Session of 2000
HOUSE BILL No. 2843
By Committee on Education
2-2
9 AN ACT
relating to taxation of nonprofit organizations; concerning
Mid-
10 America Association
for Computers in Education; amending K.S.A.
11 1999 Supp. 12-1692,
12-1696 and 79-3606 and repealing the existing
12 sections.
13
14 Be it enacted by the Legislature of the
State of Kansas:
15 Section
1. K.S.A. 1999 Supp. 12-1692 is hereby amended to read as
16 follows: 12-1692. As used in this act, the
following words and phrases
17 shall have the meanings respectively
ascribed to them herein:
18 (a) "Person"
means an individual, firm, partnership, corporation, joint
19 venture or other association of persons,
except for organizations which
20 are exempt from federal income taxation
pursuant to section 501(c)(3) of
21 the federal internal revenue code of
1986 organized for the purpose of
22 providing computer education and
training to Kansas educators and of-
23 ficers, employees, members or
representatives of such organizations;
24 (b) "Hotel, motel
or tourist court" means any structure or building
25 which contains rooms furnished for the
purposes of providing lodging,
26 which may or may not also provide meals,
entertainment or various other
27 personal services to transient guests, and
which is kept, used, maintained,
28 advertised or held out to the public as a
place where sleeping accom-
29 modations are sought for pay or
compensation by transient or permanent
30 guests and having more than two bedrooms
furnished for the accom-
31 modation of such guests;
32 (c) "Transient
guest" means a person who occupies a room in a hotel,
33 motel or tourist court for not more than 28
consecutive days;
34 (d) "Business"
means any person engaged in the business of renting,
35 leasing or letting living quarters,
sleeping accommodations, rooms or a
36 part thereof in connection with any motel,
hotel or tourist court;
37 (e) "Convention
and tourism promotion" means: (1) Activities to at-
38 tract visitors into the community through
marketing efforts, including
39 advertising, directed to at least one of
the five basic convention and tour-
40 ism market segments consisting of group
tours, pleasure travelers, asso-
41 ciation meetings and conventions, trade
shows and corporate meetings
42 and travel; and (2) support of those
activities and organizations which
43 encourage increased lodging facility
occupancy; and
2
1
(f) "Accommodations broker" means any business which
maintains
2 an inventory of two or more rooms in
one or more locations which are
3 offered for pay to a person or
persons for not more than 28 consecutive
4 days.
5 Sec.
2. K.S.A. 1999 Supp. 12-1696 is hereby amended to read as
6 follows: 12-1696. As used in this
act, the following words and phrases
7 shall have the meanings respectively
ascribed to them herein:
8
(a) "Person" means an individual, firm, partnership,
corporation, joint
9 venture or other association of
persons, except for organizations which
10 are exempt from federal income taxation
pursuant to section 501 (c)(3) of
11 the federal internal revenue code of
1986 organized for the purpose of
12 providing computer education and
training to Kansas educators and of-
13 ficers, employees, members or
representatives of such organizations;
14 (b) "Hotel, motel
or tourist court" means any structure or building
15 which contains rooms furnished for the
purposes of providing lodging,
16 which may or may not also provide meals,
entertainment or various other
17 personal services to transient guests, and
which is kept, used, maintained,
18 advertised or held out to the public as a
place where sleeping accom-
19 modations are sought for pay or
compensation by transient or permanent
20 guests and having more than two bedrooms
furnished for the accom-
21 modation of such guests;
22 (c) "Transient
guest" means a person who occupies a room in a hotel,
23 motel or tourist court for not more than 28
consecutive days;
24 (d) "Business"
means any person engaged in the business of renting,
25 leasing or letting living quarters,
sleeping accommodations, rooms or a
26 part thereof in connection with any motel,
hotel or tourist court;
27 (e) "Convention
and tourism promotion" means: (1) Activities to at-
28 tract visitors into the community through
marketing efforts, including
29 advertising, directed to at least one of
the five basic convention and tour-
30 ism market segments consisting of group
tours, pleasure travelers, asso-
31 ciation meetings and conventions, trade
shows and corporate meetings
32 and travel; and (2) support of those
activities and organizations which
33 encourage increased lodging facility
occupancy; and
34
(f) "Accommodations broker" means any business which
maintains
35 an inventory of two or more rooms in one or
more locations which are
36 offered for pay to a person or persons for
not more than 28 consecutive
37 days.
38 Sec.
3. K.S.A. 1999 Supp. 79-3606 is hereby amended to read as
39 follows: 79-3606. The following shall be
exempt from the tax imposed by
40 this act:
41 (a) All sales of
motor-vehicle fuel or other articles upon which a sales
42 or excise tax has been paid, not subject to
refund, under the laws of this
43 state except cigarettes as defined by
K.S.A. 79-3301 and amendments
3
1 thereto, cereal malt beverages and
malt products as defined by K.S.A. 79-
2 3817 and amendments thereto,
including wort, liquid malt, malt syrup
3 and malt extract, which is not
subject to taxation under the provisions of
4 K.S.A. 79-41a02 and amendments
thereto, motor vehicles taxed pursuant
5 to K.S.A. 79-5117, and amendments
thereto, tires taxed pursuant to
6 K.S.A. 1999 Supp. 65-3424d, and
amendments thereto, and drycleaning
7 and laundry services taxed pursuant
to K.S.A. 1999 Supp. 65-34,150, and
8 amendments thereto;
9 (b) all
sales of tangible personal property or service, including the
10 renting and leasing of tangible personal
property, purchased directly by
11 the state of Kansas, a political
subdivision thereof, other than a school or
12 educational institution, or purchased by a
public or private nonprofit hos-
13 pital or public hospital authority or
nonprofit blood, tissue or organ bank
14 and used exclusively for state, political
subdivision, hospital or public hos-
15 pital authority or nonprofit blood, tissue
or organ bank purposes, except
16 when: (1) Such state, hospital or public
hospital authority is engaged or
17 proposes to engage in any business
specifically taxable under the provi-
18 sions of this act and such items of
tangible personal property or service
19 are used or proposed to be used in such
business, or (2) such political
20 subdivision is engaged or proposes to
engage in the business of furnishing
21 gas, water, electricity or heat to others
and such items of personal prop-
22 erty or service are used or proposed to be
used in such business;
23 (c) all sales of
tangible personal property or services, including the
24 renting and leasing of tangible personal
property, purchased directly by
25 a public or private elementary or secondary
school or public or private
26 nonprofit educational institution and used
primarily by such school or
27 institution for nonsectarian programs and
activities provided or sponsored
28 by such school or institution or in the
erection, repair or enlargement of
29 buildings to be used for such purposes. The
exemption herein provided
30 shall not apply to erection, construction,
repair, enlargement or equip-
31 ment of buildings used primarily for human
habitation;
32 (d) all sales of
tangible personal property or services purchased by a
33 contractor for the purpose of constructing,
equipping, reconstructing,
34 maintaining, repairing, enlarging,
furnishing or remodeling facilities for
35 any public or private nonprofit hospital or
public hospital authority, public
36 or private elementary or secondary school
or a public or private nonprofit
37 educational institution, which would be
exempt from taxation under the
38 provisions of this act if purchased
directly by such hospital or public hos-
39 pital authority, school or educational
institution; and all sales of tangible
40 personal property or services purchased by
a contractor for the purpose
41 of constructing, equipping, reconstructing,
maintaining, repairing, en-
42 larging, furnishing or remodeling
facilities for any political subdivision of
43 the state, the total cost of which is paid
from funds of such political
4
1 subdivision and which would be exempt
from taxation under the provi-
2 sions of this act if purchased
directly by such political subdivision. Nothing
3 in this subsection or in the
provisions of K.S.A. 12-3418 and amendments
4 thereto, shall be deemed to exempt
the purchase of any construction
5 machinery, equipment or tools used in
the constructing, equipping, re-
6 constructing, maintaining, repairing,
enlarging, furnishing or remodeling
7 facilities for any political
subdivision of the state. As used in this subsec-
8 tion, K.S.A. 12-3418 and 79-3640, and
amendments thereto, "funds of a
9 political subdivision" shall mean
general tax revenues, the proceeds of
10 any bonds and gifts or grants-in-aid. Gifts
shall not mean funds used for
11 the purpose of constructing, equipping,
reconstructing, repairing, enlarg-
12 ing, furnishing or remodeling facilities
which are to be leased to the do-
13 nor. When any political subdivision of the
state, public or private non-
14 profit hospital or public hospital
authority, public or private elementary
15 or secondary school or public or private
nonprofit educational institution
16 shall contract for the purpose of
constructing, equipping, reconstructing,
17 maintaining, repairing, enlarging,
furnishing or remodeling facilities, it
18 shall obtain from the state and furnish to
the contractor an exemption
19 certificate for the project involved, and
the contractor may purchase ma-
20 terials for incorporation in such project.
The contractor shall furnish the
21 number of such certificate to all suppliers
from whom such purchases are
22 made, and such suppliers shall execute
invoices covering the same bearing
23 the number of such certificate. Upon
completion of the project the con-
24 tractor shall furnish to the political
subdivision, hospital or public hospital
25 authority, school or educational
institution concerned a sworn statement,
26 on a form to be provided by the director of
taxation, that all purchases so
27 made were entitled to exemption under this
subsection. As an alternative
28 to the foregoing procedure, any such
contracting entity may apply to the
29 secretary of revenue for agent status for
the sole purpose of issuing and
30 furnishing project exemption certificates
to contractors pursuant to rules
31 and regulations adopted by the secretary
establishing conditions and stan-
32 dards for the granting and maintaining of
such status. All invoices shall
33 be held by the contractor for a period of
five years and shall be subject
34 to audit by the director of taxation. If
any materials purchased under such
35 a certificate are found not to have been
incorporated in the building or
36 other project or not to have been returned
for credit or the sales or
37 compensating tax otherwise imposed upon
such materials which will not
38 be so incorporated in the building or other
project reported and paid by
39 such contractor to the director of taxation
not later than the 20th day of
40 the month following the close of the month
in which it shall be deter-
41 mined that such materials will not be used
for the purpose for which such
42 certificate was issued, the political
subdivision, hospital or public hospital
43 authority, school or educational
institution concerned shall be liable for
5
1 tax on all materials purchased for
the project, and upon payment thereof
2 it may recover the same from the
contractor together with reasonable
3 attorney fees. Any contractor or any
agent, employee or subcontractor
4 thereof, who shall use or otherwise
dispose of any materials purchased
5 under such a certificate for any
purpose other than that for which such a
6 certificate is issued without the
payment of the sales or compensating tax
7 otherwise imposed upon such
materials, shall be guilty of a misdemeanor
8 and, upon conviction therefor, shall
be subject to the penalties provided
9 for in subsection (g) of K.S.A.
79-3615, and amendments thereto;
10 (e) all sales of
tangible personal property or services purchased by a
11 contractor for the erection, repair or
enlargement of buildings or other
12 projects for the government of the United
States, its agencies or instru-
13 mentalities, which would be exempt from
taxation if purchased directly
14 by the government of the United States, its
agencies or instrumentalities.
15 When the government of the United States,
its agencies or instrumen-
16 talities shall contract for the erection,
repair, or enlargement of any build-
17 ing or other project, it shall obtain from
the state and furnish to the
18 contractor an exemption certificate for the
project involved, and the con-
19 tractor may purchase materials for
incorporation in such project. The
20 contractor shall furnish the number of such
certificates to all suppliers
21 from whom such purchases are made, and such
suppliers shall execute
22 invoices covering the same bearing the
number of such certificate. Upon
23 completion of the project the contractor
shall furnish to the government
24 of the United States, its agencies or
instrumentalities concerned a sworn
25 statement, on a form to be provided by the
director of taxation, that all
26 purchases so made were entitled to
exemption under this subsection. As
27 an alternative to the foregoing procedure,
any such contracting entity may
28 apply to the secretary of revenue for agent
status for the sole purpose of
29 issuing and furnishing project exemption
certificates to contractors pur-
30 suant to rules and regulations adopted by
the secretary establishing con-
31 ditions and standards for the granting and
maintaining of such status. All
32 invoices shall be held by the contractor
for a period of five years and shall
33 be subject to audit by the director of
taxation. Any contractor or any agent,
34 employee or subcontractor thereof, who
shall use or otherwise dispose of
35 any materials purchased under such a
certificate for any purpose other
36 than that for which such a certificate is
issued without the payment of
37 the sales or compensating tax otherwise
imposed upon such materials,
38 shall be guilty of a misdemeanor and, upon
conviction therefor, shall be
39 subject to the penalties provided for in
subsection (g) of K.S.A. 79-3615
40 and amendments thereto;
41 (f) tangible
personal property purchased by a railroad or public utility
42 for consumption or movement directly and
immediately in interstate
43 commerce;
6
1 (g) sales
of aircraft including remanufactured and modified aircraft,
2 sales of aircraft repair,
modification and replacement parts and sales of
3 services employed in the
remanufacture, modification and repair of air-
4 craft sold to persons using directly
or through an authorized agent such
5 aircraft and aircraft repair,
modification and replacement parts as certified
6 or licensed carriers of persons or
property in interstate or foreign com-
7 merce under authority of the laws of
the United States or any foreign
8 government or sold to any foreign
government or agency or instrumen-
9 tality of such foreign government and
all sales of aircraft, aircraft parts,
10 replacement parts and services employed in
the remanufacture, modifi-
11 cation and repair of aircraft for use
outside of the United States;
12 (h) all rentals
of nonsectarian textbooks by public or private elemen-
13 tary or secondary schools;
14 (i) the lease or
rental of all films, records, tapes, or any type of sound
15 or picture transcriptions used by motion
picture exhibitors;
16 (j) meals served
without charge or food used in the preparation of
17 such meals to employees of any restaurant,
eating house, dining car, hotel,
18 drugstore or other place where meals or
drinks are regularly sold to the
19 public if such employees' duties are
related to the furnishing or sale of
20 such meals or drinks;
21 (k) any motor
vehicle, semitrailer or pole trailer, as such terms are
22 defined by K.S.A. 8-126 and amendments
thereto, or aircraft sold and
23 delivered in this state to a bona fide
resident of another state, which motor
24 vehicle, semitrailer, pole trailer or
aircraft is not to be registered or based
25 in this state and which vehicle,
semitrailer, pole trailer or aircraft will not
26 remain in this state more than 10 days;
27 (l) all isolated
or occasional sales of tangible personal property, serv-
28 ices, substances or things, except isolated
or occasional sale of motor
29 vehicles specifically taxed under the
provisions of subsection (o) of K.S.A.
30 79-3603 and amendments thereto;
31 (m) all sales of
tangible personal property which become an ingre-
32 dient or component part of tangible
personal property or services pro-
33 duced, manufactured or compounded for
ultimate sale at retail within or
34 without the state of Kansas; and any such
producer, manufacturer or
35 compounder may obtain from the director of
taxation and furnish to the
36 supplier an exemption certificate number
for tangible personal property
37 for use as an ingredient or component part
of the property or services
38 produced, manufactured or compounded;
39 (n) all sales of
tangible personal property which is consumed in the
40 production, manufacture, processing,
mining, drilling, refining or com-
41 pounding of tangible personal property, the
treating of by-products or
42 wastes derived from any such production
process, the providing of serv-
43 ices or the irrigation of crops for
ultimate sale at retail within or without
7
1 the state of Kansas; and any
purchaser of such property may obtain from
2 the director of taxation and furnish
to the supplier an exemption certifi-
3 cate number for tangible personal
property for consumption in such pro-
4 duction, manufacture, processing,
mining, drilling, refining, compound-
5 ing, treating, irrigation and in
providing such services;
6 (o) all
sales of animals, fowl and aquatic plants and animals, the pri-
7 mary purpose of which is use in
agriculture or aquaculture, as defined in
8 K.S.A. 47-1901, and amendments
thereto, the production of food for
9 human consumption, the production of
animal, dairy, poultry or aquatic
10 plant and animal products, fiber or fur, or
the production of offspring for
11 use for any such purpose or purposes;
12 (p) all sales of
drugs, as defined by K.S.A. 65-1626 and amendments
13 thereto, dispensed pursuant to a
prescription order, as defined by K.S.A.
14 65-1626 and amendments thereto, by a
licensed practitioner or a mid-
15 level practitioner as defined by K.S.A.
65-1626, and amendments thereto;
16 (q) all sales of
insulin dispensed by a person licensed by the state
17 board of pharmacy to a person for treatment
of diabetes at the direction
18 of a person licensed to practice medicine
by the board of healing arts;
19 (r) all sales of
prosthetic and orthopedic appliances prescribed in
20 writing by a person licensed to practice
the healing arts, dentistry or
21 optometry. For the purposes of this
subsection, the term prosthetic and
22 orthopedic appliances means any apparatus,
instrument, device, or equip-
23 ment used to replace or substitute for any
missing part of the body; used
24 to alleviate the malfunction of any part of
the body; or used to assist any
25 disabled person in leading a normal life by
facilitating such person's mo-
26 bility; such term shall include accessories
attached or to be attached to
27 motor vehicles, but such term shall not
include motor vehicles or personal
28 property which when installed becomes a
fixture to real property;
29 (s) all sales of
tangible personal property or services purchased di-
30 rectly by a groundwater management district
organized or operating un-
31 der the authority of K.S.A. 82a-1020 et
seq. and amendments thereto,
32 which property or services are used in the
operation or maintenance of
33 the district;
34 (t) all sales of
farm machinery and equipment or aquaculture ma-
35 chinery and equipment, repair and
replacement parts therefor and serv-
36 ices performed in the repair and
maintenance of such machinery and
37 equipment. For the purposes of this
subsection the term "farm machinery
38 and equipment or aquaculture machinery and
equipment" shall include
39 machinery and equipment used in the
operation of Christmas tree farm-
40 ing but shall not include any passenger
vehicle, truck, truck tractor, trailer,
41 semitrailer or pole trailer, other than a
farm trailer, as such terms are
42 defined by K.S.A. 8-126 and amendments
thereto. Each purchaser of
43 farm machinery and equipment or aquaculture
machinery and equipment
8
1 exempted herein must certify in
writing on the copy of the invoice or
2 sales ticket to be retained by the
seller that the farm machinery and
3 equipment or aquaculture machinery
and equipment purchased will be
4 used only in farming, ranching or
aquaculture production. Farming or
5 ranching shall include the operation
of a feedlot and farm and ranch work
6 for hire and the operation of a
nursery;
7 (u) all
leases or rentals of tangible personal property used as a
dwell-
8 ing if such tangible personal
property is leased or rented for a period of
9 more than 28 consecutive days;
10 (v) all sales of
food products to any contractor for use in preparing
11 meals for delivery to homebound elderly
persons over 60 years of age and
12 to homebound disabled persons or to be
served at a group-sitting at a
13 location outside of the home to otherwise
homebound elderly persons
14 over 60 years of age and to otherwise
homebound disabled persons, as
15 all or part of any food service project
funded in whole or in part by
16 government or as part of a private
nonprofit food service project available
17 to all such elderly or disabled persons
residing within an area of service
18 designated by the private nonprofit
organization, and all sales of food
19 products for use in preparing meals for
consumption by indigent or home-
20 less individuals whether or not such meals
are consumed at a place des-
21 ignated for such purpose;
22 (w) all sales of
natural gas, electricity, heat and water delivered
23 through mains, lines or pipes: (1) To
residential premises for noncom-
24 mercial use by the occupant of such
premises; (2) for agricultural use and
25 also, for such use, all sales of propane
gas; (3) for use in the severing of
26 oil; and (4) to any property which is
exempt from property taxation pur-
27 suant to K.S.A. 79-201b Second
through Sixth, and amendments thereto.
28 As used in this paragraph, "severing" shall
have the meaning ascribed
29 thereto by subsection (k) of K.S.A.
79-4216, and amendments thereto;
30 (x) all sales of
propane gas, LP-gas, coal, wood and other fuel sources
31 for the production of heat or lighting for
noncommercial use of an oc-
32 cupant of residential premises;
33 (y) all sales of
materials and services used in the repairing, servicing,
34 altering, maintaining, manufacturing,
remanufacturing, or modification of
35 railroad rolling stock for use in
interstate or foreign commerce under
36 authority of the laws of the United
States;
37 (z) all sales of
tangible personal property and services purchased di-
38 rectly by a port authority or by a
contractor therefor as provided by the
39 provisions of K.S.A. 12-3418 and amendments
thereto;
40 (aa) all sales of
materials and services applied to equipment which is
41 transported into the state from without the
state for repair, service, al-
42 teration, maintenance, remanufacture or
modification and which is sub-
43 sequently transported outside the state for
use in the transmission of
9
1 liquids or natural gas by means of
pipeline in interstate or foreign com-
2 merce under authority of the laws of
the United States;
3 (bb) all
sales of used mobile homes or manufactured homes. As used
4 in this subsection: (1) "Mobile
homes" and "manufactured homes" shall
5 have the meanings ascribed thereto by
K.S.A. 58-4202 and amendments
6 thereto; and (2) "sales of used
mobile homes or manufactured homes"
7 means sales other than the original
retail sale thereof;
8 (cc) all
sales of tangible personal property or services purchased for
9 the purpose of and in conjunction
with constructing, reconstructing, en-
10 larging or remodeling a business or retail
business which meets the
11 requirements established in K.S.A.
74-50,115 and amendments thereto,
12 and the sale and installation of machinery
and equipment purchased for
13 installation at any such business or retail
business. When a person shall
14 contract for the construction,
reconstruction, enlargement or remodeling
15 of any such business or retail business,
such person shall obtain from the
16 state and furnish to the contractor an
exemption certificate for the project
17 involved, and the contractor may purchase
materials, machinery and
18 equipment for incorporation in such
project. The contractor shall furnish
19 the number of such certificates to all
suppliers from whom such purchases
20 are made, and such suppliers shall execute
invoices covering the same
21 bearing the number of such certificate.
Upon completion of the project
22 the contractor shall furnish to the owner
of the business or retail business
23 a sworn statement, on a form to be provided
by the director of taxation,
24 that all purchases so made were entitled to
exemption under this subsec-
25 tion. All invoices shall be held by the
contractor for a period of five years
26 and shall be subject to audit by the
director of taxation. Any contractor
27 or any agent, employee or subcontractor
thereof, who shall use or oth-
28 erwise dispose of any materials, machinery
or equipment purchased un-
29 der such a certificate for any purpose
other than that for which such a
30 certificate is issued without the payment
of the sales or compensating tax
31 otherwise imposed thereon, shall be guilty
of a misdemeanor and, upon
32 conviction therefor, shall be subject to
the penalties provided for in sub-
33 section (g) of K.S.A. 79-3615 and
amendments thereto. As used in this
34 subsection, "business" and "retail
business" have the meanings respec-
35 tively ascribed thereto by K.S.A. 74-50,114
and amendments thereto;
36 (dd) all sales of
tangible personal property purchased with food
37 stamps issued by the United States
department of agriculture;
38 (ee) all sales of
lottery tickets and shares made as part of a lottery
39 operated by the state of Kansas;
40 (ff) on and after
July 1, 1988, all sales of new mobile homes or man-
41 ufactured homes to the extent of 40% of the
gross receipts, determined
42 without regard to any trade-in allowance,
received from such sale. As used
43 in this subsection, "mobile homes" and
"manufactured homes" shall have
10
1 the meanings ascribed thereto by
K.S.A. 58-4202 and amendments
2 thereto;
3 (gg) all
sales of tangible personal property purchased in accordance
4 with vouchers issued pursuant to the
federal special supplemental food
5 program for women, infants and
children;
6 (hh) all
sales of medical supplies and equipment purchased directly
7 by a nonprofit skilled nursing home
or nonprofit intermediate nursing
8 care home, as defined by K.S.A.
39-923, and amendments thereto, for
9 the purpose of providing medical
services to residents thereof. This ex-
10 emption shall not apply to tangible
personal property customarily used
11 for human habitation purposes;
12 (ii) all sales of
tangible personal property purchased directly by a non-
13 profit organization for nonsectarian
comprehensive multidiscipline youth
14 development programs and activities
provided or sponsored by such or-
15 ganization, and all sales of tangible
personal property by or on behalf of
16 any such organization. This exemption shall
not apply to tangible personal
17 property customarily used for human
habitation purposes;
18 (jj) all sales of
tangible personal property or services, including the
19 renting and leasing of tangible personal
property, purchased directly on
20 behalf of a community-based mental
retardation facility or mental health
21 center organized pursuant to K.S.A. 19-4001
et seq., and amendments
22 thereto, and licensed in accordance with
the provisions of K.S.A. 75-
23 3307b and amendments thereto. This
exemption shall not apply to tan-
24 gible personal property customarily used
for human habitation purposes;
25 (kk) on and after
January 1, 1989, all sales of machinery and equip-
26 ment used directly and primarily for the
purposes of manufacturing, as-
27 sembling, processing, finishing, storing,
warehousing or distributing ar-
28 ticles of tangible personal property in
this state intended for resale by a
29 manufacturing or processing plant or
facility or a storage, warehousing or
30 distribution facility, and all sales of
repair and replacement parts and
31 accessories purchased for such machinery
and equipment:
32 (1) For purposes
of this subsection, machinery and equipment shall
33 be deemed to be used directly and primarily
in the manufacture, assem-
34 blage, processing, finishing, storing,
warehousing or distributing of tan-
35 gible personal property where such
machinery and equipment is used
36 during a manufacturing, assembling,
processing or finishing, storing,
37 warehousing or distributing operation:
38 (A) To effect a
direct and immediate physical change upon the tan-
39 gible personal property;
40 (B) to guide or
measure a direct and immediate physical change upon
41 such property where such function is an
integral and essential part of
42 tuning, verifying or aligning the component
parts of such property;
43 (C) to test or
measure such property where such function is an in-
11
1 tegral part of the production flow or
function;
2 (D) to
transport, convey or handle such property during the manu-
3 facturing, processing, storing,
warehousing or distribution operation at
4 the plant or facility; or
5 (E) to
place such property in the container, package or wrapping in
6 which such property is normally sold
or transported.
7 (2) For
purposes of this subsection "machinery and equipment used
8 directly and primarily" shall
include, but not be limited to:
9
(A) Mechanical machines or components thereof contributing to
a
10 manufacturing, assembling or finishing
process;
11 (B) molds and
dies that determine the physical characteristics of the
12 finished product or its packaging
material;
13 (C) testing
equipment to determine the quality of the finished
14 product;
15 (D) computers and
related peripheral equipment that directly control
16 or measure the manufacturing process or
which are utilized for engi-
17 neering of the finished product; and
18 (E) computers and
related peripheral equipment utilized for research
19 and development and product design.
20 (3) "Machinery
and equipment used directly and primarily" shall not
21 include:
22 (A) Hand
tools;
23 (B) machinery,
equipment and tools used in maintaining and repair-
24 ing any type of machinery and
equipment;
25
(C) transportation equipment not used in the manufacturing,
assem-
26 bling, processing, furnishing, storing,
warehousing or distributing process
27 at the plant or facility;
28 (D) office
machines and equipment including computers and related
29 peripheral equipment not directly and
primarily used in controlling or
30 measuring the manufacturing process;
31 (E) furniture and
buildings; and
32 (F) machinery and
equipment used in administrative, accounting,
33 sales or other such activities of the
business;
34 (4) for purposes
of this subsection, "repair and replacement parts and
35 accessories" means all parts and
accessories for exempt machinery and
36 equipment, including but not limited to
dies, jigs, molds, and patterns
37 which are attached to exempt machinery or
which are otherwise used in
38 production, short-lived replaceable parts
that can be readily detached
39 from exempt machinery or equipment, such as
belts, drill bits, grinding
40 wheels, cutting bars and saws, and other
replacement parts for production
41 equipment, including refractory brick and
other refractory items for kiln
42 equipment used in production
operations;
43 (ll) all sales of
educational materials purchased for distribution to the
12
1 public at no charge by a nonprofit
corporation organized for the purpose
2 of encouraging, fostering and
conducting programs for the improvement
3 of public health;
4 (mm) all
sales of seeds and tree seedlings; fertilizers, insecticides,
5 herbicides, germicides, pesticides
and fungicides; and services, purchased
6 and used for the purpose of producing
plants in order to prevent soil
7 erosion on land devoted to
agricultural use;
8 (nn) except
as otherwise provided in this act, all sales of services ren-
9 dered by an advertising agency or
licensed broadcast station or any mem-
10 ber, agent or employee thereof;
11 (oo) all sales of
tangible personal property purchased by a community
12 action group or agency for the exclusive
purpose of repairing or weath-
13 erizing housing occupied by low income
individuals;
14 (pp) all sales of
drill bits and explosives actually utilized in the explo-
15 ration and production of oil or gas;
16 (qq) all sales of
tangible personal property and services purchased by
17 a nonprofit museum or historical society or
any combination thereof, in-
18 cluding a nonprofit organization which is
organized for the purpose of
19 stimulating public interest in the
exploration of space by providing edu-
20 cational information, exhibits and
experiences, which is exempt from fed-
21 eral income taxation pursuant to section
501(c)(3) of the federal internal
22 revenue code of 1986;
23 (rr) all sales of
tangible personal property which will admit the pur-
24 chaser thereof to any annual event
sponsored by a nonprofit organization
25 which is exempt from federal income
taxation pursuant to section
26 501(c)(3) of the federal internal revenue
code of 1986;
27 (ss) all sales of
tangible personal property and services purchased by
28 a public broadcasting station licensed by
the federal communications
29 commission as a noncommercial educational
television or radio station;
30 (tt) all sales of
tangible personal property and services purchased by
31 or on behalf of a not-for-profit
corporation which is exempt from federal
32 income taxation pursuant to section
501(c)(3) of the federal internal rev-
33 enue code of 1986, for the sole purpose of
constructing a Kansas Korean
34 War memorial;
35 (uu) all sales of
tangible personal property and services purchased by
36 or on behalf of any rural volunteer
fire-fighting organization for use ex-
37 clusively in the performance of its duties
and functions;
38 (vv) all sales of
tangible personal property purchased by any of the
39 following organizations which are exempt
from federal income taxation
40 pursuant to section 501 (c)(3) of the
federal internal revenue code of
41 1986, for the following purposes, and all
sales of any such property by or
42 on behalf of any such organization for any
such purpose:
43 (1) The American
Heart Association, Kansas Affiliate, Inc. for the
13
1 purposes of providing education,
training, certification in emergency car-
2 diac care, research and other related
services to reduce disability and
3 death from cardiovascular diseases
and stroke;
4 (2) the
Kansas Alliance for the Mentally Ill, Inc. for the purpose of
5 advocacy for persons with mental
illness and to education, research and
6 support for their families;
7 (3) the
Kansas Mental Illness Awareness Council for the purposes of
8 advocacy for persons who are mentally
ill and to education, research and
9 support for them and their
families;
10 (4) the American
Diabetes Association Kansas Affiliate, Inc. for the
11 purpose of eliminating diabetes through
medical research, public edu-
12 cation focusing on disease prevention and
education, patient education
13 including information on coping with
diabetes, and professional education
14 and training;
15 (5) the American
Lung Association of Kansas, Inc. for the purpose of
16 eliminating all lung diseases through
medical research, public education
17 including information on coping with lung
diseases, professional educa-
18 tion and training related to lung disease
and other related services to
19 reduce the incidence of disability and
death due to lung disease;
20 (6) the Kansas
chapters of the Alzheimer's Disease and Related Dis-
21 orders Association, Inc. for the purpose of
providing assistance and sup-
22 port to persons in Kansas with Alzheimer's
disease, and their families and
23 caregivers; and
24 (7) the
Mid-America Association for Computers in Education for the
25 purpose of providing computer education
and training to Kansas educa-
26 tors and promoting discussion concerning
the use of technology in Kansas
27 schools.
28 (ww) all sales of
tangible personal property purchased by the Habitat
29 for Humanity for the exclusive use of being
incorporated within a housing
30 project constructed by such
organization.;
31 (xx) all sales of
tangible personal property and services purchased by
32 a nonprofit zoo which is exempt from
federal income taxation pursuant
33 to section 501(c)(3) of the federal
internal revenue code of 1986, or on
34 behalf of such zoo by an entity itself
exempt from federal income taxation
35 pursuant to section 501(c)(3) of the
federal internal revenue code of 1986
36 contracted with to operate such zoo and all
sales of tangible personal
37 property or services purchased by a
contractor for the purpose of con-
38 structing, equipping, reconstructing,
maintaining, repairing, enlarging,
39 furnishing or remodeling facilities for any
nonprofit zoo which would be
40 exempt from taxation under the provisions
of this section if purchased
41 directly by such nonprofit zoo or the
entity operating such zoo. Nothing
42 in this subsection shall be deemed to
exempt the purchase of any con-
43 struction machinery, equipment or tools
used in the constructing, equip-
14
1 ping, reconstructing, maintaining,
repairing, enlarging, furnishing or re-
2 modeling facilities for any nonprofit
zoo. When any nonprofit zoo shall
3 contract for the purpose of
constructing, equipping, reconstructing, main-
4 taining, repairing, enlarging,
furnishing or remodeling facilities, it shall
5 obtain from the state and furnish to
the contractor an exemption certifi-
6 cate for the project involved, and
the contractor may purchase materials
7 for incorporation in such project.
The contractor shall furnish the number
8 of such certificate to all suppliers
from whom such purchases are made,
9 and such suppliers shall execute
invoices covering the same bearing the
10 number of such certificate. Upon completion
of the project the contractor
11 shall furnish to the nonprofit zoo
concerned a sworn statement, on a form
12 to be provided by the director of taxation,
that all purchases so made were
13 entitled to exemption under this
subsection. All invoices shall be held by
14 the contractor for a period of five years
and shall be subject to audit by
15 the director of taxation. If any materials
purchased under such a certifi-
16 cate are found not to have been
incorporated in the building or other
17 project or not to have been returned for
credit or the sales or compen-
18 sating tax otherwise imposed upon such
materials which will not be so
19 incorporated in the building or other
project reported and paid by such
20 contractor to the director of taxation not
later than the 20th day of the
21 month following the close of the month in
which it shall be determined
22 that such materials will not be used for
the purpose for which such cer-
23 tificate was issued, the nonprofit zoo
concerned shall be liable for tax on
24 all materials purchased for the project,
and upon payment thereof it may
25 recover the same from the contractor
together with reasonable attorney
26 fees. Any contractor or any agent, employee
or subcontractor thereof,
27 who shall use or otherwise dispose of any
materials purchased under such
28 a certificate for any purpose other than
that for which such a certificate
29 is issued without the payment of the sales
or compensating tax otherwise
30 imposed upon such materials, shall be
guilty of a misdemeanor and, upon
31 conviction therefor, shall be subject to
the penalties provided for in sub-
32 section (g) of K.S.A. 79-3615, and
amendments thereto;
33 (yy) all sales of
tangible personal property and services purchased by
34 a parent-teacher association or
organization, and all sales of tangible per-
35 sonal property by or on behalf of such
association or organization;
36 (zz) all sales of
machinery and equipment purchased by over-the-air,
37 free access radio or television station
which is used directly and primarily
38 for the purpose of producing a broadcast
signal or is such that the failure
39 of the machinery or equipment to operate
would cause broadcasting to
40 cease. For purposes of this subsection,
machinery and equipment shall
41 include, but not be limited to, that
required by rules and regulations of
42 the federal communications commission, and
all sales of electricity which
43 are essential or necessary for the purpose
of producing a broadcast signal
15
1 or is such that the failure of the
electricity would cause broadcasting to
2 cease;
3 (aaa) all
sales of tangible personal property and services purchased
4 by a religious organization which is
exempt from federal income taxation
5 pursuant to section 501(c)(3) of the
federal internal revenue code, and
6 used exclusively for religious
purposes, and all sales of tangible personal
7 property or services purchased by a
contractor for the purpose of con-
8 structing, equipping, reconstructing,
maintaining, repairing, enlarging,
9 furnishing or remodeling facilities
for any such organization which would
10 be exempt from taxation under the
provisions of this section if purchased
11 directly by such organization. Nothing in
this subsection shall be deemed
12 to exempt the purchase of any construction
machinery, equipment or
13 tools used in the constructing, equipping,
reconstructing, maintaining,
14 repairing, enlarging, furnishing or
remodeling facilities for any such or-
15 ganization. When any such organization
shall contract for the purpose of
16 constructing, equipping, reconstructing,
maintaining, repairing, enlarg-
17 ing, furnishing or remodeling facilities,
it shall obtain from the state and
18 furnish to the contractor an exemption
certificate for the project involved,
19 and the contractor may purchase materials
for incorporation in such pro-
20 ject. The contractor shall furnish the
number of such certificate to all
21 suppliers from whom such purchases are
made, and such suppliers shall
22 execute invoices covering the same bearing
the number of such certifi-
23 cate. Upon completion of the project the
contractor shall furnish to such
24 organization concerned a sworn statement,
on a form to be provided by
25 the director of taxation, that all
purchases so made were entitled to ex-
26 emption under this subsection. All invoices
shall be held by the contractor
27 for a period of five years and shall be
subject to audit by the director of
28 taxation. If any materials purchased under
such a certificate are found
29 not to have been incorporated in the
building or other project or not to
30 have been returned for credit or the sales
or compensating tax otherwise
31 imposed upon such materials which will not
be so incorporated in the
32 building or other project reported and paid
by such contractor to the
33 director of taxation not later than the
20th day of the month following
34 the close of the month in which it shall be
determined that such materials
35 will not be used for the purpose for which
such certificate was issued,
36 such organization concerned shall be liable
for tax on all materials pur-
37 chased for the project, and upon payment
thereof it may recover the same
38 from the contractor together with
reasonable attorney fees. Any contrac-
39 tor or any agent, employee or subcontractor
thereof, who shall use or
40 otherwise dispose of any materials
purchased under such a certificate for
41 any purpose other than that for which such
a certificate is issued without
42 the payment of the sales or compensating
tax otherwise imposed upon
43 such materials, shall be guilty of a
misdemeanor and, upon conviction
16
1 therefor, shall be subject to the
penalties provided for in subsection (g)
2 of K.S.A. 79-3615, and amendments
thereto. Sales tax paid on and after
3 July 1, 1998, but prior to the
effective date of this act upon the gross
4 receipts received from any sale
exempted by the amendatory provisions
5 of this subsection shall be refunded.
Each claim for a sales tax refund
6 shall be verified and submitted to
the director of taxation upon forms
7 furnished by the director and shall
be accompanied by any additional
8 documentation required by the
director. The director shall review each
9 claim and shall refund that amount of
sales tax paid as determined under
10 the provisions of this subsection. All
refunds shall be paid from the sales
11 tax refund fund upon warrants of the
director of accounts and reports
12 pursuant to vouchers approved by the
director or the director's designee;
13 (bbb) all sales
of food for human consumption by an organization
14 which is exempt from federal income
taxation pursuant to section 501
15 (c)(3) of the federal internal revenue code
of 1986, pursuant to a food
16 distribution program which offers such food
at a price below cost in
17 exchange for the performance of community
service by the purchaser
18 thereof;
19 (ccc) on and
after July 1, 1999, all sales of tangible personal property
20 and services purchased by a primary care
clinic or health center the pri-
21 mary purpose of which is to provide
services to medically underserved
22 individuals and families, and which is
exempt from federal income taxa-
23 tion pursuant to section 501 (c)(3) of the
federal internal revenue code,
24 and all sales of tangible personal property
or services purchased by a
25 contractor for the purpose of constructing,
equipping, reconstructing,
26 maintaining, repairing, enlarging,
furnishing or remodeling facilities for
27 any such clinic or center which would be
exempt from taxation under the
28 provisions of this section if purchased
directly by such clinic or center.
29 Nothing in this subsection shall be deemed
to exempt the purchase of
30 any construction machinery, equipment or
tools used in the constructing,
31 equipping, reconstructing, maintaining,
repairing, enlarging, furnishing
32 or remodeling facilities for any such
clinic or center. When any such clinic
33 or center shall contract for the purpose of
constructing, equipping, re-
34 constructing, maintaining, repairing,
enlarging, furnishing or remodeling
35 facilities, it shall obtain from the state
and furnish to the contractor an
36 exemption certificate for the project
involved, and the contractor may
37 purchase materials for incorporation in
such project. The contractor shall
38 furnish the number of such certificate to
all suppliers from whom such
39 purchases are made, and such suppliers
shall execute invoices covering
40 the same bearing the number of such
certificate. Upon completion of the
41 project the contractor shall furnish to
such clinic or center concerned a
42 sworn statement, on a form to be provided
by the director of taxation,
43 that all purchases so made were entitled to
exemption under this subsec-
17
1 tion. All invoices shall be held by
the contractor for a period of five years
2 and shall be subject to audit by the
director of taxation. If any materials
3 purchased under such a certificate
are found not to have been incorpo-
4 rated in the building or other
project or not to have been returned for
5 credit or the sales or compensating
tax otherwise imposed upon such
6 materials which will not be so
incorporated in the building or other pro-
7 ject reported and paid by such
contractor to the director of taxation not
8 later than the 20th day of the month
following the close of the month in
9 which it shall be determined that
such materials will not be used for the
10 purpose for which such certificate was
issued, such clinic or center con-
11 cerned shall be liable for tax on all
materials purchased for the project,
12 and upon payment thereof it may recover the
same from the contractor
13 together with reasonable attorney fees. Any
contractor or any agent, em-
14 ployee or subcontractor thereof, who shall
use or otherwise dispose of
15 any materials purchased under such a
certificate for any purpose other
16 than that for which such a certificate is
issued without the payment of
17 the sales or compensating tax otherwise
imposed upon such materials,
18 shall be guilty of a misdemeanor and, upon
conviction therefor, shall be
19 subject to the penalties provided for in
subsection (g) of K.S.A. 79-3615,
20 and amendments thereto;
21 (ddd) on and
after January 1, 1999, and before January 1, 2000, all
22 sales of materials and services purchased
by any class II or III railroad as
23 classified by the federal surface
transportation board for the construction,
24 renovation, repair or replacement of class
II or III railroad track and
25 facilities used directly in interstate
commerce. In the event any such track
26 or facility for which materials and
services were purchased sales tax ex-
27 empt is not operational for five years
succeeding the allowance of such
28 exemption, the total amount of sales tax
which would have been payable
29 except for the operation of this subsection
shall be recouped in accord-
30 ance with rules and regulations adopted for
such purpose by the secretary
31 of revenue; and
32 (eee) on and
after January 1, 1999, and before January 1, 2000, all
33 sales of materials and services purchased
for the original construction,
34 reconstruction, repair or replacement of
grain storage facilities, including
35 railroad sidings providing access
thereto.
36 Sec. 4. K.S.A. 1999 Supp.
12-1692, 12-1696 and 79-3606 are hereby
37 repealed.
38 Sec. 5. This act shall
take effect and be in force from and after its
39 publication in the statute book.