to disburse such receipts, as well as grants and gifts,
in the interest of collegiate and intercollegiate athletic programs for the
support and sole benefit of an educational institution; and (4) nonprofit
trusts, foundations and other entities organized and operated for the pri-
mary purpose of encouraging, fostering and conducting scholarly inves-
tigations and industrial and other types of research for the support and
sole benefit of an educational institution.

      Sec.  9. K.S.A. 1999 Supp. 79-3603 is hereby amended to read as
follows: 79-3603. For the privilege of engaging in the business of selling
tangible personal property at retail in this state or rendering or furnishing
any of the services taxable under this act, there is hereby levied and there
shall be collected and paid a tax at the rate of 4.9% and, within a rede-
velopment district established pursuant to K.S.A. 74-8921, and amend-
ments thereto, there is hereby levied and there shall be collected and
paid an additional tax at the rate of 2% until the earlier of the date the
bonds issued to finance or refinance the redevelopment project have been
paid in full or the final scheduled maturity of the first series of bonds
issued to finance any part of the project upon:

      (a) The gross receipts received from the sale of tangible personal
property at retail within this state;

      (b)  (1) the gross receipts from intrastate telephone or telegraph serv-
ices and (2) the gross receipts received from the sale of interstate tele-
phone or telegraph services, which (A) originate within this state and
terminate outside the state and are billed to a customer's telephone num-
ber or account in this state; or (B) originate outside this state and ter-
minate within this state and are billed to a customer's telephone number
or account in this state except that the sale of interstate telephone or
telegraph service does not include: (A) Any interstate incoming or out-
going wide area telephone service or wide area transmission type service
which entitles the subscriber to make or receive an unlimited number of
communications to or from persons having telephone service in a speci-
fied area which is outside the state in which the station provided this
service is located; (B) any interstate private communications service to
the persons contracting for the receipt of that service that entitles the
purchaser to exclusive or priority use of a communications channel or
group of channels between exchanges; (C) any value-added nonvoice
service in which computer processing applications are used to act on the
form, content, code or protocol of the information to be transmitted; (D)
any telecommunication service to a provider of telecommunication serv-
ices which will be used to render telecommunications services, including
carrier access services; or (E) any service or transaction defined in this
section among entities classified as members of an affiliated group as
provided by federal law (U.S.C. Section 1504). For the purposes of this
subsection the term gross receipts does not include purchases of tele-
phone, telegraph or telecommunications using a prepaid telephone call-
ing card or pre-paid authorization number. As used in this subsection, a
pre-paid telephone calling card or pre-paid authorization number means
the right to exclusively make telephone calls, paid for in advance, with
the prepaid value measured in minutes or other time units, that enables
the origination of calls using an access number or authorization code or
both, whether manually or electronically dialed;

      (c) the gross receipts from the sale or furnishing of gas, water, elec-
tricity and heat, which sale is not otherwise exempt from taxation under
the provisions of this act, and whether furnished by municipally or pri-
vately owned utilities;

      (d) the gross receipts from the sale of meals or drinks furnished at
any private club, drinking establishment, catered event, restaurant, eating
house, dining car, hotel, drugstore or other place where meals or drinks
are regularly sold to the public;

      (e) the gross receipts from the sale of admissions to any place pro-
viding amusement, entertainment or recreation services including admis-
sions to state, county, district and local fairs, but such tax shall not be
levied and collected upon the gross receipts received from sales of ad-
missions to any cultural and historical event which occurs triennially;

      (f) the gross receipts from the operation of any coin-operated device
dispensing or providing tangible personal property, amusement or other
services except laundry services, whether automatic or manually operated;

      (g) the gross receipts from the service of renting of rooms by hotels,
as defined by K.S.A. 36-501 and amendments thereto, or by accommo-
dation brokers, as defined by K.S.A. 12-1692, and amendments thereto;

      (h) the gross receipts from the service of renting or leasing of tangible
personal property except such tax shall not apply to the renting or leasing
of machinery, equipment or other personal property owned by a city and
purchased from the proceeds of industrial revenue bonds issued prior to
July 1, 1973, in accordance with the provisions of K.S.A. 12-1740 through
12-1749, and amendments thereto, and any city or lessee renting or leas-
ing such machinery, equipment or other personal property purchased
with the proceeds of such bonds who shall have paid a tax under the
provisions of this section upon sales made prior to July 1, 1973, shall be
entitled to a refund from the sales tax refund fund of all taxes paid
thereon;

      (i) the gross receipts from the rendering of dry cleaning, pressing,
dyeing and laundry services except laundry services rendered through a
coin-operated device whether automatic or manually operated;

      (j) the gross receipts from the rendering of the services of washing
and washing and waxing of vehicles;

      (k) the gross receipts from cable, community antennae and other sub-
scriber radio and television services;

      (l)  (1) except as otherwise provided by paragraph (2), the gross re-
ceipts received from the sales of tangible personal property to all con-
tractors, subcontractors or repairmen of materials and supplies for use by
them in erecting structures for others, or building on, or otherwise im-
proving, altering, or repairing real or personal property of others;.

      (2) Any such contractor, subcontractor or repairman who maintains
an inventory of such property both for sale at retail and for use by them
for the purposes described by paragraph (1) shall be deemed a retailer
with respect to purchases for and sales from such inventory, except that
the gross receipts received from any such sale, other than a sale at retail,
shall be equal to the total purchase price paid for such property and the
tax imposed thereon shall be paid by the deemed retailer;

      (m) the gross receipts received from fees and charges by public and
private clubs, drinking establishments, organizations and businesses for
participation in sports, games and other recreational activities, but such
tax shall not be levied and collected upon the gross receipts received from:
(1) Fees and charges by any political subdivision, by any organization
exempt from property taxation pursuant to paragraph Ninth of K.S.A. 79-
201, and amendments thereto, or by any youth recreation organization
exclusively providing services to persons 18 years of age or younger which
is exempt from federal income taxation pursuant to section 501(c)(3) of
the federal internal revenue code of 1986, for participation in sports,
games and other recreational activities; and (2) entry fees and charges for
participation in a special event or tournament sanctioned by a national
sporting association to which spectators are charged an admission which
is taxable pursuant to subsection (e);

      (n) the gross receipts received from dues charged by public and pri-
vate clubs, drinking establishments, organizations and businesses, pay-
ment of which entitles a member to the use of facilities for recreation or
entertainment, but such tax shall not be levied and collected upon the
gross receipts received from: (1) Dues charged by any organization ex-
empt from property taxation pursuant to paragraphs Eighth and Ninth of
K.S.A. 79-201, and amendments thereto; and (2) sales of memberships
in a nonprofit organization which is exempt from federal income taxation
pursuant to section 501 (c)(3) of the federal internal revenue code of
1986, and whose purpose is to support the operation of a nonprofit zoo;

      (o) the gross receipts received from the isolated or occasional sale of
motor vehicles or trailers but not including: (1) The transfer of motor
vehicles or trailers by a person to a corporation solely in exchange for
stock securities in such corporation; or (2) the transfer of motor vehicles
or trailers by one corporation to another when all of the assets of such
corporation are transferred to such other corporation; or (3) the sale of
motor vehicles or trailers which are subject to taxation pursuant to the
provisions of K.S.A. 79-5101 et seq., and amendments thereto, by an
immediate family member to another immediate family member. For the
purposes of clause (3), immediate family member means lineal ascendants
or descendants, and their spouses. In determining the base for computing
the tax on such isolated or occasional sale, the fair market value of any
motor vehicle or trailer traded in by the purchaser to the seller may be
deducted from the selling price;

      (p) the gross receipts received for the service of installing or applying
tangible personal property which when installed or applied is not being
held for sale in the regular course of business, and whether or not such
tangible personal property when installed or applied remains tangible
personal property or becomes a part of real estate, except that no tax shall
be imposed upon the service of installing or applying tangible personal
property in connection with the original construction of a building or
facility, the original construction, reconstruction, restoration, remodeling,
renovation, repair or replacement of a residence or the construction, re-
construction, restoration, replacement or repair of a bridge or highway.

      For the purposes of this subsection:

      (1) "Original construction" shall mean the first or initial construction
of a new building or facility. The term "original construction" shall include
the addition of an entire room or floor to any existing building or facility,
the completion of any unfinished portion of any existing building or fa-
cility and the restoration, reconstruction or replacement of a building or
facility damaged or destroyed by fire, flood, tornado, lightning, explosion
or earthquake, but such term, except with regard to a residence, shall not
include replacement, remodeling, restoration, renovation or reconstruc-
tion under any other circumstances;

      (2) "building" shall mean only those enclosures within which individ-
uals customarily are employed, or which are customarily used to house
machinery, equipment or other property, and including the land improve-
ments immediately surrounding such building;

      (3) "facility" shall mean a mill, plant, refinery, oil or gas well, water
well, feedlot or any conveyance, transmission or distribution line of any
cooperative, nonprofit, membership corporation organized under or sub-
ject to the provisions of K.S.A. 17-4601 et seq., and amendments thereto,
or of any municipal or quasi-municipal corporation, including the land
improvements immediately surrounding such facility; and

      (4) "residence" shall mean only those enclosures within which indi-
viduals customarily live;

      (q) the gross receipts received for the service of repairing, servicing,
altering or maintaining tangible personal property, except computer soft-
ware described in subsection (s), which when such services are rendered
is not being held for sale in the regular course of business, and whether
or not any tangible personal property is transferred in connection there-
with. The tax imposed by this subsection shall be applicable to the services
of repairing, servicing, altering or maintaining an item of tangible personal
property which has been and is fastened to, connected with or built into
real property;

      (r) the gross receipts from fees or charges made under service or
maintenance agreement contracts for services, charges for the providing
of which are taxable under the provisions of subsection (p) or (q);

      (s) the gross receipts received from the sale of computer software,
and the sale of the services of modifying, altering, updating or maintaining
computer software. As used in this subsection, "computer software"
means information and directions loaded into a computer which dictate
different functions to be performed by the computer. Computer software
includes any canned or prewritten program which is held or existing for
general or repeated sale, even if the program was originally developed
for a single end user as custom computer software. The sale of computer
software or services does not include: (1) The initial sale of any custom
computer program which is originally developed for the exclusive use of
a single end user; or (2) those services rendered in the modification of
computer software when the modification is developed exclusively for a
single end user only to the extent of the modification and only to the
extent that the actual amount charged for the modification is separately
stated on invoices, statements and other billing documents provided to
the end user. The services of modification, alteration, updating and main-
tenance of computer software shall only include the modification, alter-
ation, updating and maintenance of computer software taxable under this
subsection whether or not the services are actually provided; and

      (t) the gross receipts received for telephone answering services, in-
cluding mobile phone services, beeper services and other similar services;
and

      (u) the gross receipts received from the sale of prepaid telephone
calling cards or pre-paid authorization numbers and the recharge of such
cards or numbers. A pre-paid telephone calling card or pre-paid author-
ization number means the right to exclusively make telephone calls, paid
for in advance, with the prepaid value measured in minutes or other time
units, that enables the origination of calls using an access number or
authorization code or both, whether manually or electronically dialed. If
the sale or recharge of such card or number does not take place at the
vendor's place of business, it shall be conclusively determined to take
place at the customer's shipping address; if there is no item shipped then
it shall be the customer's billing address.

      Sec.  10. K.S.A. 1999 Supp. 79-3606, as amended by section 1 of 2000
House Bill No. 2011, is hereby amended to read as follows: 79-3606. The
following shall be exempt from the tax imposed by this act:

      (a) All sales of motor-vehicle fuel or other articles upon which a sales
or excise tax has been paid, not subject to refund, under the laws of this
state except cigarettes as defined by K.S.A. 79-3301 and amendments
thereto, cereal malt beverages and malt products as defined by K.S.A. 79-
3817 and amendments thereto, including wort, liquid malt, malt syrup
and malt extract, which is not subject to taxation under the provisions of
K.S.A. 79-41a02 and amendments thereto, motor vehicles taxed pursuant
to K.S.A. 79-5117, and amendments thereto, tires taxed pursuant to
K.S.A. 1999 Supp. 65-3424d, and amendments thereto, and drycleaning
and laundry services taxed pursuant to K.S.A. 1999 Supp. 65-34,150, and
amendments thereto;

      (b) all sales of tangible personal property or service, including the
renting and leasing of tangible personal property, purchased directly by
the state of Kansas, a political subdivision thereof, other than a school or
educational institution, or purchased by a public or private nonprofit hos-
pital or public hospital authority or nonprofit blood, tissue or organ bank
and used exclusively for state, political subdivision, hospital or public hos-
pital authority or nonprofit blood, tissue or organ bank purposes, except
when: (1) Such state, hospital or public hospital authority is engaged or
proposes to engage in any business specifically taxable under the provi-
sions of this act and such items of tangible personal property or service
are used or proposed to be used in such business, or (2) such political
subdivision is engaged or proposes to engage in the business of furnishing
gas, water, electricity or heat to others and such items of personal prop-
erty or service are used or proposed to be used in such business;

      (c) all sales of tangible personal property or services, including the
renting and leasing of tangible personal property, purchased directly by
a public or private elementary or secondary school or public or private
nonprofit educational institution and used primarily by such school or
institution for nonsectarian programs and activities provided or sponsored
by such school or institution or in the erection, repair or enlargement of
buildings to be used for such purposes. The exemption herein provided
shall not apply to erection, construction, repair, enlargement or equip-
ment of buildings used primarily for human habitation;

      (d) all sales of tangible personal property or services purchased by a
contractor for the purpose of constructing, equipping, reconstructing,
maintaining, repairing, enlarging, furnishing or remodeling facilities for
any public or private nonprofit hospital or public hospital authority, public
or private elementary or secondary school or a public or private nonprofit
educational institution, which would be exempt from taxation under the
provisions of this act if purchased directly by such hospital or public hos-
pital authority, school or educational institution; and all sales of tangible
personal property or services purchased by a contractor for the purpose
of constructing, equipping, reconstructing, maintaining, repairing, en-
larging, furnishing or remodeling facilities for any political subdivision of
the state, the total cost of which is paid from funds of such political
subdivision and which would be exempt from taxation under the provi-
sions of this act if purchased directly by such political subdivision. Nothing
in this subsection or in the provisions of K.S.A. 12-3418 and amendments
thereto, shall be deemed to exempt the purchase of any construction
machinery, equipment or tools used in the constructing, equipping, re-
constructing, maintaining, repairing, enlarging, furnishing or remodeling
facilities for any political subdivision of the state. As used in this subsec-
tion, K.S.A. 12-3418 and 79-3640, and amendments thereto, "funds of a
political subdivision" shall mean general tax revenues, the proceeds of
any bonds and gifts or grants-in-aid. Gifts shall not mean funds used for
the purpose of constructing, equipping, reconstructing, repairing, enlarg-
ing, furnishing or remodeling facilities which are to be leased to the do-
nor. When any political subdivision of the state, public or private non-
profit hospital or public hospital authority, public or private elementary
or secondary school or public or private nonprofit educational institution
shall contract for the purpose of constructing, equipping, reconstructing,
maintaining, repairing, enlarging, furnishing or remodeling facilities, it
shall obtain from the state and furnish to the contractor an exemption
certificate for the project involved, and the contractor may purchase ma-
terials for incorporation in such project. The contractor shall furnish the
number of such certificate to all suppliers from whom such purchases are
made, and such suppliers shall execute invoices covering the same bearing
the number of such certificate. Upon completion of the project the con-
tractor shall furnish to the political subdivision, hospital or public hospital
authority, school or educational institution concerned a sworn statement,
on a form to be provided by the director of taxation, that all purchases so
made were entitled to exemption under this subsection. As an alternative
to the foregoing procedure, any such contracting entity may apply to the
secretary of revenue for agent status for the sole purpose of issuing and
furnishing project exemption certificates to contractors pursuant to rules
and regulations adopted by the secretary establishing conditions and stan-
dards for the granting and maintaining of such status. All invoices shall
be held by the contractor for a period of five years and shall be subject
to audit by the director of taxation. If any materials purchased under such
a certificate are found not to have been incorporated in the building or
other project or not to have been returned for credit or the sales or
compensating tax otherwise imposed upon such materials which will not
be so incorporated in the building or other project reported and paid by
such contractor to the director of taxation not later than the 20th day of
the month following the close of the month in which it shall be deter-
mined that such materials will not be used for the purpose for which such
certificate was issued, the political subdivision, hospital or public hospital
authority, school or educational institution concerned shall be liable for
tax on all materials purchased for the project, and upon payment thereof
it may recover the same from the contractor together with reasonable
attorney fees. Any contractor or any agent, employee or subcontractor
thereof, who shall use or otherwise dispose of any materials purchased
under such a certificate for any purpose other than that for which such a
certificate is issued without the payment of the sales or compensating tax
otherwise imposed upon such materials, shall be guilty of a misdemeanor
and, upon conviction therefor, shall be subject to the penalties provided
for in subsection (g) of K.S.A. 79-3615, and amendments thereto;

      (e) all sales of tangible personal property or services purchased by a
contractor for the erection, repair or enlargement of buildings or other
projects for the government of the United States, its agencies or instru-
mentalities, which would be exempt from taxation if purchased directly
by the government of the United States, its agencies or instrumentalities.
When the government of the United States, its agencies or instrumen-
talities shall contract for the erection, repair, or enlargement of any build-
ing or other project, it shall obtain from the state and furnish to the
contractor an exemption certificate for the project involved, and the con-
tractor may purchase materials for incorporation in such project. The
contractor shall furnish the number of such certificates to all suppliers
from whom such purchases are made, and such suppliers shall execute
invoices covering the same bearing the number of such certificate. Upon
completion of the project the contractor shall furnish to the government
of the United States, its agencies or instrumentalities concerned a sworn
statement, on a form to be provided by the director of taxation, that all
purchases so made were entitled to exemption under this subsection. As
an alternative to the foregoing procedure, any such contracting entity may
apply to the secretary of revenue for agent status for the sole purpose of
issuing and furnishing project exemption certificates to contractors pur-
suant to rules and regulations adopted by the secretary establishing con-
ditions and standards for the granting and maintaining of such status. All
invoices shall be held by the contractor for a period of five years and shall
be subject to audit by the director of taxation. Any contractor or any agent,
employee or subcontractor thereof, who shall use or otherwise dispose of
any materials purchased under such a certificate for any purpose other
than that for which such a certificate is issued without the payment of
the sales or compensating tax otherwise imposed upon such materials,
shall be guilty of a misdemeanor and, upon conviction therefor, shall be
subject to the penalties provided for in subsection (g) of K.S.A. 79-3615
and amendments thereto;

      (f) tangible personal property purchased by a railroad or public utility
for consumption or movement directly and immediately in interstate
commerce;

      (g) sales of aircraft including remanufactured and modified aircraft,
sales of aircraft repair, modification and replacement parts and sales of
services employed in the remanufacture, modification and repair of air-
craft sold to persons using directly or through an authorized agent such
aircraft and aircraft repair, modification and replacement parts as certified
or licensed carriers of persons or property in interstate or foreign com-
merce under authority of the laws of the United States or any foreign
government or sold to any foreign government or agency or instrumen-
tality of such foreign government and all sales of aircraft, aircraft parts,
replacement parts and services employed in the remanufacture, modifi-
cation and repair of aircraft for use outside of the United States;

      (h) all rentals of nonsectarian textbooks by public or private elemen-
tary or secondary schools;

      (i) the lease or rental of all films, records, tapes, or any type of sound
or picture transcriptions used by motion picture exhibitors;

      (j) meals served without charge or food used in the preparation of
such meals to employees of any restaurant, eating house, dining car, hotel,
drugstore or other place where meals or drinks are regularly sold to the
public if such employees' duties are related to the furnishing or sale of
such meals or drinks;

      (k) any motor vehicle, semitrailer or pole trailer, as such terms are
defined by K.S.A. 8-126 and amendments thereto, or aircraft sold and
delivered in this state to a bona fide resident of another state, which motor
vehicle, semitrailer, pole trailer or aircraft is not to be registered or based
in this state and which vehicle, semitrailer, pole trailer or aircraft will not
remain in this state more than 10 days;

      (l) all isolated or occasional sales of tangible personal property, serv-
ices, substances or things, except isolated or occasional sale of motor
vehicles specifically taxed under the provisions of subsection (o) of K.S.A.
79-3603 and amendments thereto;

      (m) all sales of tangible personal property which become an ingre-
dient or component part of tangible personal property or services pro-
duced, manufactured or compounded for ultimate sale at retail within or
without the state of Kansas; and any such producer, manufacturer or
compounder may obtain from the director of taxation and furnish to the
supplier an exemption certificate number for tangible personal property
for use as an ingredient or component part of the property or services
produced, manufactured or compounded;

      (n) all sales of tangible personal property which is consumed in the
production, manufacture, processing, mining, drilling, refining or com-
pounding of tangible personal property, the treating of by-products or
wastes derived from any such production process, the providing of serv-
ices or the irrigation of crops for ultimate sale at retail within or without
the state of Kansas; and any purchaser of such property may obtain from
the director of taxation and furnish to the supplier an exemption certifi-
cate number for tangible personal property for consumption in such pro-
duction, manufacture, processing, mining, drilling, refining, compound-
ing, treating, irrigation and in providing such services;

      (o) all sales of animals, fowl and aquatic plants and animals, the pri-
mary purpose of which is use in agriculture or aquaculture, as defined in
K.S.A. 47-1901, and amendments thereto, the production of food for
human consumption, the production of animal, dairy, poultry or aquatic
plant and animal products, fiber or fur, or the production of offspring for
use for any such purpose or purposes;

      (p) all sales of drugs, as defined by K.S.A. 65-1626 and amendments
thereto, dispensed pursuant to a prescription order, as defined by K.S.A.
65-1626 and amendments thereto, by a licensed practitioner or a mid-
level practitioner as defined by K.S.A. 65-1626, and amendments thereto;

      (q) all sales of insulin dispensed by a person licensed by the state
board of pharmacy to a person for treatment of diabetes at the direction
of a person licensed to practice medicine by the board of healing arts;

      (r) all sales of prosthetic and orthopedic appliances prescribed in
writing by a person licensed to practice the healing arts, dentistry or
optometry. For the purposes of this subsection, the term prosthetic and
orthopedic appliances means any apparatus, instrument, device, or equip-
ment used to replace or substitute for any missing part of the body; used
to alleviate the malfunction of any part of the body; or used to assist any
disabled person in leading a normal life by facilitating such person's mo-
bility; such term shall include accessories attached or to be attached to
motor vehicles, but such term shall not include motor vehicles or personal
property which when installed becomes a fixture to real property;

      (s) all sales of tangible personal property or services purchased di-
rectly by a groundwater management district organized or operating un-
der the authority of K.S.A. 82a-1020 et seq. and amendments thereto,
which property or services are used in the operation or maintenance of
the district;

      (t) all sales of farm machinery and equipment or aquaculture ma-
chinery and equipment, repair and replacement parts therefor and serv-
ices performed in the repair and maintenance of such machinery and
equipment. For the purposes of this subsection the term "farm machinery
and equipment or aquaculture machinery and equipment" shall include
machinery and equipment used in the operation of Christmas tree farm-
ing but shall not include any passenger vehicle, truck, truck tractor, trailer,
semitrailer or pole trailer, other than a farm trailer, as such terms are
defined by K.S.A. 8-126 and amendments thereto. Each purchaser of
farm machinery and equipment or aquaculture machinery and equipment
exempted herein must certify in writing on the copy of the invoice or
sales ticket to be retained by the seller that the farm machinery and
equipment or aquaculture machinery and equipment purchased will be
used only in farming, ranching or aquaculture production. Farming or
ranching shall include the operation of a feedlot and farm and ranch work
for hire and the operation of a nursery;

      (u) all leases or rentals of tangible personal property used as a dwell-
ing if such tangible personal property is leased or rented for a period of
more than 28 consecutive days;

      (v) all sales of food products to any contractor for use in preparing
meals for delivery to homebound elderly persons over 60 years of age and
to homebound disabled persons or to be served at a group-sitting at a
location outside of the home to otherwise homebound elderly persons
over 60 years of age and to otherwise homebound disabled persons, as
all or part of any food service project funded in whole or in part by
government or as part of a private nonprofit food service project available
to all such elderly or disabled persons residing within an area of service
designated by the private nonprofit organization, and all sales of food
products for use in preparing meals for consumption by indigent or home-
less individuals whether or not such meals are consumed at a place des-
ignated for such purpose;

      (w) all sales of natural gas, electricity, heat and water delivered
through mains, lines or pipes: (1) To residential premises for noncom-
mercial use by the occupant of such premises; (2) for agricultural use and
also, for such use, all sales of propane gas; (3) for use in the severing of
oil; and (4) to any property which is exempt from property taxation pur-
suant to K.S.A. 79-201b Second through Sixth. As used in this paragraph,
"severing" shall have the meaning ascribed thereto by subsection (k) of
K.S.A. 79-4216, and amendments thereto;

      (x) all sales of propane gas, LP-gas, coal, wood and other fuel sources
for the production of heat or lighting for noncommercial use of an oc-
cupant of residential premises;

      (y) all sales of materials and services used in the repairing, servicing,
altering, maintaining, manufacturing, remanufacturing, or modification of
railroad rolling stock for use in interstate or foreign commerce under
authority of the laws of the United States;

      (z) all sales of tangible personal property and services purchased di-
rectly by a port authority or by a contractor therefor as provided by the
provisions of K.S.A. 12-3418 and amendments thereto;

      (aa) all sales of materials and services applied to equipment which is
transported into the state from without the state for repair, service, al-
teration, maintenance, remanufacture or modification and which is sub-
sequently transported outside the state for use in the transmission of
liquids or natural gas by means of pipeline in interstate or foreign com-
merce under authority of the laws of the United States;

      (bb) all sales of used mobile homes or manufactured homes. As used
in this subsection: (1) "Mobile homes" and "manufactured homes" shall
have the meanings ascribed thereto by K.S.A. 58-4202 and amendments
thereto; and (2) "sales of used mobile homes or manufactured homes"
means sales other than the original retail sale thereof;

      (cc) all sales of tangible personal property or services purchased for
the purpose of and in conjunction with constructing, reconstructing, en-
larging or remodeling a business or retail business which meets the
requirements established in K.S.A. 74-50,115 and amendments thereto,
and the sale and installation of machinery and equipment purchased for
installation at any such business or retail business. When a person shall
contract for the construction, reconstruction, enlargement or remodeling
of any such business or retail business, such person shall obtain from the
state and furnish to the contractor an exemption certificate for the project
involved, and the contractor may purchase materials, machinery and
equipment for incorporation in such project. The contractor shall furnish
the number of such certificates to all suppliers from whom such purchases
are made, and such suppliers shall execute invoices covering the same
bearing the number of such certificate. Upon completion of the project
the contractor shall furnish to the owner of the business or retail business
a sworn statement, on a form to be provided by the director of taxation,
that all purchases so made were entitled to exemption under this subsec-
tion. All invoices shall be held by the contractor for a period of five years
and shall be subject to audit by the director of taxation. Any contractor
or any agent, employee or subcontractor thereof, who shall use or oth-
erwise dispose of any materials, machinery or equipment purchased un-
der such a certificate for any purpose other than that for which such a
certificate is issued without the payment of the sales or compensating tax
otherwise imposed thereon, shall be guilty of a misdemeanor and, upon
conviction therefor, shall be subject to the penalties provided for in sub-
section (g) of K.S.A. 79-3615 and amendments thereto. As used in this
subsection, "business" and "retail business" have the meanings respec-
tively ascribed thereto by K.S.A. 74-50,114 and amendments thereto;

      (dd) all sales of tangible personal property purchased with food
stamps issued by the United States department of agriculture;

      (ee) all sales of lottery tickets and shares made as part of a lottery
operated by the state of Kansas;

      (ff) on and after July 1, 1988, all sales of new mobile homes or man-
ufactured homes to the extent of 40% of the gross receipts, determined
without regard to any trade-in allowance, received from such sale. As used
in this subsection, "mobile homes" and "manufactured homes" shall have
the meanings ascribed thereto by K.S.A. 58-4202 and amendments
thereto;

      (gg) all sales of tangible personal property purchased in accordance
with vouchers issued pursuant to the federal special supplemental food
program for women, infants and children;

      (hh) all sales of medical supplies and equipment purchased directly
by a nonprofit skilled nursing home or nonprofit intermediate nursing
care home, as defined by K.S.A. 39-923, and amendments thereto, for
the purpose of providing medical services to residents thereof. This ex-
emption shall not apply to tangible personal property customarily used
for human habitation purposes;

      (ii) all sales of tangible personal property purchased directly by a non-
profit organization for nonsectarian comprehensive multidiscipline youth
development programs and activities provided or sponsored by such or-
ganization, and all sales of tangible personal property by or on behalf of
any such organization. This exemption shall not apply to tangible personal
property customarily used for human habitation purposes;

      (jj) all sales of tangible personal property or services, including the
renting and leasing of tangible personal property, purchased directly on
behalf of a community-based mental retardation facility or mental health
center organized pursuant to K.S.A. 19-4001 et seq., and amendments
thereto, and licensed in accordance with the provisions of K.S.A. 75-
3307b and amendments thereto. This exemption shall not apply to tan-
gible personal property customarily used for human habitation purposes;

      (kk) (1)  (A) all sales of machinery and equipment which are used
in this state as an integral or essential part of an integrated production
operation by a manufacturing or processing plant or facility;

      (B) all sales of installation, repair and maintenance services per-
formed on such machinery and equipment; and

      (C) all sales of repair and replacement parts and accessories pur-
chased for such machinery and equipment.

      (2) For purposes of this subsection:

      (A) "Integrated production operation" means an integrated series of
operations engaged in at a manufacturing or processing plant or facility
to process, transform or convert tangible personal property by physical,
chemical or other means into a different form, composition or character
from that in which it originally existed. Integrated production operations
shall include: (i) Production line operations, including packaging opera-
tions; (ii) preproduction operations to handle, store and treat raw mate-
rials; (iii) post production handling, storage, warehousing and distribution
operations; and (iv) waste, pollution and environmental control opera-
tions, if any;

      (B) "production line" means the assemblage of machinery and equip-
ment at a manufacturing or processing plant or facility where the actual
transformation or processing of tangible personal property occurs;

      (C) "manufacturing or processing plant or facility" means a single,
fixed location owned or controlled by a manufacturing or processing busi-
ness that consists of one or more structures or buildings in a contiguous
area where integrated production operations are conducted to manufac-
ture or process tangible personal property to be ultimately sold at retail.
Such term shall not include any facility primarily operated for the purpose
of conveying or assisting in the conveyance of natural gas, electricity, oil
or water. A business may operate one or more manufacturing or proc-
essing plants or facilities at different locations to manufacture or process
a single product of tangible personal property to be ultimately sold at
retail;

      (D) "manufacturing or processing business" means a business that
utilizes an integrated production operation to manufacture, process, fab-
ricate, finish, or assemble items for wholesale and retail distribution as
part of what is commonly regarded by the general public as an industrial
manufacturing or processing operation or an agricultural commodity
processing operation. (i) Industrial manufacturing or processing opera-
tions include, by way of illustration but not of limitation, the fabrication
of automobiles, airplanes, machinery or transportation equipment, the
fabrication of metal, plastic, wood, or paper products, electricity power
generation, water treatment, petroleum refining, chemical production,
wholesale bottling, newspaper printing, ready mixed concrete production,
and the remanufacturing of used parts for wholesale or retail sale. Such
processing operations shall include operations at an oil well, gas well, mine
or other excavation site where the oil, gas, minerals, coal, clay, stone, sand
or gravel that has been extracted from the earth is cleaned, separated,
crushed, ground, milled, screened, washed, or otherwise treated or pre-
pared before its transmission to a refinery or before any other wholesale
or retail distribution. (ii) Agricultural commodity processing operations
include, by way of illustration but not of limitation, meat packing, poultry
slaughtering and dressing, processing and packaging farm and dairy prod-
ucts in sealed containers for wholesale and retail distribution, feed grind-
ing, grain milling, frozen food processing, and grain handling, cleaning,
blending, fumigation, drying and aeration operations engaged in by grain
elevators or other grain storage facilities. (iii) Manufacturing or processing
businesses do not include, by way of illustration but not of limitation,
nonindustrial businesses whose operations are primarily retail and that
produce or process tangible personal property as an incidental part of
conducting the retail business, such as retailers who bake, cook or prepare
food products in the regular course of their retail trade, grocery stores,
meat lockers and meat markets that butcher or dress livestock or poultry
in the regular course of their retail trade, contractors who alter, service,
repair or improve real property, and retail businesses that clean, service
or refurbish and repair tangible personal property for its owner;

      (E) "repair and replacement parts and accessories" means all parts
and accessories for exempt machinery and equipment, including, but not
limited to, dies, jigs, molds, patterns and safety devices that are attached
to exempt machinery or that are otherwise used in production, and parts
and accessories that require periodic replacement such as belts, drill bits,
grinding wheels, grinding balls, cutting bars, saws, refractory brick and
other refractory items for exempt kiln equipment used in production op-
erations;

      (F) "primary" or "primarily" mean more than 50% of the time.

      (3) For purposes of this subsection, machinery and equipment shall
be deemed to be used as an integral or essential part of an integrated
production operation when used:

      (A) To receive, transport, convey, handle, treat or store raw materials
in preparation of its placement on the production line;

      (B) to transport, convey, handle or store the property undergoing
manufacturing or processing at any point from the beginning of the pro-
duction line through any warehousing or distribution operation of the
final product that occurs at the plant or facility;

      (C) to act upon, effect, promote or otherwise facilitate a physical
change to the property undergoing manufacturing or processing;

      (D) to guide, control or direct the movement of property undergoing
manufacturing or processing;

      (E) to test or measure raw materials, the property undergoing man-
ufacturing or processing or the finished product, as a necessary part of
the manufacturer's integrated production operations;

      (F) to plan, manage, control or record the receipt and flow of inven-
tories of raw materials, consumables and component parts, the flow of
the property undergoing manufacturing or processing and the manage-
ment of inventories of the finished product;

      (G) to produce energy for, lubricate, control the operating of or oth-
erwise enable the functioning of other production machinery and equip-
ment and the continuation of production operations;

      (H) to package the property being manufactured or processed in a
container or wrapping in which such property is normally sold or trans-
ported;

      (I) to transmit or transport electricity, coke, gas, water, steam or sim-
ilar substances used in production operations from the point of genera-
tion, if produced by the manufacturer or processor at the plant site, to
that manufacturer's production operation; or, if purchased or delivered
from offsite, from the point where the substance enters the site of the
plant or facility to that manufacturer's production operations;

      (J) to cool, heat, filter, refine or otherwise treat water, steam, acid,
oil, solvents or other substances that are used in production operations;

      (K) to provide and control an environment required to maintain cer-
tain levels of air quality, humidity or temperature in special and limited
areas of the plant or facility, where such regulation of temperature or
humidity is part of and essential to the production process;

      (L) to treat, transport or store waste or other byproducts of produc-
tion operations at the plant or facility; or

      (M) to control pollution at the plant or facility where the pollution is
produced by the manufacturing or processing operation.

      (4) The following machinery, equipment and materials shall be
deemed to be exempt even though it may not otherwise qualify as ma-
chinery and equipment used as an integral or essential part of an inte-
grated production operation: (A) Computers and related peripheral
equipment that are utilized by a manufacturing or processing business
for engineering of the finished product or for research and development
or product design; (B) machinery and equipment that is utilized by a
manufacturing or processing business to manufacture or rebuild tangible
personal property that is used in manufacturing or processing operations,
including tools, dies, molds, forms and other parts of qualifying machinery
and equipment; (C) portable plants for aggregate concrete, bulk cement
and asphalt including cement mixing drums to be attached to a motor
vehicle; (D) industrial fixtures, devices, support facilities and special foun-
dations necessary for manufacturing and production operations, and ma-
terials and other tangible personal property sold for the purpose of fab-
ricating such fixtures, devices, facilities and foundations. An exemption
certificate for such purchases shall be signed by the manufacturer or
processor. If the fabricator purchases such material, the fabricator shall
also sign the exemption certificate; and (E) a manufacturing or processing
business' laboratory equipment that is not located at the plant or facility,
but that would otherwise qualify for exemption under subsection (3)(E).

      (5) "Machinery and equipment used as an integral or essential part
of an integrated production operation" shall not include:

      (A) Machinery and equipment used for nonproduction purposes, in-
cluding, but not limited to, machinery and equipment used for plant se-
curity, fire prevention, first aid, accounting, administration, record keep-
ing, advertising, marketing, sales or other related activities, plant cleaning,
plant communications, and employee work scheduling;

      (B) machinery, equipment and tools used primarily in maintaining
and repairing any type of machinery and equipment or the building and
plant;

      (C) transportation, transmission and distribution equipment not pri-
marily used in a production, warehousing or material handling operation
at the plant or facility, including the means of conveyance of natural gas,
electricity, oil or water, and equipment related thereto, located outside
the plant or facility;

      (D) office machines and equipment including computers and related
peripheral equipment not used directly and primarily to control or mea-
sure the manufacturing process;

      (E) furniture and other furnishings;

      (F) buildings, other than exempt machinery and equipment that is
permanently affixed to or becomes a physical part of the building, and
any other part of real estate that is not otherwise exempt;

      (G) building fixtures that are not integral to the manufacturing op-
eration, such as utility systems for heating, ventilation, air conditioning,
communications, plumbing or electrical;

      (H) machinery and equipment used for general plant heating, cooling
and lighting;

      (I) motor vehicles that are registered for operation on public high-
ways; or

      (J) employee apparel, except safety and protective apparel that is pur-
chased by an employer and furnished gratuitously to employees who are
involved in production or research activities.

      (6) Subsections (3) and (5) shall not be construed as exclusive listings
of the machinery and equipment that qualify or do not qualify as an
integral or essential part of an integrated production operation. When
machinery or equipment is used as an integral or essential part of pro-
duction operations part of the time and for nonproduction purpose at
other times, the primary use of the machinery or equipment shall deter-
mine whether or not such machinery or equipment qualifies for exemp-
tion.

      (7) The secretary of revenue shall adopt rules and regulations nec-
essary to administer the provisions of this subsection;

      (ll) all sales of educational materials purchased for distribution to the
public at no charge by a nonprofit corporation organized for the purpose
of encouraging, fostering and conducting programs for the improvement
of public health;

      (mm) all sales of seeds and tree seedlings; fertilizers, insecticides,
herbicides, germicides, pesticides and fungicides; and services, purchased
and used for the purpose of producing plants in order to prevent soil
erosion on land devoted to agricultural use;

      (nn) except as otherwise provided in this act, all sales of services ren-
dered by an advertising agency or licensed broadcast station or any mem-
ber, agent or employee thereof;

      (oo) all sales of tangible personal property purchased by a community
action group or agency for the exclusive purpose of repairing or weath-
erizing housing occupied by low income individuals;

      (pp) all sales of drill bits and explosives actually utilized in the explo-
ration and production of oil or gas;

      (qq) all sales of tangible personal property and services purchased by
a nonprofit museum or historical society or any combination thereof, in-
cluding a nonprofit organization which is organized for the purpose of
stimulating public interest in the exploration of space by providing edu-
cational information, exhibits and experiences, which is exempt from fed-
eral income taxation pursuant to section 501(c)(3) of the federal internal
revenue code of 1986;

      (rr) all sales of tangible personal property which will admit the pur-
chaser thereof to any annual event sponsored by a nonprofit organization
which is exempt from federal income taxation pursuant to section
501(c)(3) of the federal internal revenue code of 1986;

      (ss) all sales of tangible personal property and services purchased by
a public broadcasting station licensed by the federal communications
commission as a noncommercial educational television or radio station;

      (tt) all sales of tangible personal property and services purchased by
or on behalf of a not-for-profit corporation which is exempt from federal
income taxation pursuant to section 501(c)(3) of the federal internal rev-
enue code of 1986, for the sole purpose of constructing a Kansas Korean
War memorial;

      (uu) all sales of tangible personal property and services purchased by
or on behalf of any rural volunteer fire-fighting organization for use ex-
clusively in the performance of its duties and functions;

      (vv) all sales of tangible personal property purchased by any of the
following organizations which are exempt from federal income taxation
pursuant to section 501 (c)(3) of the federal internal revenue code of
1986, for the following purposes, and all sales of any such property by or
on behalf of any such organization for any such purpose:

      (1) The American Heart Association, Kansas Affiliate, Inc. for the
purposes of providing education, training, certification in emergency car-
diac care, research and other related services to reduce disability and
death from cardiovascular diseases and stroke;

      (2) the Kansas Alliance for the Mentally Ill, Inc. for the purpose of
advocacy for persons with mental illness and to education, research and
support for their families;

      (3) the Kansas Mental Illness Awareness Council for the purposes of
advocacy for persons who are mentally ill and to education, research and
support for them and their families;

      (4) the American Diabetes Association Kansas Affiliate, Inc. for the
purpose of eliminating diabetes through medical research, public edu-
cation focusing on disease prevention and education, patient education
including information on coping with diabetes, and professional education
and training;

      (5) the American Lung Association of Kansas, Inc. for the purpose of
eliminating all lung diseases through medical research, public education
including information on coping with lung diseases, professional educa-
tion and training related to lung disease and other related services to
reduce the incidence of disability and death due to lung disease; and

      (6) the Kansas chapters of the Alzheimer's Disease and Related Dis-
orders Association, Inc. for the purpose of providing assistance and sup-
port to persons in Kansas with Alzheimer's disease, and their families and
caregivers;

      (ww) all sales of tangible personal property purchased by the Habitat
for Humanity for the exclusive use of being incorporated within a housing
project constructed by such organization;

      (xx) all sales of tangible personal property and services purchased by
a nonprofit zoo which is exempt from federal income taxation pursuant
to section 501(c)(3) of the federal internal revenue code of 1986, or on
behalf of such zoo by an entity itself exempt from federal income taxation
pursuant to section 501(c)(3) of the federal internal revenue code of 1986
contracted with to operate such zoo and all sales of tangible personal
property or services purchased by a contractor for the purpose of con-
structing, equipping, reconstructing, maintaining, repairing, enlarging,
furnishing or remodeling facilities for any nonprofit zoo which would be
exempt from taxation under the provisions of this section if purchased
directly by such nonprofit zoo or the entity operating such zoo. Nothing
in this subsection shall be deemed to exempt the purchase of any con-
struction machinery, equipment or tools used in the constructing, equip-
ping, reconstructing, maintaining, repairing, enlarging, furnishing or re-
modeling facilities for any nonprofit zoo. When any nonprofit zoo shall
contract for the purpose of constructing, equipping, reconstructing, main-
taining, repairing, enlarging, furnishing or remodeling facilities, it shall
obtain from the state and furnish to the contractor an exemption certifi-
cate for the project involved, and the contractor may purchase materials
for incorporation in such project. The contractor shall furnish the number
of such certificate to all suppliers from whom such purchases are made,
and such suppliers shall execute invoices covering the same bearing the
number of such certificate. Upon completion of the project the contractor
shall furnish to the nonprofit zoo concerned a sworn statement, on a form
to be provided by the director of taxation, that all purchases so made were
entitled to exemption under this subsection. All invoices shall be held by
the contractor for a period of five years and shall be subject to audit by
the director of taxation. If any materials purchased under such a certifi-
cate are found not to have been incorporated in the building or other
project or not to have been returned for credit or the sales or compen-
sating tax otherwise imposed upon such materials which will not be so
incorporated in the building or other project reported and paid by such
contractor to the director of taxation not later than the 20th day of the
month following the close of the month in which it shall be determined
that such materials will not be used for the purpose for which such cer-
tificate was issued, the nonprofit zoo concerned shall be liable for tax on
all materials purchased for the project, and upon payment thereof it may
recover the same from the contractor together with reasonable attorney
fees. Any contractor or any agent, employee or subcontractor thereof,
who shall use or otherwise dispose of any materials purchased under such
a certificate for any purpose other than that for which such a certificate
is issued without the payment of the sales or compensating tax otherwise
imposed upon such materials, shall be guilty of a misdemeanor and, upon
conviction therefor, shall be subject to the penalties provided for in sub-
section (g) of K.S.A. 79-3615, and amendments thereto;

      (yy) all sales of tangible personal property and services purchased by
a parent-teacher association or organization, and all sales of tangible per-
sonal property by or on behalf of such association or organization;

      (zz) all sales of machinery and equipment purchased by over-the-air,
free access radio or television station which is used directly and primarily
for the purpose of producing a broadcast signal or is such that the failure
of the machinery or equipment to operate would cause broadcasting to
cease. For purposes of this subsection, machinery and equipment shall
include, but not be limited to, that required by rules and regulations of
the federal communications commission, and all sales of electricity which
are essential or necessary for the purpose of producing a broadcast signal
or is such that the failure of the electricity would cause broadcasting to
cease;

      (aaa) all sales of tangible personal property and services purchased
by a religious organization which is exempt from federal income taxation
pursuant to section 501(c)(3) of the federal internal revenue code, and
used exclusively for religious purposes, and all sales of tangible personal
property or services purchased by a contractor for the purpose of con-
structing, equipping, reconstructing, maintaining, repairing, enlarging,
furnishing or remodeling facilities for any such organization which would
be exempt from taxation under the provisions of this section if purchased
directly by such organization. Nothing in this subsection shall be deemed
to exempt the purchase of any construction machinery, equipment or
tools used in the constructing, equipping, reconstructing, maintaining,
repairing, enlarging, furnishing or remodeling facilities for any such or-
ganization. When any such organization shall contract for the purpose of
constructing, equipping, reconstructing, maintaining, repairing, enlarg-
ing, furnishing or remodeling facilities, it shall obtain from the state and
furnish to the contractor an exemption certificate for the project involved,
and the contractor may purchase materials for incorporation in such pro-
ject. The contractor shall furnish the number of such certificate to all
suppliers from whom such purchases are made, and such suppliers shall
execute invoices covering the same bearing the number of such certifi-
cate. Upon completion of the project the contractor shall furnish to such
organization concerned a sworn statement, on a form to be provided by
the director of taxation, that all purchases so made were entitled to ex-
emption under this subsection. All invoices shall be held by the contractor
for a period of five years and shall be subject to audit by the director of
taxation. If any materials purchased under such a certificate are found
not to have been incorporated in the building or other project or not to
have been returned for credit or the sales or compensating tax otherwise
imposed upon such materials which will not be so incorporated in the
building or other project reported and paid by such contractor to the
director of taxation not later than the 20th day of the month following
the close of the month in which it shall be determined that such materials
will not be used for the purpose for which such certificate was issued,
such organization concerned shall be liable for tax on all materials pur-
chased for the project, and upon payment thereof it may recover the same
from the contractor together with reasonable attorney fees. Any contrac-
tor or any agent, employee or subcontractor thereof, who shall use or
otherwise dispose of any materials purchased under such a certificate for
any purpose other than that for which such a certificate is issued without
the payment of the sales or compensating tax otherwise imposed upon
such materials, shall be guilty of a misdemeanor and, upon conviction
therefor, shall be subject to the penalties provided for in subsection (g)
of K.S.A. 79-3615, and amendments thereto. Sales tax paid on and after
July 1, 1998, but prior to the effective date of this act upon the gross
receipts received from any sale exempted by the amendatory provisions
of this subsection shall be refunded. Each claim for a sales tax refund
shall be verified and submitted to the director of taxation upon forms
furnished by the director and shall be accompanied by any additional
documentation required by the director. The director shall review each
claim and shall refund that amount of sales tax paid as determined under
the provisions of this subsection. All refunds shall be paid from the sales
tax refund fund upon warrants of the director of accounts and reports
pursuant to vouchers approved by the director or the director's designee;

      (bbb) all sales of food for human consumption by an organization
which is exempt from federal income taxation pursuant to section 501
(c)(3) of the federal internal revenue code of 1986, pursuant to a food
distribution program which offers such food at a price below cost in
exchange for the performance of community service by the purchaser
thereof;

      (ccc) on and after July 1, 1999, all sales of tangible personal property
and services purchased by a primary care clinic or health center the pri-
mary purpose of which is to provide services to medically underserved
individuals and families, and which is exempt from federal income taxa-
tion pursuant to section 501 (c)(3) of the federal internal revenue code,
and all sales of tangible personal property or services purchased by a
contractor for the purpose of constructing, equipping, reconstructing,
maintaining, repairing, enlarging, furnishing or remodeling facilities for
any such clinic or center which would be exempt from taxation under the
provisions of this section if purchased directly by such clinic or center.
Nothing in this subsection shall be deemed to exempt the purchase of
any construction machinery, equipment or tools used in the constructing,
equipping, reconstructing, maintaining, repairing, enlarging, furnishing
or remodeling facilities for any such clinic or center. When any such clinic
or center shall contract for the purpose of constructing, equipping, re-
constructing, maintaining, repairing, enlarging, furnishing or remodeling
facilities, it shall obtain from the state and furnish to the contractor an
exemption certificate for the project involved, and the contractor may
purchase materials for incorporation in such project. The contractor shall
furnish the number of such certificate to all suppliers from whom such
purchases are made, and such suppliers shall execute invoices covering
the same bearing the number of such certificate. Upon completion of the
project the contractor shall furnish to such clinic or center concerned a
sworn statement, on a form to be provided by the director of taxation,
that all purchases so made were entitled to exemption under this subsec-
tion. All invoices shall be held by the contractor for a period of five years
and shall be subject to audit by the director of taxation. If any materials
purchased under such a certificate are found not to have been incorpo-
rated in the building or other project or not to have been returned for
credit or the sales or compensating tax otherwise imposed upon such
materials which will not be so incorporated in the building or other pro-
ject reported and paid by such contractor to the director of taxation not
later than the 20th day of the month following the close of the month in
which it shall be determined that such materials will not be used for the
purpose for which such certificate was issued, such clinic or center con-
cerned shall be liable for tax on all materials purchased for the project,
and upon payment thereof it may recover the same from the contractor
together with reasonable attorney fees. Any contractor or any agent, em-
ployee or subcontractor thereof, who shall use or otherwise dispose of
any materials purchased under such a certificate for any purpose other
than that for which such a certificate is issued without the payment of
the sales or compensating tax otherwise imposed upon such materials,
shall be guilty of a misdemeanor and, upon conviction therefor, shall be
subject to the penalties provided for in subsection (g) of K.S.A. 79-3615,
and amendments thereto;

      (ddd) on and after January 1, 1999, and before January 1, 2000, all
sales of materials and services purchased by any class II or III railroad as
classified by the federal surface transportation board for the construction,
renovation, repair or replacement of class II or III railroad track and
facilities used directly in interstate commerce. In the event any such track
or facility for which materials and services were purchased sales tax ex-
empt is not operational for five years succeeding the allowance of such
exemption, the total amount of sales tax which would have been payable
except for the operation of this subsection shall be recouped in accord-
ance with rules and regulations adopted for such purpose by the secretary
of revenue;

      (eee) on and after January 1, 1999, and before January 1, 2000 2001,
all sales of materials and services purchased for the original construction,
reconstruction, repair or replacement of grain storage facilities, including
railroad sidings providing access thereto; and

      (fff) all sales of material handling equipment, racking systems and
other related machinery and equipment that is used for the handling,
movement or storage of tangible personal property in a warehouse or
distribution facility in this state; all sales of installation, repair and main-
tenance services performed on such machinery and equipment; and all
sales of repair and replacement parts for such machinery and equipment.
For purposes of this subsection, a warehouse or distribution facility means
a single, fixed location that consists of buildings or structures in a contig-
uous area where storage or distribution operations are conducted that are
separate and apart from the business' retail operations, if any, and which
do not otherwise qualify for exemption as occurring at a manufacturing
or processing plant or facility. Material handling and storage equipment
shall include aeration, dust control, cleaning, handling and other such
equipment that is used in a public grain warehouse or other commercial
grain storage facility, whether used for grain handling, grain storage, grain
refining or processing, or other grain treatment operation; and

      (ggg) all sales of tangible personal property and services purchased
by or on behalf of the Kansas Academy of Science which is exempt from
federal income taxation pursuant to section 501(c)(3) of the federal inter-
nal revenue code of 1986, and used solely by such academy for the prep-
aration, publication and dissemination of education materials.

      Sec.  11. K.S.A. 1999 Supp. 79-3633 is hereby amended to read as
follows: 79-3633. As used in K.S.A. 79-3620 and 79-3632 to 79-3639 and
amendments thereto, unless the context clearly indicates otherwise:

      (a) "Income" means adjusted gross income determined under the
Kansas income tax act without regard to the modifications specified by
subsections (c)(i), (ii) regarding Kansas public employee retirement sys-
tem retirement benefits, (vii), (ix) and (xii) of K.S.A. 79-32,117, and
amendments thereto.

      (b) "Household" means a claimant and all other persons for whom a
personal exemption is claimed who together occupy a common residence.

      (c) "Claimant" means a person who has filed a claim for a refund or
credit under the provisions of this act and was, during the entire calendar
year preceding the year in which the claim was filed for relief under this
act, domiciled in this state, was a member of a household, had income of
not more than $25,000 in the calendar year for which a claim is filed and
was: (1) A person having a disability; (2) a person other than a person
included under (1), who has attained 55 years of age in the calendar year
for which a claim is filed or (3) a person other than a person included
under (1) or (2) having one or more dependent children under 18 years
of age residing at the person's homestead during the calendar year for
which a claim is filed.

      (d) "Head of household" means the person filing a claim under the
provisions of this act.

      (e) "Disability" means (1) inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental im-
pairment which can be expected to result in death or has lasted or can
be expected to last for a continuous period of not less than 12 months,
and an individual shall be determined to be under a disability only if the
physical or mental impairment or impairments are of such severity that
the individual is not only unable to do the individual's previous work but
cannot, considering age, education and work experience, engage in any
other kind of substantial gainful work which exists in the national econ-
omy, regardless of whether such work exists in the immediate area in
which the individual lives or whether a specific job vacancy exists for the
individual, or whether the individual would be hired if application was
made for work. For purposes of the preceding sentence (with respect to
any individual), "work which exists in the national economy" means work
which exists in significant numbers either in the region where the indi-
vidual lives or in several regions of the country; for purposes of this sub-
section, a "physical or mental impairment" is an impairment that results
from anatomical, physiological or psychological abnormalities which are
demonstrable by medically acceptable clinical and laboratory diagnostic
techniques; or

      (2) blindness and inability by reason of blindness to engage in sub-
stantial gainful activity requiring skills or abilities comparable to those of
any gainful activity in which the individual has previously engaged with
some regularity and over a substantial period of time.

      (f) "Blindness" means central visual acuity of 20/200 or less in the bet-
ter eye with the use of a correcting lens. An eye which is accompanied
by a limitation in the fields of vision such that the widest diameter of the
visual field subtends an angle no greater than 20 degrees shall be consid-
ered for the purpose of this paragraph as having a central visual acuity of
20/200 or less.

      Sec.  12. K.S.A. 1999 Supp. 79-3635 is hereby amended to read as
follows: 79-3635. (a)  (1) A claimant shall be entitled to a refund of re-
tailers' sales taxes paid upon food during the calendar year 1998 and each
year thereafter in the amount hereinafter provided. There shall be al-
lowed for each member of a household of a claimant having income of
$12,500 or less, an amount equal to $60. There shall be allowed for each
member of a household of a claimant having income of more than $12,500
but not more than $25,000, an amount equal to $30. There shall be al-
lowed for a claimant who qualifies for an additional personal exemption
amount pursuant to K.S.A. 79-32,121, and amendments thereto, an ad-
ditional amount of $30 or $60, as the case requires. All such claims shall
be paid from the sales tax refund fund upon warrants of the director of
accounts and reports pursuant to vouchers approved by the director of
taxation or by a person or persons designated by the director.

      (2) As an alternative to the procedure described by paragraph 1, for
all taxable years commencing after December 31, 1997, there shall be
allowed as a credit against the tax liability of a resident individual imposed
under the Kansas income tax act an amount equal to $60 or $30, as the
case requires, for each member of a household. There shall be allowed
for a claimant who qualifies for an additional personal exemption amount
pursuant to K.S.A. 79-32,121, and amendments thereto, an additional
amount of $30 or $60, as the case requires. If the amount of such tax
credit exceeds the claimant's income tax liability for such taxable year,
such excess amount shall be refunded to the claimant.

      (b) A head of household shall make application for refunds for all
members of the same household upon a common form provided for the
making of joint claims. All claims paid to members of the same household
shall be paid as a joint claim by means of a single warrant.

      (c) No claim for a refund of taxes under the provisions of K.S.A. 79-
3632 et seq. shall be paid or allowed unless such claim is actually filed
with and in the possession of the department of revenue on or before
April 15 of the year next succeeding the year in which such taxes were
paid. The director of taxation may: (1) Extend the time for filing any claim
under the provisions of this act when good cause exists therefor; or (2)
accept a claim filed after the deadline for filing in the case of sickness,
absence or disability of the claimant if such claim has been filed within
four years of such deadline.

      New Sec.  13. The provisions of sections 13 through 19 and amend-
ments thereto of this act may be cited as the streamlined sales tax system
for the 21st century act.

      New Sec.  14. The legislature finds that:

      (a) State and local tax systems should treat transactions in a compet-
itively neutral manner;

      (b) a simplified sales and use tax system that treats all transactions in
a competitively neutral manner will strengthen and preserve the sales and
use tax as vital state and local revenue sources and preserve state fiscal
sovereignty;

      (c) remote sellers should not receive preferential tax treatment at the
expense of local "main street" merchants, nor should such vendors be
burdened with special, discriminatory or multiple taxes.

      (d) the state should simplify sales and use taxes to reduce the admin-
istrative burden of collection; and

      (e) while states have the sovereign right to set their own tax policies,
states working together have the opportunity to develop a more simple,
uniform, and fair system of state sales and use taxation without federal
government mandates of interference.

      New Sec.  15. The department of revenue shall enter into discussions
with states regarding development of a multi-state, voluntary, streamlined
system for sales and use tax collection and administration. These discus-
sions shall focus on a system that would have the capability to determine
whether the transaction is taxable or tax exempt, the appropriate tax rate
applied to the transaction, and the total tax due on the transaction, and
shall provide a method of collecting and remitting sales and use taxes to
the state. Such system may provide compensation for the costs of col-
lecting and remitting sales and use taxes. Discussions between the de-
partment and other states may include, but are not limited to:

      (a) The development of a "joint request for information" from po-
tential public and private parties governing the specifications for such
system;

      (b) the mechanism for compensating parties for the development and
operation of such system;

      (c) establishment of minimum statutory simplification measures nec-
essary for state participation in such system; and

      (d) measures to preserve confidentiality of taxpayer information and
privacy rights of consumers.

      Following these discussions, the department may proceed to issue a
joint request for information.

      New Sec.  16. The department is authorized to participate in a sales
tax pilot project with other states and selected businesses to test means
for simplifying sales and use tax administration and may enter into joint
agreements for that purpose.

      (a) Agreements to participate in the test shall establish provisions for
the administration, imposition and collection of sales and use taxes re-
sulting in revenues paid that are the same as would be paid under articles
36 and 37 of chapter 79 of the Kansas Statutes Annotated.

      (b) Parties to the agreements are excused from complying with the
provisions of articles 36 and 37 of chapter 79 of the Kansas Statutes
Annotated to the extent a different procedure is required by the agree-
ments, except for confidentiality of taxpayer information as detailed in
section 17, and amendments thereto.

      (c) Agreements authorized under this section shall terminate no later
than December 31, 2001.

      New Sec.  17. Return information submitted to any party or parties
acting for and on behalf of the state shall be treated as confidential. Dis-
closure of such information necessary under sections 15 and 16 shall be
pursuant to a written agreement between the department and the party
or parties. Such party or parties shall be bound by the same requirements
of confidentiality as the department, under K.S.A. 79-3614, and amend-
ments thereto.

      New Sec.  18. There is hereby created a legislative oversight com-
mittee which shall consist of the chairpersons and minority party leaders
of the standing committees on taxation of the senate and the house of
representatives. The department shall provide testimony and information
as requested by the committee. The department shall provide quarterly
reports to the governor, the speaker of the house, minority leader of the
house, president of the senate and senate minority leader and to the
members of the legislative oversight committee on the progress of multi-
state discussions.

      New Sec.  19. By March 1, 2001, the department shall report to the
governor and to the speaker of the house, minority leader of the house,
president of the senate and senate minority leader and to the members
of the legislative oversight committee on the status of multi-state discus-
sions and, if a proposed system has been agreed upon by participating
states, shall also recommend whether the state should participate in such
system.

      Sec.  20. K.S.A. 1999 Supp. 12-187, 12-188, 12-189, 12-189c, 12-
1694, 12-1698, 12-2536, 75-5133, 79-3602, 79-3603, 79-3606, as amended
by section 1 of 2000 House Bill No. 2011, 79-3633 and 79-3635 are hereby
repealed.

     Sec.  21. This act shall take effect and be in force from and after its
publication in the statute book.