As Amended by House Committee
Session of 2000
HOUSE BILL No. 3010
By Committee on Appropriations
3-2
11 AN ACT
concerning the job expansion and investment credit act of 1976;
12 amending K.S.A. 1999
Supp. 74-50,131 and 79-32,160a and repealing
13 the existing
sections.
14
15 Be it enacted by the Legislature of the
State of Kansas:
16 Section
1. K.S.A. 1999 Supp. 74-50,131 is hereby amended to read
17 as follows: 74-50,131. Commencing after
December 31, 1999: (a) As
18 used in this act: ``Qualified firm'' means
a for-profit business establish-
19 ment, subject to state income, sales or
property taxes, identified under
20 the manufacturing standard
industrial classification (SIC) codes as in ef-
21 fect July 1, 1993, major groups 20 through
39, major groups 40 through
22 51, and major groups 60 through
89,; identified under the North
American
23 industry classification system (NAICS)
as in effect on July October
1,
24 2000 or is identified as a corporate
or regional headquarters or back-office
25 operation of a national or multi-nation
corporation regardless of SIC code
26 or NAICS designation. The secretary
of commerce and housing shall
27 determine eligibility when a
conflict difference exists
between a firm's
28 SIC code and NAICS designation. A
business establishment may be as-
29 signed a standard industrial classification
code or NAICS designation ac-
30 cording to the primary business activity at
a single physical location in the
31 state.
32 (b) In the case
of firms in major groups 40 through 51, and major
33 groups 60 through 89,
or the corresponding
appropriate NAICS desig-
34 nation the business establishment
must also demonstrate the following:
35 (1) More than
one-half 1/2 of its gross revenues are a
result of sales
36 to commercial or governmental customers
outside the state of Kansas; or
37 (2) more than
one-half 1/2 of its gross revenues are a
result of sales to
38 Kansas manufacturing firms within major
groups 20 through 39 or the
39 corresponding
appropriate NAICS designation; or
40 (3) more than
one-half 1/2 of its gross revenues are a
result of a com-
41 bination of sales described in (1) and
(2).
42 (c) For purposes
of determining whether one of the average wage
43 options described in subsection (d) below
is satisfied, business establish-
2
1 ments located within a metropolitan
county, as defined in K.S.A. 1999
2 Supp. 74-50,114, and amendments
thereto will be compared only to other
3 businesses within that metropolitan
county, and business establishments
4 located outside of a metropolitan
county will be compared to businesses
5 within an aggregation of counties
representing the business establish-
6 ment's region of the state, which
regional aggregation will exclude met-
7 ropolitan counties. Such aggregation
shall be determined by the depart-
8 ment of commerce and housing.
9
(d) Additionally, a business establishment having met the
criteria as
10 established in subsection (a) or (b), and
using the comparison method
11 described in subsection (c), must meet one
of the following criteria:
12 (1) The
establishment with 500 or fewer full-time equivalent em-
13 ployees will provide an average wage that
is above the average wage paid
14 by all firms with 500 or fewer full-time
equivalent employees which share
15 the same two-digit standard industrial
classification code or
correspond-
16 ing
appropriate NAICS designation.
17 (2) The
establishment with 500 or fewer full-time equivalent em-
18 ployees is the sole firm within its
two-digit standard industrial classifica-
19 tion code or
corresponding appropriate NAICS
designation which has
20 500 or fewer full-time equivalent
employees.
21 (3) The
establishment with more than 500 full-time equivalent em-
22 ployees will provide an average wage that
is above the average wage paid
23 by firms with more than 500 full-time
equivalent employees which share
24 the same two-digit standard industrial
classification code or
correspond-
25 ing
appropriate NAICS designation.
26 (4) The
establishment with more than 500 full-time equivalent em-
27 ployees is the sole firm within its
two-digit standard industrial classifica-
28 tion code or
corresponding appropriate NAICS
designation which has
29 500 or more full-time equivalent employees,
in which event it shall either
30 provide an average wage that is above the
average wage paid by all firms
31 with 500 or fewer full-time equivalent
employees which share the same
32 two-digit standard industrial
classification code or corresponding
appro-
33 priate NAICS designation, or
be the sole firm within its two-digit stan-
34 dard industrial classification code
or corresponding appropriate
NAICS
35 designation.
36 (e) As an
alternative to the requirements of subsections (c) and (d),
37 a firm having met the requirements of
subsections (a) or (b), may qualify,
38 if excluding taxable disbursements to
company owners, the business es-
39 tablishment's annual average wage must be
greater than or equal to 1.5
40 times the aggregate average wage paid by
industries covered by the em-
41 ployment security law based on data
maintained by the secretary of hu-
42 man resources.
43 (f) For the
purposes of this section, the number of full-time equiva-
3
1 lent employees shall be determined by
adding dividing the number of
2 hours worked by part-time
employees during the pertinent measurement
3 interval by an amount equal to the
corresponding multiple of a 40-hour
4 work week and adding the quotient
to the number of full-time employees
5 to the number of hours worked
by part-time employees divided by 40.
6 (g) The
secretary of commerce and housing shall certify annually to
7 the secretary of revenue that a firm
meets the criteria for a qualified firm
8 and that the firm is eligible for the
benefits and assistance provided under
9 this act. The secretary of
commerce and housing is hereby authorized to
10 obtain any and all information necessary
to determine such eligibility.
11 Information obtained under this section
shall not be subject to disclosure
12 pursuant to K.S.A. 45-215 et
seq. and amendments thereto, but
may shall
13 upon request be made available to
the legislative post audit division.
14 The secretary of commerce and housing shall
publish rules and regula-
15 tions for the implementation of this act.
Such rules and regulations shall
16 include, but not be limited to:
17 (1) A definition
of ``training and education'' for purposes of K.S.A.
18 1999 Supp. 74-50,132 and amendments
thereto.
19 (2) Establishment
of eligibility requirements and application proce-
20 dures for expenditures from the high
performance incentive fund created
21 in K.S.A. 1999 Supp. 74-50,133 and
amendments thereto.
22 (3) Establishment
of approval guidelines for private consultants au-
23 thorized pursuant to K.S.A. 1999 Supp.
74-50,133 and amendments
24 thereto.
25 (4) Establishment
of guidelines for prioritizing business assistance
26 programs pursuant to K.S.A. 1999 Supp.
74-50,133 and amendments
27 thereto.
28 (5) A definition
of ``commercial customer'' for the purpose of K.S.A.
29 1999 Supp. 74-50,133 and amendments
thereto.
30 (6) A definition
of ``headquarters'' for the purpose of K.S.A. 1999
31 Supp. 74-50,133 and amendments thereto.
32
(7) Establishment of guidelines concerning the use and
disclosure of
33 any information obtained to determine
the eligibility of a firm for the
34 assistance and benefits provided for by
this act.
35 Sec.
2. K.S.A. 1999 Supp. 79-32,160a is hereby amended to read
as
36 follows: 79-32,160a. (a) For taxable years
commencing after December
37 31, 1997 1999, any
taxpayer who shall invest in a qualified business fa-
38 cility, as defined in subsection (b) of
K.S.A. 79-32,154, and amendments
39 thereto, and also meets the definition of a
business in subsection (b) of
40 K.S.A. 74-50,114 and amendments thereto,
shall be allowed a credit for
41 such investment, in an amount determined
under subsection (b) or (c),
42 as the case requires, against the tax
imposed by the Kansas income tax
43 act or where the qualified business
facility is the principal place from
4
1 which the trade or business of the
taxpayer is directed or managed and
2 the facility has facilitated the
creation of at least 20 new full-time posi-
3 tions, against the premium tax or
privilege fees imposed pursuant to
4 K.S.A. 40-252, and amendments thereto
or as measured by the net in-
5 come of financial institutions
imposed pursuant to chapter 79, article 11
6 of the Kansas Statutes Annotated, for
the taxable year during which com-
7 mencement of commercial operations,
as defined in subsection (f) of
8 K.S.A. 79-32,154, and amendments
thereto, occurs at such qualified busi-
9 ness facility. In the case of a
taxpayer who meets the definition of a man-
10 ufacturing business in subsection (d) of
K.S.A. 74-50,114 and amend-
11 ments thereto, no credit shall be allowed
under this section unless the
12 number of qualified business facility
employees, as determined under
13 subsection (d) of K.S.A. 79-32,154, and
amendments thereto, engaged or
14 maintained in employment at the qualified
business facility as a direct
15 result of the investment by the taxpayer
for the taxable year for which the
16 credit is claimed equals or exceeds two. In
the case of a taxpayer who
17 meets the definition of a nonmanufacturing
business in subsection (f) of
18 K.S.A. 74-50,114 and amendments thereto, no
credit shall be allowed
19 under this section unless the number of
qualified business facility em-
20 ployees, as determined under subsection (d)
of K.S.A. 79-32,154, and
21 amendments thereto, engaged or maintained
in employment at the qual-
22 ified business facility as a direct result
of the investment by the taxpayer
23 for the taxable year for which the credit
is claimed equals or exceeds five.
24 Where an employee performs services for the
taxpayer outside the qual-
25 ified business facility, the employee shall
be considered engaged or main-
26 tained in employment at the qualified
business facility if (1) the em-
27 ployee's service performed outside the
qualified business facility is
28 incidental to the employee's service inside
the qualified business facility,
29 or (2) the base of operations or, the place
from which the service is di-
30 rected or controlled, is at the qualified
business facility.
31 (b) The credit
allowed by subsection (a) for any taxpayer who invests
32 in a qualified business facility which is
located in a designated nonmetro-
33 politan region established under K.S.A.
74-50,116 and amendments
34 thereto, on or after the effective date of
this act, shall be a portion of the
35 income tax imposed by the Kansas income tax
act on the taxpayer's Kansas
36 taxable income, the premium tax or
privilege fees imposed pursuant to
37 K.S.A. 40-252, and amendments thereto or
the privilege tax as measured
38 by the net income of financial institutions
imposed pursuant to chapter
39 79, article 11 of the Kansas Statutes
Annotated, for the taxable year for
40 which such credit is allowed, but in the
case where the qualified business
41 facility investment was made prior to
January 1, 1996, not in excess of
42 50% of such tax. Such portion shall be an
amount equal to the sum of
43 the following:
5
1 (1) Two
thousand five hundred dollars for each qualified business
2 facility employee determined under
K.S.A. 79-32,154, and amendments
3 thereto; plus
4 (2) one
thousand dollars for each $100,000, or major fraction thereof,
5 which shall be deemed to be 51% or
more, in qualified business facility
6 investment, as determined under
K.S.A. 79-32,154, and amendments
7 thereto.
8 (c) The
credit allowed by subsection (a) for any taxpayer who invests
9 in a qualified business facility,
which is not located in a nonmetropolitan
10 region established under K.S.A. 74-50,116
and amendments thereto and
11 which also meets the definition of business
in subsection (b) of K.S.A.
12 74-50,114 and amendments thereto, on or
after the effective date of this
13 act, shall be a portion of the income tax
imposed by the Kansas income
14 tax act on the taxpayer's Kansas taxable
income, the premium tax or priv-
15 ilege fees imposed pursuant to K.S.A.
40-252, and amendments thereto
16 or the privilege tax as measured by the net
income of financial institutions
17 imposed pursuant to chapter 79, article 11
of the Kansas Statutes An-
18 notated, for the taxable year for which
such credit is allowed, but in the
19 case where the qualified business facility
investment was made prior to
20 January 1, 1996, not in excess of 50% of
such tax. Such portion shall be
21 an amount equal to the sum of the
following:
22 (1) One thousand
five hundred dollars for each qualified business
23 facility employee as determined under
K.S.A. 79-32,154, and amend-
24 ments thereto; and
25 (2) one thousand
dollars for each $100,000, or major fraction thereof,
26 which shall be deemed to be 51% or more, in
qualified business facility
27 investment as determined under K.S.A.
79-32,154, and amendments
28 thereto.
29 (d) The credit
allowed by subsection (a) for each qualified business
30 facility employee and for qualified
business facility investment shall be a
31 one-time credit. If the amount of the
credit allowed under subsection (a)
32 exceeds the tax imposed by the Kansas
income tax act on the taxpayer's
33 Kansas taxable income, the premium tax and
privilege fees imposed pur-
34 suant to K.S.A. 40-252, and amendments
thereto or the privilege tax as
35 measured by the net income of financial
institutions imposed pursuant to
36 chapter 79, article 11 of the Kansas
Statutes Annotated for the taxable
37 year, or in the case where the qualified
business facility investment was
38 made prior to January 1, 1996, 50% of such
tax imposed upon the amount
39 which exceeds such tax liability or such
portion thereof may be carried
40 over for credit in the same manner in the
succeeding taxable years until
41 the total amount of such credit is used.
Except that, before the credit is
42 allowed, a taxpayer, who meets the
definition of a manufacturing business
43 in subsection (d) of K.S.A. 74-50,114 and
amendments thereto, shall re-
6
1 certify annually that the net
increase of a minimum of two qualified busi-
2 ness facility employees has continued
to be maintained and a taxpayer,
3 who meets the definition of a
nonmanufacturing business in subsection
4 (f) of K.S.A. 74-50,114 and
amendments thereto, shall recertify annually
5 that the net increase of a minimum of
five qualified business employees
6 has continued to be maintained.
7
(e) Notwithstanding the foregoing provisions of this section,
any tax-
8 payer qualified and certified under
the provisions of K.S.A. 1999 Supp.
9 74-50,131, and amendments
thereto,; which, prior to making a
commit-
10 ment to invest in a qualified Kansas
business, has filed a certificate of
11 intent to invest in a qualified business
facility in a form satisfactory to the
12 secretary of commerce and housing;
and that has received written ap-
13 proval from the secretary of commerce and
housing for participation and
14 has participated, during the tax year for
which the exemption is claimed,
15 in the Kansas industrial training, Kansas
industrial retraining or the state
16 of Kansas investments in lifelong learning
program or is eligible for the
17 tax credit established in K.S.A. 1999 Supp.
74-50,132, and amendments
18 thereto, shall be entitled to a credit in
an amount equal to 10% of that
19 portion of the qualified business facility
investment which exceeds
20 $50,000 the
annual average investment made over the lesser of: (1) All
of
21 the taxpayer's prior tax years;
or (2) the taxpayer's five most recent tax
22 years
$50,000 in lieu of the credit provided in subsection (b)(2)
or (c)(2)
23 without regard to the number of qualified
business facility employees
24 engaged or maintained in employment at the
qualified business facility.
25 The credit allowed by this subsection shall
be a one-time credit. If the
26 amount thereof exceeds the tax imposed by
the Kansas income tax act on
27 the taxpayer's Kansas taxable income or the
premium tax or privilege fees
28 imposed pursuant to K.S.A. 40-252, and
amendments thereto or the priv-
29 ilege tax as measured by net income of
financial institutions imposed
30 pursuant to chapter 79, article 11 of the
Kansas Statutes Annotated for
31 the taxable year, the amount thereof which
exceeds such tax liability may
32 be carried forward for credit in the
succeeding taxable year or years until
33 the total amount of the tax credit is used,
except that no such tax credit
34 shall be carried forward for deduction
after the 10th taxable year suc-
35 ceeding the taxable year in which such
credit initially was claimed and no
36 carry forward shall be allowed for
deduction in any succeeding taxable
37 year unless the taxpayer continued to be
qualified and was recertified for
38 such succeeding taxable year pursuant to
K.S.A. 1999 Supp. 74-50,131,
39 and amendments thereto.
40 (f) This section
and K.S.A. 79-32,160b and amendments thereto shall
41 be part of and supplemental to the job
expansion and investment credit
42 act of 1976 and acts amendatory thereof and
supplemental thereto.
43 Sec. 3. K.S.A. 1999 Supp.
74-50,131 and 79-32,160a are hereby
7
1 repealed.
2 Sec. 4. This act
shall take effect and be in force from and after its
3 publication in the statute book.