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Session of 2000
          HOUSE BILL No. 3048           By Committee on Federal and State Affairs           3-28          

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  9             AN  ACT concerning bingo; relating to the regulation and taxation
10             thereof; amending K.S.A. 79-4701, 79-4703, 79-4704, 79-4705, 79-
11             4705a, 79-4706, 79-4707, 79-4708, 79-4710, 79-4711, 79-4712a, 79-
12             4713 and K.S.A. 1999 Supp. 79-3606 and repealing the existing sec-
13             tions; also repealing K.S.A. 79-4714.
14      
15       Be it enacted by the Legislature of the State of Kansas:
16             New Section  1. Sections 2 through 16, and amendments thereto,
17       shall be known and may be cited as the bingo act.
18             Sec.  2. K.S.A. 79-4701 is hereby amended to read as follows: 79-
19       4701. As used in this act, each of the following words and phrases shall
20       have the following meaning unless the context otherwise requires:
21             (a) ``Bingo'' or ``games of bingo'' means the games of call bingo and
22       instant bingo.
23             (b) ``Bingo card'' or ``card'' means a reusable card which is marked
24       off into 25 squares arranged in five horizontal rows of five squares each
25       and five vertical rows of five squares each, with each square being des-
26       ignated by a number, letter or combination of numbers and letters. Only
27       the center square shall be designated with the word free. No two cards in
28       the same game shall be identical.
29             (c) ``Bingo face'' or ``face'' means a piece of paper which is marked
30       off into 25 squares arranged in five horizontal rows of five squares each
31       and five vertical rows of five squares each, with each square being des-
32       ignated by a number, letter or combination of numbers and letters. Only
33       the center square shall be designated with the word free. No two bingo
34       faces in the same game shall be identical. Faces shall be disposable and
35       shall not be reused after the game in which a player has used such face.
36             (b) (d) ``Call bingo'' means a game in which: (1) Each participant must
37       pay player pays a charge and; (2) a prize or prizes are awarded to the
38       winner or winners in which; (3) each participant player receives one or
39       more cards or in which a card or cards are included in a paper game
40       program booklet each of which is marked off into 25 squares arranged in
41       five horizontal rows of five squares each and five vertical rows of five
42       squares each, with each square being designated by number, letter or
43       combination of numbers and letters, and only the center square desig-

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  1       nated with the word ``free'' with no two cards being identical, with the
  2       players covering faces; and (4) each player covers the squares on each
  3       card or face as the operator of such game announces a number, letter or
  4       combination of numbers and letters appearing on an object selected by
  5       chance, either manually or mechanically from a receptacle in which have
  6       been placed objects bearing numbers, letters or combinations of numbers
  7       and letters corresponding to the system used for designating the squares,
  8       with. The winner of each game being is the player or players first properly
  9       covering properly a predetermined and announced pattern of squares
10       upon the card or a card which is included in a paper game program
11       booklet face being used by such player or players.
12             ``Call bingo'' shall include any regular, special, progressive or mini
13       game of bingo.
14             ``Call bingo'' does shall not include any game utilizing an electronic or
15       computerized card system.
16             (e) ``Department'' means the department of revenue.
17             (f) ``Director'' means the director of taxation.
18             (g) ``Distributor'' means any person or entity that sells or distributes
19       instant bingo tickets, bingo cards or bingo faces to operators.
20             (c) (h) ``Instant bingo'' means a game: (1) In which each participant
21       must pay player pays a charge; (2) in which a prize or prizes are awarded
22       to the winner or winners; (3) in which each participant player receives
23       one or more disposable pull-tab or break-open tickets which accord a
24       participant player an opportunity to win something of value by opening
25       or detaching the paper covering from the back of the ticket to reveal a
26       set of numbers, letters, symbols or configurations, or any combination
27       thereof; (4) which is conducted by a licensee under this act; (5) the con-
28       duct of which must be in the presence of the participants players; and
29       (6) which does not utilize any dice, normal playing cards, instant ticket
30       with a removable latex covering or slot machines. Winners of instant bingo
31       shall be determined either (1) by a combination of letters, numbers or
32       symbols determined and posted prior to the sale of instant bingo tickets
33       or (2) by random selection during the session at which the bingo tickets
34       are sold.
35             ``Instant bingo'' does shall not include any game utilizing electronically
36       generated or computer-generated tickets.
37             (i) ``Lessor'' means the owner, coowner, lessor or sublessor of premises
38       upon which a licensee is permitted to manage, operate or conduct games
39       of bingo, whether or not a written lease has been entered into and sub-
40       mitted to the secretary as required in subsection (c) of K.S.A. 79-4703,
41       and amendments thereto, and includes all political subdivisions and other
42       public agencies.
43             (j) ``Licensee'' means any nonprofit organization holding a license to

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  1       manage, operate or conduct games of bingo pursuant to K.S.A. 79-4701
  2       et seq., and amendments thereto.
  3             (k) ``Mini bingo'' means a game of call bingo in which the prizes
  4       awarded are not less than 50% of the gross receipts derived from the sale
  5       of cards or faces for participation in the game or $50, whichever is less.
  6             (l) ``Net proceeds'' means the gross receipts received by the licensee
  7       from charges imposed on players for participation in games of bingo and
  8       any admission fees or charges less amounts actually paid as prizes in
  9       games of bingo and any tax payable by the licensee.
10             (d) ``Bingo card distributor'' means any person or entity that sells or
11       otherwise distributes instant bingo tickets or disposable paper call bingo
12       cards to licensees under this act.
13             (e) (m) ``Nonprofit religious organization'' means any organization,
14       church, body of communicants, or group, gathered in common member-
15       ship for mutual support and edification in piety, worship, and religious
16       observances, or a society of individuals united for religious purposes at a
17       definite place and of which no part of the net earnings inures to the
18       benefit of any private shareholder or individual member of such organi-
19       zation, and which religious organization maintains an established place of
20       worship within this state and has a regular schedule of services or meet-
21       ings at least on a weekly basis and has been determined by the secretary
22       of revenue to be organized and created as a bona fide religious organi-
23       zation and which has been exempted from the payment of federal income
24       taxes as provided by section 501(c)(3) or section 501(d) of the federal
25       internal revenue code of 1954 1986, as amended, or determined to be
26       organized and operated as a bona fide nonprofit religious organization by
27       the secretary of revenue.
28             (f) (n) ``Nonprofit charitable organization'' means any organization
29       which is organized and operated for:
30             (1) The relief of poverty, distress, or other condition of public con-
31       cern within this state; or
32             (2) for financially supporting the activities of a charitable organization
33       as defined in paragraph (1); or
34             (3) for conferring direct benefits on the community at large; and of
35       which no part of the net earnings inures to the benefit of any private
36       shareholder or individual member of such organization and has been de-
37       termined by the secretary of revenue to be organized and operated as a
38       bona fide charitable organization and which has been exempted from the
39       payment of federal income taxes as provided by sections 501(c)(3),
40       501(c)(4), 501(c)(5), 501(c)(6) and 501(c)(7) of the federal internal rev-
41       enue code of 1954 1986, as amended, or determined to be organized and
42       operated as a bona fide nonprofit charitable organization by the secretary
43       of revenue.

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  1             (g) (o) ``Nonprofit fraternal organization'' means any organization
  2       within this state which exists for the common benefit, brotherhood, or
  3       other interests of its members and is authorized by its written constitu-
  4       tion, charter, articles of incorporation or bylaws to engage in a fraternal,
  5       civic or service purpose within this state and has been determined by the
  6       secretary of revenue to be organized and operated as a bona fide fraternal
  7       organization and which has been exempted from the payment of federal
  8       income taxes as provided by section 501(c)(8) or section 501(c)(10) of the
  9       federal internal revenue code of 1954 1986, as amended, or determined
10       to be organized and operated as a bona fide nonprofit fraternal organi-
11       zation by the secretary of revenue.
12             (h) (p) ``Nonprofit educational organization'' means any public or pri-
13       vate elementary or secondary school or institution of higher education
14       which has been determined by the secretary of revenue to be organized
15       and operated as a bona fide educational organization and which has been
16       exempted from the payment of federal income taxes as provided by sec-
17       tion 501(c)(3) of the federal internal revenue code of 1954 1986, as
18       amended, or determined to be organized and operated as a bona fide
19       nonprofit educational organization by the secretary of revenue.
20             (i) (q) ``Nonprofit veterans' organization'' means any organization
21       within this state or any branch, lodge, or chapter of a national or state
22       organization within this state, the membership of which consists exclu-
23       sively of individuals who qualify for membership because they were or
24       are members of the armed services or forces of the United States, or an
25       auxiliary unit or society of such a nonprofit veterans' organization the
26       membership of which consists exclusively of individuals who were or are
27       members of the armed services or forces of the United States, or are
28       cadets, or are spouses, widows or widowers of individuals who were or
29       are members of the armed services or forces of the United States, and of
30       which no part of the net earnings inures to the benefit of any private
31       shareholder or individual member of such organization, and has been
32       determined by the secretary of revenue to be organized and operated as
33       a bona fide veterans' organization and which has been exempted from
34       the payment of federal income taxes as provided by section 501(c)(4) or
35       501(c)(19) of the federal internal revenue code of 1954 1986, as amended,
36       or determined to be organized and operated as a bona fide nonprofit
37       veterans' organization by the secretary of revenue.
38             (j) ``Lessor'' means the owner, coowner, lessor or sublessor of prem-
39       ises upon which a licensee is permitted to manage, operate or conduct
40       games of bingo, whether or not a written lease has been entered into and
41       submitted to the secretary of revenue as required in subsection (c) of
42       K.S.A. 79-4703, and amendments thereto, and includes all political sub-
43       divisions and other public agencies.

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  1             (r) ``Operator'' means any licensee, Native American Indian tribe or
  2       other person or entity which manages, operates or conducts games of
  3       bingo.
  4             (s) ``Person'' means any natural person, corporation, partnership,
  5       trust or association.
  6             (k) (t) ``Premises'' means any room, hall, building, enclosure or out-
  7       door area used for the management, operation or conduct of a game of
  8       bingo by a licensee.
  9             (u) ``Progressive bingo game'' means a game of call bingo in which
10       either the established prize amount or number of bingo balls or objects
11       called, or both, may be increased from one session to the next scheduled
12       session if no player completes the required pattern within the specified
13       number of bingo balls or objects drawn. The player's opportunity to win
14       shall increase as the prize amount increases.
15             (v) ``Regular game of bingo'' means any game of bingo which is subject
16       to the 25 game limit, $50 prize limit and the $1 charge limit imposed
17       under subsections (g), (h) and (j) of K.S.A. 79-4706, and amendments
18       thereto.
19             (w) ``Secretary'' means the secretary of revenue or the secretary's
20       designee.
21             (x) ``Session'' means a day on which a licensee conducts games of
22       bingo.
23             Sec.  3. K.S.A. 79-4703 is hereby amended to read as follows: 79-
24       4703. (a) Any bona fide nonprofit religious, charitable, fraternal, educa-
25       tional or veterans' organization desiring to manage, operate or conduct
26       games of bingo within the state of Kansas may make application for a
27       license therefor in the manner provided under this section. Application
28       for licenses required under the provisions of this act shall be made to the
29       secretary of revenue upon forms prepared by the secretary of revenue or
30       the secretary's designee and prescribed by the secretary. The application
31       shall contain:
32             (1) The name and address of the organization applicant;
33             (2) the particular place or location for which a license is desired;
34             (3) a sworn statement verifying that such organization applicant is a
35       bona fide nonprofit religious, charitable, fraternal, educational or veter-
36       ans' organization authorized to operate within the state of Kansas signed
37       by the presiding officer and secretary of the organization; and
38             (4) such other information as may be required by the secretary of
39       revenue.
40             (b) No bingo license shall be issued to any bona fide nonprofit relig-
41       ious, charitable, fraternal, educational or veterans' organization if any of
42       its officers, directors or officials or persons employed on the premises:
43             (1) Has been convicted of, has pleaded guilty to or pleaded nolo con-

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  1       tendere to a violation of gambling laws of any state or the gambling laws
  2       of the United States, or shall have forfeited bond to appear in court to
  3       answer charges for any such violation, or has been convicted or pleaded
  4       guilty or pleaded nolo contendere to the violation of any law of this or any
  5       other state which is classed as a felony under the laws of such state;
  6             (2) at the time of application for renewal of a bingo license issued
  7       hereunder would not be eligible for such license upon a first application.
  8             (c) An application for a license required under the provisions of this
  9       act shall be accompanied by a fee of $25 and if such organization applicant
10       is to conduct bingo on any leased premises, the terms of the lease shall
11       be reduced to writing and a copy of the lease shall be submitted to the
12       secretary of revenue. The secretary of revenue shall have the power and
13       authority to approve or disapprove any lease submitted. No lease, which
14       has been approved by the secretary of revenue, shall be amended, mod-
15       ified or renewed in any manner until such amendments, modifications or
16       renewals of such lease have been approved by and are on file with the
17       secretary of revenue. No lease submitted to the secretary of revenue shall
18       be approved unless:
19             (1) The rental cost of the premises itself is fair and reasonable and,
20       in no event, shall. The rent charged for any session of bingo shall not
21       exceed 50% of the net proceeds for the session after payment of prizes
22       and taxes or the fair and reasonable rental value determined by the sec-
23       retary of revenue, whichever is less. The rental costs so charged shall be
24       substantiated to the secretary of revenue under rules and regulations
25       adopted by the secretary.
26             (2) Any costs additional to the costs under paragraph (1) of this sub-
27       section (c) which are to be borne by the lessee shall reflect the actual
28       costs incurred by the lessor and shall first shall be substantiated to the
29       secretary of revenue under rules and regulations adopted by the secretary.
30             (3) No costs shall be borne by the lessee unless such costs are enu-
31       merated in the lease submitted to the secretary of revenue.
32             (d) Each license issued shall expire at midnight on June 30 following
33       its date of issuance. A licensee may hold only one license and that license
34       is valid for only one location. However, any licensee may operate or con-
35       duct games of bingo, not to exceed five days in any one year, at locations
36       other than that specified in the license and. If any licensee does operate
37       or conduct games of bingo under this provision at a location other than
38       that specified in the license, such licensee shall submit a written notifi-
39       cation to the secretary of revenue, at least three days prior to operating
40       or conducting bingo at the change of such other location. No organization
41       shall be issued a license to operate or conduct games of bingo at any
42       location outside the county within which such organization is located as
43       reported in its application for licensure pursuant to subsection (a), nor

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  1       shall any licensee shall operate or conduct games of bingo at any location
  2       outside the county within which such licensee is located. Licenses issued
  3       under the provisions of this act shall not be transferred or assignable. If
  4       any organization licensed to play bingo licensee changes any of its officers,
  5       directors or officials during the term of its bingo license, such organization
  6       licensee shall report the names and addresses of such individuals to the
  7       secretary of revenue immediately with the sworn statement of each such
  8       individual as required by this section on forms furnished prescribed by
  9       the secretary of revenue. No organization licensee which denies its mem-
10       bership to persons for the reason of their race, color or physical handicap,
11       shall be granted or allowed to retain a license issued under the authority
12       of this act. Except for nonprofit adult care homes licensed under the laws
13       of the state of Kansas, no license shall be issued to any organization person
14       under the provisions of this act which has not been in existence contin-
15       uously within the state of Kansas for a period of 18 months immediately
16       preceding the date of making application for a license. The licensee shall
17       display the license in a prominent place in the vicinity of the area where
18       it is to conduct bingo.
19             (d) (e) No lessor of premises used for the management, operation or
20       conduct of any games of bingo shall permit the management, operation
21       or conduct of bingo games on such premises unless and until such lessor
22       has made application for and has been issued a registration certificate by
23       the secretary of revenue. Application for registration shall be accompa-
24       nied by a fee in the amount of $100 and. Such application shall be made
25       upon forms prescribed by the secretary and shall be submitted to the
26       secretary. The application shall contain:
27             (1) The name or names of the lessor of premises which will be used
28       for the management, operation or conduct of any games of bingo includ-
29       ing, in the case of a corporation, partnership, association, trust or other
30       entity, the names of all individuals having more than a 10% ownership
31       interest, either directly or indirectly in such entity;
32             (2) the address of such premises;
33             (3) the name or names of any and all organizations licensees which
34       will manage, operate or conduct any games of bingo on such premises
35       during the period for which the registration certificate is valid;
36             (4) such other information as may be required by the secretary.
37             (e) (f) Each registration certificate, or renewal thereof, issued under
38       the provisions of subsection (d) (e) shall expire at midnight on June 30
39       following its date of issuance. The certificate of registration shall be valid
40       for only one premises and shall be prominently displayed in a prominent
41       place in the registered premises.
42             (f) The secretary of revenue shall not issue a (g) No registration
43       certificate shall be issued for any premises if any individual who is con-

8
  1       nected in any way, directly or indirectly, with the owner or lessor of the
  2       premises has, within five years prior to registration, has been convicted
  3       of or pleaded guilty or nolo contendere to any felony or illegal gambling
  4       activity or purchased a tax stamp for wagering or gambling activity.
  5             Sec.  4. K.S.A. 79-4704 is hereby amended to read as follows: 79-
  6       4704. For the purpose of providing revenue which may be used by the
  7       state, counties and cities and for the privilege of operating or conducting
  8       games of bingo under the authority of this act:
  9             (a) There is hereby levied and there shall be collected and paid by
10       each licensee remitted by the operator a tax at the rate of 3% upon the
11       gross receipts received by the licensee operator from charges for partic-
12       ipation in call bingo games using bingo cards and any admission fees or
13       charges in connection therewith. The legal incidence of the tax under this
14       subsection is hereby imposed upon the players of games of bingo. The tax
15       imposed under this subsection shall be paid by the player to the operator
16       of games of bingo. The operator shall collect from the player the full
17       amount of the tax and remit the same to the director. The tax imposed by
18       this section subsection shall be in addition to the license fee imposed
19       under K.S.A. 79-4703, and amendments thereto. The provisions of this
20       subsection shall expire on July 1, 2003.
21             (b) There is hereby levied and there shall be collected and remitted
22       by each distributor a tax at a rate of $0.0035 upon each bingo face sold
23       or distributed by the distributor to operators conducting call bingo games
24       within the state of Kansas. The legal incidence of the tax under this sub-
25       section is hereby imposed upon the players of games of bingo. Such tax
26       shall be pre-collected by the distributor from the players. The tax imposed
27       under this subsection shall be paid by the player to the operator of games
28       of bingo. The operator shall collect from the player the full amount of the
29       tax imposed and remit the same to the distributor. The distributor shall
30       collect from the operator the full amount of the tax imposed and remit the
31       same to the director.
32             (b) (c) There is hereby levied and there shall be collected and paid
33       remitted by each bingo card distributor a tax at a rate of 1% upon the
34       total of the printed retail sales price of all tickets in each box of instant
35       bingo tickets sold or distributed by the distributor to each licensee con-
36       ducting instant bingo games within the state of Kansas. The bingo card
37       distributor shall include the tax due under this subsection in the sales
38       price of each box paid by the licensee and such tax shall be itemized
39       separately on the invoice provided to the licensee The legal incidence of
40       the tax under this subsection is hereby imposed upon the players of games
41       of bingo. Such tax shall be pre-collected by the distributor from the play-
42       ers. The tax imposed under this subsection shall be paid by the player to
43       the operator of games of bingo. The operator shall collect from the player

9
  1       the full amount of the tax imposed and remit the same to the distributor.
  2       The distributor shall collect from the operator the full amount of the tax
  3       imposed and remit the same to the director.
  4             (c) (d) Whenever, in the judgment of the secretary of revenue, it is
  5       necessary, in order to secure the collection of the tax due under subsec-
  6       tion (b) this section, the secretary shall require any bingo card distributor
  7       subject to required to remit such tax to file a bond with the director of
  8       taxation under conditions established by and in such form and amount as
  9       prescribed by rules and regulations adopted by the secretary.
10             Sec.  5. K.S.A. 79-4705 is hereby amended to read as follows: 79-
11       4705. (a) On dates prescribed by the director of taxation, every licensee
12       operating or conducting a game of bingo operator shall make a return to
13       the director of taxation upon forms prescribed by the director stating.
14       Such form shall contain:
15             (1) The name and address of the organization, operator;
16             (2) the amount of the gross receipts received from charges for ad-
17       mission or participation in such game games using bingo cards during the
18       preceding reporting period,;
19             (3) the number of bingo faces and the name of the distributor from
20       whom such faces were purchased or otherwise obtained during the pre-
21       ceding reporting period;
22             (4) the amount of the gross receipts received from charges for admis-
23       sion to the premises for participation in games of bingo during the pre-
24       ceding reporting period;
25             (5) the number of each denomination of instant bingo tickets sold
26       during the preceding reporting period and; and
27             (6) such other information as the director may deem necessary. The
28       licensee making the return shall,
29             (b) At the time of making such return, pay licensees conducting call
30       bingo games using bingo cards shall remit to the director of taxation the
31       amount of the tax then due under subsection (a) of K.S.A. 79-4704, and
32       amendments thereto. The director may extend the time for making re-
33       turns and the payment of such taxes for a period not exceeding 60 days
34       under rules and regulations adopted by the secretary of revenue.
35             (b) (c) On dates prescribed by the director of taxation, every bingo
36       card distributor shall make a return to the director of taxation upon forms
37       prescribed by the director, listing. Such form shall state:
38             (1) the number of instant bingo tickets sold or distributed to each
39       licensee, operator;
40             (2) the amount of the retail sales price of such tickets,;
41             (3) the number of bingo cards sold or distributed to each operator;
42             (4) the number of disposable paper call bingo faces sold or distributed
43       to each licensee operator; and

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  1             (5) and such other information as the director may deem necessary.
  2       The distributor making the return shall, pay At the time of making such
  3       return, the distributor shall remit to the director of taxation the an amount
  4       equal to 98% of tax then due on the instant bingo tickets under K.S.A.
  5       79-4704 due under subsection (b) of K.S.A. 79-4704, and amendments
  6       thereto.
  7             (c) (d) If any licensee or bingo card operator or distributor fails to
  8       make a return, or to pay or remit any tax, when required to do so by the
  9       provisions of this act, except in the case of an extension of time granted
10       by the director of taxation, there shall be added to the tax determined to
11       be due a penalty of 25% of the amount of such tax, together with interest
12       at the rate per month prescribed by subsection (a) of K.S.A. 79-2968, and
13       amendments thereto, from the date the tax was due until paid.
14             (d) (e) If any tax determined and assessed by the director of taxation
15       is unpaid is not remitted due to fraud with intent to evade the tax imposed
16       by this act, there shall be added thereto a penalty of fifty percent 50% of
17       the amount of such tax, together with interest at the rate per month
18       prescribed by subsection (a) of K.S.A. 79-2968, and amendments thereto,
19       from the date the tax was due until paid.
20             (e) (f) Whenever, in the judgment of the director of taxation, the
21       failure of any licensee or bingo card operator or distributor to comply
22       with the provisions of subsection (a) or (b), (b) or (c) was due to reason-
23       able cause, the director of taxation may, in the director's discretion, may
24       waive or reduce any of the penalties or interest imposed by this section,
25       upon making a record of the reason therefor.
26             (f) (g) The penalties imposed under this section shall be in addition
27       to , and in no way shall abridge, supersede, or contravene, all other pen-
28       alties imposed by this act for violation of the provisions of this act law.
29             Sec.  6. K.S.A. 79-4705a is hereby amended to read as follows: 79-
30       4705a. (a) For the purpose of ascertaining the correctness of any return
31       or for the purpose of determining the receipts and payments of any li-
32       censee remittances of any operator or distributor, the secretary of reve-
33       nue shall have power to examine, or cause to be examined by any agent
34       or representative designated by the secretary for that purpose, may ex-
35       amine any books, papers, records or memoranda, bearing upon the mat-
36       ters required to be included in the records of the licensee operator or
37       distributor, and. The secretary may require the attendance of the licensee
38       operator or distributor in the county where the licensee operator or dis-
39       tributor resides, or where the location or of the registered premises for
40       bingo games are located, or of any person having knowledge relating to
41       such records, and may take testimony and require proof of such person
42       or persons.
43             (b) The secretary of revenue may issue subpoenas to compel access

11
  1       to or for the production of such books, papers, records or memoranda in
  2       the custody of or to which the licensee operator or distributor has access,
  3       or to compel the appearance of such persons, and. The secretary may
  4       issue interrogatories to any such person to the same extent and subject
  5       to the same limitations as would apply if the subpoena or interrogatories
  6       were issued or served in aid of a civil action in the district court. The
  7       secretary or an agent or representative designated by the secretary for
  8       that purpose may administer oaths and take depositions to the same ex-
  9       tent and subject to the same limitations as would apply if the deposition
10       was in aid of a civil action in the district court. In case of the refusal of
11       any person to comply with any subpoena or interrogatory or to testify to
12       any matter regarding which such person lawfully may be lawfully ques-
13       tioned, the district court of any county may, upon application of the sec-
14       retary, may order such person to comply with such subpoena or inter-
15       rogatory or to testify. Failure to obey the court's order may be punished
16       by the court as contempt. Subpoenas or interrogatories issued under the
17       provisions of this section may be served upon individuals and corporations
18       in the manner provided in K.S.A. 60-304, and amendments thereto, for
19       the service of process by any officer authorized to serve subpoenas in civil
20       actions or by the secretary of revenue or an agent or representative des-
21       ignated by the secretary.
22             Sec.  7. K.S.A. 79-4706 is hereby amended to read as follows: 79-
23       4706. Games of bingo managed, operated or conducted by organizations
24       licensed under the provisions of this act shall be managed, operated or
25       conducted subject to and conducted in accordance with the provisions of
26       this act and rules and regulations adopted by the secretary of revenue
27       and the following restrictions:
28             (a) The entire gross receipts received by any such organization li-
29       censee from the operation or conduct of games of bingo, except that
30       portion utilized for the payment of the cost of prizes and license fees and
31       taxes on games of bingo cards imposed under the provisions of this act,
32       shall be used exclusively for the lawful purposes of the organization per-
33       mitted to conduct that game licensee.
34             (b) No person except Games of bingo managed, conducted or oper-
35       ated by a licensee, shall be managed, conducted or operated only by a
36       bona fide member or spouse of a bona fide member of the sponsoring
37       organization licensee or parent organization or an auxiliary unit or society
38       of such sponsoring organization may participate in the management, con-
39       duct or operation of any game of bingo licensee.
40             (c) No lessor, any employee of any such lessor or any employee, of-
41       ficer or shareholder of a for profit corporation which is the lessor, shall
42       play any game of bingo or participate in any drawing on premises leased
43       by any such lessor or shall nor shall such person be responsible for or

12
  1       assist in the management, operation or conduct of any game of bingo or
  2       drawing on such premises.
  3             (d) No person may participate in the management, conduct or op-
  4       eration of bingo games managed, conducted or operated by a licensee if
  5       such person, within five years prior to such participation, has been con-
  6       victed of or pleaded guilty or nolo contendere to any felony or illegal
  7       gambling activity or purchased a tax stamp for wagering or gambling
  8       activity.
  9             (e) No person may receive any remuneration or profit for participat-
10       ing in the management, conduct or operation of any game of bingo man-
11       aged, conducted or operated by a licensee.
12             (f) The aggregate value of all prizes including the retail value of all
13       merchandise awarded or offered by any such organization on any single
14       day a licensee in a single session to winners of games of call regular and
15       special bingo shall not exceed $1,200, and. The value of a prize awarded
16       in a progressive or mini call bingo game shall not be included when de-
17       termining the limit imposed by this subsection. Any monetary prize
18       awarded in cash of $100 of $500 or more awarded in games of bingo shall
19       be paid by a check drawn on the bingo trust bank account of the licensee.
20             (g) The total number of regular, special and progressive call bingo
21       games managed, operated or conducted by any licensee in any one day
22       session shall not exceed 25 and not more than five of such games shall be
23       jackpot or special games and. Not more than one licensee may conduct
24       bingo games at a given location or registered premises in any one calendar
25       day session.
26             (h) The prize awarded by a licensee in any one regular call bingo game
27       shall not exceed $50 in cash or its equivalent and such. The prize in any
28       one jackpot or special call bingo game shall not exceed $500 in cash or
29       its equivalent.
30             (i) The retail value of any merchandise received by a winner of a
31       bingo game shall be considered as the cash value for the purposes of
32       determining the value of the prize.
33             (j) The charge made imposed by a licensee for a single reusable bingo
34       card or equivalent number of disposable paper cards bingo faces to play
35       in call bingo games in any one session, other than jackpot or special games,
36       shall not exceed $1 and. Such reusable bingo card or equivalent number
37       of disposable paper cards bingo faces shall be valid for all such regular
38       call bingo games conducted or operated by the licensee on a particular
39       day in any one session. The charge made imposed by a licensee for a
40       single reusable bingo card or disposable paper card bingo face to play in
41       any single jackpot or special game shall not exceed $1. Paper game pro-
42       gram booklets with multiple bingo cards printed on the pages thereof are
43       permitted so long as the charge made for a regular game program booklet

13
  1       does not exceed $1, except that the charge for such game program booklet
  2       may be increased by an amount not exceeding $1 for each single jackpot
  3       or special game in the game program booklet. The charge made imposed
  4       by a licensee for a single instant bingo ticket shall not exceed $1.
  5             (k) Games of bingo shall not be managed, operated or conducted by
  6       any licensee on more than two calendar days in any one week.
  7             (l) All licenses issued under the provisions of this act shall be issued
  8       in the name of the organization licensed.
  9             (m) Each licensee operator shall keep a record of all bingo games of
10       bingo managed, operated or conducted by it for a period of three years
11       following the date the game is managed, operated or conducted.
12             (n) No person under the age of 18 years shall participate in the man-
13       agement, operation or conduct of any game of bingo managed, operated
14       or conducted by a licensee under the provisions of this act and no licensee
15       shall sell any instant bingo ticket to a person under the age of 18 years.
16             (o) A lessor of premises used for the management, operation or con-
17       duct of games of bingo or a licensee may not advertise games of bingo
18       games except to the extent and in the manner prescribed by the rules
19       and regulations adopted by the secretary of revenue, and. Any advertise-
20       ment of any bingo game of bingo by or on behalf of such lessor or licensee
21       shall specify the organization which is managing, operating or conducting
22       the bingo such game. For the purposes of this act and rules and regula-
23       tions of the secretary of revenue, The announcement of the cancellation
24       of a game of bingo shall not be considered to be an advertisement.
25             (p) No lessor of premises used for the management, operation or
26       conduct of any games of bingo or any licensee shall offer an opportunity
27       to participate in a game of chance, drawing, contest, door prize, game,
28       test of skill, lottery or any similar activity as an inducement to participate
29       in games of bingo nor as a bingo prize or preliminary to the awarding of
30       a bingo prize.
31             (p)  (1) Except for games of bingo and as provided by paragraph (2)
32       of this subsection, no game of chance or contest in which a prize is
33       awarded shall be conducted on any premises if the intent of such game of
34       chance or contest is to induce participation in such games of bingo.
35             (2) One drawing during a session may be conducted by the licensee
36       or the lessor of the premises. The prize awarded in any such drawing shall
37       not exceed $25. There shall be no charge for participation in such drawing.
38       Any person present at the bingo session shall be permitted to participate
39       in such drawing whether or not such person has purchased anything of
40       value.
41             (q) No licensee shall manage, operate or conduct bingo on any leased
42       premises or with leased equipment unless all of the terms and conditions
43       of rental or use, including the rental of chairs, bingo equipment, tables,

14
  1       security guards, janitor service or any other services, are set forth in a
  2       lease submitted, approved and on file with the secretary of revenue.
  3             (r) No premises shall be used for the management, operation or con-
  4       duct of bingo games of bingo by a licensee on more than three calendar
  5       days in any one week.
  6             (s) No premises shall be subdivided to provide multiple premises
  7       where games of bingo are managed, operated or conducted by a licensee,
  8       whether or not the multiple premises have different addresses.
  9             (t) No game of bingo shall be managed, operated or conducted on
10       leased premises by a licensee if at any time during the immediately pre-
11       ceding 44 hours the premises, or any leased premises within 1,000 feet
12       of them, have been used for the management, operation or conduct of a
13       game of bingo.
14             (u) Every licensee who has gross receipts of $1,000 or more received
15       from participation in games, admission fees or charges and from any other
16       source directly related to the operation or conduct of any bingo games of
17       bingo in any calendar month shall maintain a bingo trust bank account
18       into which all such receipts are deposited daily and from which all pay-
19       ments are made relating to the management, operation or conduct of any
20       bingo games of bingo, except payment of prizes of less than $100 $500.
21       Having once established such bingo trust bank account, the licensee shall
22       continue to make deposits of all receipts therein. Every licensee shall
23       notify the secretary of revenue of the name of the bank in which the
24       bingo trust bank account is maintained, together with the number and
25       name of the account. Every licensee who maintains a bingo trust bank
26       account shall maintain a complete record of all deposits and withdrawals
27       from such bank account and the same shall be available to the secretary
28       of revenue or the secretary's agents or investigators to audit at any rea-
29       sonable time.
30             (v) The records required under this subsection (u) are in addition to
31       all other records required to be kept by the licensee by statute or rules
32       and regulations. The records required by this subsection (u) shall be
33       maintained in the same place as all other records required to be kept by
34       the licensee.
35             (w) (v) No instant bingo ticket shall be sold and no mini bingo game
36       shall be conducted by a licensee more than one and one-half hour prior
37       to the start of the first regular or special game of call bingo for the day
38       of a session or after the termination of the last game of call bingo operated
39       or conducted by the licensee for such calendar day session.
40             (x) (w) No licensee operator shall purchase disposable paper call
41       bingo cards or obtain bingo faces or instant bingo tickets from any person
42       or entity other than a bingo card distributor registered by the secretary
43       of revenue as provided in this act pursuant to K.S.A. 79-4712a, and

15
  1       amendments thereto.
  2             (y) (x) All instant bingo tickets sold or distributed to licensees oper-
  3       ators shall bear on the face thereof a unique serial number which shall
  4       not be repeated on the same manufacturer's form number less than every
  5       three years. All instant bingo tickets shall be sold or distributed in boxes,
  6       and. Each box shall be sealed by the manufacturer with a seal which
  7       includes a warning to the purchaser that the box may have been tampered
  8       with if the box was received by the purchaser with the seal broken. Each
  9       box of instant bingo tickets shall contain tickets printed in such a manner
10       as to insure that at least 60% of the gross revenues generated by the
11       ultimate sale of all tickets from such box shall be returned to the final
12       purchasers of such tickets. No box of instant bingo tickets may be opened
13       by a licensee unless all tickets contained in a previously opened box with
14       the same form number have been sold.
15             (z) (y) Each box of instant bingo tickets sold or distributed to licens-
16       ees operators shall be accompanied by a flare which contains the following
17       information: (1) The name of the game; (2) the manufacturer's name or
18       logo; (3) the game form number; (4) the ticket count in the game; (5) the
19       prize structure for the game, which includes the number of winning tick-
20       ets by denomination and their respective winning symbol or number com-
21       binations; (6) the cost per ticket; (7) the game serial number; (8) the
22       winning numbers or symbols for the top three winning tiers set out in
23       such a manner that each prize may be marked off as the prize is won and
24       awarded; (9) the business name of the bingo card distributor; and (10) if
25       sold or distributed to a licensee under the bingo act, the Kansas bingo
26       license number of the licensee to which the game is sold or distributed.
27             (z)  (1) No progressive bingo game may exceed 20 consecutive sessions
28       conducted by a licensee prior to the awarding of the established prize.
29             (2) No more than two progressive bingo games may be conducted in
30       any one session.
31             (3) A prize for a progressive game may start at an amount not to
32       exceed $250 and may be increased by no more than $100 for each session
33       during which the progressive game is continued. The prize awarded to
34       the winner of a progressive bingo game shall not exceed $1,000.
35             (4) If the progressive bingo game prize is not awarded at a bingo
36       session, the progressive bingo game shall be continued at a future occasion
37       until such time a winner is determined. The winning prize shall be the
38       full amount. If there is no winner of a progressive game of bingo, a stated
39       consolation prize may be awarded. Any consolation prize shall be less
40       than the value of the progressive bingo game prize amount and shall not
41       exceed $250.
42             (5) All progressive bingo games and rules for such games shall be
43       described fully and posted in the house rules prior to the start of the

16
  1       session. Such games shall comply with requirements imposed under the
  2       bingo act and any rules and regulations adopted pursuant thereto.
  3             (6) When a person achieves the first preannounced winning combi-
  4       nation, the game shall be completed and the next progressive bingo game
  5       and winning combination shall be commenced with a new bingo card or
  6       face and all objects or balls in the receptacle.
  7             (7) The rules for a progressive bingo game shall remain in effect until
  8       the game ends and the winner is determined.
  9             (8) Progressive bingo games may not be conducted in conjunction
10       with a session of bingo conducted at a location other than that specified
11       in the license as authorized by subsection (c) of 79-4703, and amendments
12       thereto.
13             (9) A licensee shall not cease bingo operations unless all progressive
14       bingo games are completed and prizes are awarded, unless prior approval
15       has been received from the secretary.
16             (aa) Except as specifically provided by the secretary in rules and reg-
17       ulations, the distribution, sale or use of bingo cards is prohibited from
18       and after July 1, 2003. Thereafter only bingo faces shall be distributed,
19       sold or used in call bingo games operated and conducted by operators.
20             (bb) The total number of mini games of bingo managed, operated or
21       conducted by a licensee during a session shall not exceed 20 games.
22             New Sec.  8. The secretary shall require, pursuant to rules and reg-
23       ulations, identification of each sheet of bingo faces in order to insure
24       compliance with the provisions of this act. Each package of bingo faces
25       sold or distributed to operators shall be accompanied by a printed state-
26       ment which contains the following information:
27             (a) The number of bingo faces contained in the package;
28             (b) the amount paid by the operator for each package, including the
29       tax paid;
30             (c) identification of the manufacturer;
31             (d) the business name of the distributor;
32             (e) the Kansas bingo license number of the licensee to which the
33       package is sold, if sold or distributed to a licensee; and
34             (f) any other information required by the secretary.
35             Sec.  9. K.S.A. 79-4707 is hereby amended to read as follows: 79-
36       4707. (a) The secretary of revenue, after a hearing in accordance with the
37       provisions of the Kansas administrative procedure act, may revoke or
38       suspend any license or registration certificate issued under the provisions
39       of this act for any one of the following reasons:
40             (1) The licensee or registrant has fraudulently obtained the license
41       or registration certificate by giving false information in the application
42       therefor;
43             (2) the licensee or registrant has violated any of the laws of the state

17
  1       of Kansas or provisions of this act or any rules and regulations of the
  2       secretary of revenue for the registration, licensing, taxing, management,
  3       adopted pursuant thereto for the registration, licensing, taxing, manage-
  4       ment, conduct or operation of games of bingo; or
  5             (3) the licensee or registrant has become ineligible to obtain a license
  6       under this act.
  7             (b) Any action of the secretary pursuant to subsection (a) is subject
  8       to review in accordance with the act for judicial review and civil enforce-
  9       ment of agency actions. In case of the revocation of the license of any
10       licensee or the registration of any registrant, no new license or registration
11       shall be issued to such lessor, sublessor or organization, or any person
12       acting for or on its behalf, for a period of six months thereafter. No rev-
13       ocation or suspension of a license or registration certificate shall be for a
14       period in excess of one year if the applicant is otherwise is qualified on
15       the date the applicant makes a new application therefor.
16             (c) The secretary of revenue, or the secretary's designee, is hereby
17       authorized to enjoin any person from managing, operating or conducting
18       any games of bingo, or from leasing any premises for such purposes, if
19       such person does not possess a valid license or registration certificate
20       issued pursuant to the provisions of the acts contained in article 47 of
21       chapter 79 of the Kansas Statutes Annotated and amendments thereto,
22       and bingo act. The secretary, or the secretary's designee, shall be entitled
23       to have an order restraining such person from managing, operating or
24       conducting any games of bingo or for any other purpose contrary to the
25       provisions of the acts contained in article 47 of chapter 79 of the Kansas
26       Statutes Annotated and amendments thereto, bingo act or from leasing
27       premises for any of such purposes, and. No bond shall be required for
28       any such restraining order, nor for any temporary or permanent injunc-
29       tion issued in such proceedings.
30             (d) The provisions of this section shall not apply to games of bingo
31       managed, operated or conducted by a Native American Indian tribe.
32             Sec.  10. K.S.A. 79-4708 is hereby amended to read as follows: 79-
33       4708. The administration and enforcement of this the bingo act shall be
34       vested in the secretary of revenue who. The secretary shall adopt and
35       enforce rules and regulations to regulate, license, and tax the manage-
36       ment, operation and conduct of games of bingo and participants therein
37       and to properly administer and enforce the provisions of this the bingo
38       act. Also, the secretary shall adopt rules and regulations relating to the
39       leasing of premises for the management, operation and conduct of games
40       of bingo.
41             Sec.  11. K.S.A. 79-4710 is hereby amended to read as follows: 79-
42       4710. (a) All amounts received by or for the secretary of revenue from
43       license and registration fees pursuant to this act shall be remitted to the

18
  1       state treasurer and. The state treasurer shall deposit all of such moneys
  2       in the state treasury and,. Except as otherwise provided by K.S.A. 79-
  3       4711, and amendments thereto for maintenance of the bingo refund fund,
  4       the state treasurer shall credit the same to the state bingo regulation
  5       general fund.
  6             (b) All amounts received by or for the secretary of revenue from the
  7       tax levied pursuant to K.S.A. 79-4704, and amendments thereto, shall be
  8       remitted to the state treasurer and the state treasurer shall deposit all of
  9       such moneys in the state treasury.
10             There is hereby created, in the state treasury, the state bingo regulation
11       fund and the county and city bingo tax fund. Subject to the maintenance
12       requirements of the bingo refund fund under K.S.A. 79-4711 and amend-
13       ments thereto, 1/3 of each deposit shall be credited to the state general
14       fund, 1/3 of each deposit to the state bingo regulation fund and the re-
15       maining 1/3 of such deposit shall be credited to the county and city bingo
16       tax fund. Moneys in the state bingo regulation fund shall be expended for
17       the enforcement of the bingo statutes in article 47 of chapter 79 of Kansas
18       Statutes Annotated and rules and regulations adopted pursuant thereto.
19       Such expenditures shall be made upon vouchers approved by the secre-
20       tary of revenue or a person designated by the secretary.
21             (c) All moneys deposited in the county and city bingo tax fund shall
22       be returned to the counties and cities in which the locations and regis-
23       tered premises are located at a time or times fixed by the secretary but
24       not less than once each year. If the locations and registered premises are
25       located within the corporate limits of a city, all taxes collected therefrom
26       shall be remitted to the city treasurer of such city and credited to the city
27       general fund. If the locations and registered premises are located within
28       the unincorporated area of any county, all taxes collected therefrom shall
29       be remitted to the county treasurer of such county and credited to the
30       county general fund. Moneys distributed to cities and counties under this
31       section shall be used to assist in the enforcement of the bingo laws of this
32       state.
33             (d) Except as otherwise provided by this act, all operating expenses
34       of the secretary related to the administration and enforcement of the bingo
35       act appropriated by the legislature shall be paid from the state general
36       fund.
37             (e) Upon the effective date of this act, the director of accounts and
38       reports shall transfer all moneys in the county and city bingo tax fund
39       and the state bingo regulation fund to the state general fund. Upon the
40       effective date of this act, all liabilities of the county and city bingo tax
41       fund and the state bingo regulation fund existing prior to the effective
42       date are hereby imposed on the state general fund. The county and city
43       bingo tax fund and the state bingo regulation fund are hereby abolished.

19
  1             Sec.  12. K.S.A. 79-4711 is hereby amended to read as follows: 79-
  2       4711. There is hereby created the bingo refund fund in the state treasury.
  3       The bingo refund fund shall be a refund clearing fund and refunds of the
  4       fees imposed under K.S.A. 79-4703, and amendments thereto, and of the
  5       tax levied under K.S.A. 79-4704, and amendments thereto, shall be made
  6       from this such fund. The bingo refund fund shall be maintained by the
  7       secretary of revenue from the license and registration fees received under
  8       this act and from the tax collected under K.S.A. 79-4704 and amendments
  9       thereto and taxes collected under the bingo act in an amount sufficient
10       for such refunds not to exceed $10,000.
11             Sec.  13. K.S.A. 79-4712a is hereby amended to read as follows: 79-
12       4712a. (a) No person or entity shall sell or otherwise distribute any dis-
13       posable paper call bingo faces, bingo cards or instant bingo tickets to any
14       organization licensed under the provisions of this act operator unless and
15       until such person or entity has made application for and has been issued
16       a bingo card distributor registration certificate by the secretary of reve-
17       nue. Application for registration shall be submitted to the secretary and
18       shall be accompanied by a fee in the amount of $500 and shall be made
19       upon forms prescribed by the secretary.
20             (b) Each bingo card distributor registration certificate shall expire at
21       midnight on June 30 following its date of issuance. Application for renewal
22       of a registration certificate shall be submitted to the secretary and shall
23       be accompanied by a fee in the amount of $500 and shall be made upon
24       forms prescribed by the secretary.
25             (c) The secretary of revenue shall establish by rule and regulation
26       rules and regulations reasonable criteria for approval of bingo card dis-
27       tributors applications for registration. The secretary of revenue shall re-
28       fuse to register a bingo card distributor if any owner, manager or em-
29       ployee thereof has, within five years prior to registration, has been
30       convicted of or pleaded guilty or nolo contendere to any felony or illegal
31       gambling violation in this or any other jurisdiction.
32             (d) All bingo card distributors shall maintain for a period of not less
33       than three years full and complete records of all disposable paper call
34       bingo cards, bingo faces and instant bingo tickets sold to licensees within
35       this state or distributed to operators. Such records shall be made available
36       for inspection by any authorized representative of the secretary of
37       revenue.
38             Sec.  14. K.S.A. 79-4713 is hereby amended to read as follows: 79-
39       4713. (a) In addition to or in lieu of any other civil or criminal penalty
40       provided by law, the secretary of revenue or the secretary's designee,
41       upon a finding that a licensee under K.S.A. 79-4703 and amendments
42       thereto, a, lessor or a bingo card distributor has violated any provision of
43       K.S.A. 79-4701 through 79-4705, 79-4705a, 79-4706, 79-4707, 79-4708,

20
  1       79-4710, 79-4711 or 79-4712, and amendments thereto, or any provision
  2       of the bingo act or any rule and regulation of the secretary of revenue
  3       adopted pursuant thereto, shall impose on such licensee, lessor or bingo
  4       card distributor a civil fine not exceeding $500 for each violation.
  5             (b) No fine shall be imposed pursuant to this section except upon the
  6       written order of the secretary of revenue or the secretary's designee to
  7       the licensee, lessor or bingo card distributor who committed the violation.
  8       Such order shall state the violation, the fine to be imposed and the right
  9       of the licensee, lessor or bingo card distributor to appeal the order. Such
10       order shall be subject to appeal and review in the manner provided by
11       the Kansas administrative procedures procedure act.
12             (c) Any fine collected pursuant to this section shall be paid to the
13       state treasurer, who shall deposit the entire amount in the state treasury
14       and credit it to the state bingo regulation fund.
15             New Sec.  15. The department of revenue shall be subject to a per-
16       formance audit of the first year of implementation and enforcement of
17       this act by the department. The scope of such audit shall be determined
18       by the legislative post audit committee ad shall include, but not be limited
19       to, the efficiency and effectiveness of the department in implementing
20       and enforcing this act. The post auditor may contract for the conduct of
21       such performance audit in accordance with procedures established by the
22       legislative post audit act. The report of the audit required by this section
23       shall be submitted to the legislative post audit committee and to the
24       legislature no later than the first day of the 2002 session. The furnishing
25       of audit services pursuant to this section shall be a transaction between
26       the post auditor and the department of revenue and shall be settled in
27       accordance with the provisions of K.S.A. 75-5515 and amendments
28       thereto.
29             New Sec.  16. If any provision of the bingo act or the application
30       thereof to any person or circumstances is held unconstitutional or oth-
31       erwise invalid, such unconstitutionality or invalidity shall not affect other
32       provisions or applications of the act which can be given effect without
33       the unconstitutional or invalid provision or application, and, to this end,
34       the provisions of this act are severable.
35             Sec.  17. K.S.A. 1999 Supp. 79-3606 is hereby amended to read as
36       follows: 79-3606. The following shall be exempt from the tax imposed by
37       this act:
38             (a) All sales of motor-vehicle fuel or other articles upon which a sales
39       or excise tax has been paid, not subject to refund, under the laws of this
40       state except cigarettes as defined by K.S.A. 79-3301 and amendments
41       thereto, cereal malt beverages and malt products as defined by K.S.A. 79-
42       3817 and amendments thereto, including wort, liquid malt, malt syrup
43       and malt extract, which is not subject to taxation under the provisions of

21
  1       K.S.A. 79-41a02 and amendments thereto, motor vehicles taxed pursuant
  2       to K.S.A. 79-5117, and amendments thereto, tires taxed pursuant to
  3       K.S.A. 1999 Supp. 65-3424d, and amendments thereto, and drycleaning
  4       and laundry services taxed pursuant to K.S.A. 1999 Supp. 65-34,150, and
  5       amendments thereto;
  6             (b) all sales of tangible personal property or service, including the
  7       renting and leasing of tangible personal property, purchased directly by
  8       the state of Kansas, a political subdivision thereof, other than a school or
  9       educational institution, or purchased by a public or private nonprofit hos-
10       pital or public hospital authority or nonprofit blood, tissue or organ bank
11       and used exclusively for state, political subdivision, hospital or public hos-
12       pital authority or nonprofit blood, tissue or organ bank purposes, except
13       when: (1) Such state, hospital or public hospital authority is engaged or
14       proposes to engage in any business specifically taxable under the provi-
15       sions of this act and such items of tangible personal property or service
16       are used or proposed to be used in such business, or (2) such political
17       subdivision is engaged or proposes to engage in the business of furnishing
18       gas, water, electricity or heat to others and such items of personal prop-
19       erty or service are used or proposed to be used in such business;
20             (c) all sales of tangible personal property or services, including the
21       renting and leasing of tangible personal property, purchased directly by
22       a public or private elementary or secondary school or public or private
23       nonprofit educational institution and used primarily by such school or
24       institution for nonsectarian programs and activities provided or sponsored
25       by such school or institution or in the erection, repair or enlargement of
26       buildings to be used for such purposes. The exemption herein provided
27       shall not apply to erection, construction, repair, enlargement or equip-
28       ment of buildings used primarily for human habitation;
29             (d) all sales of tangible personal property or services purchased by a
30       contractor for the purpose of constructing, equipping, reconstructing,
31       maintaining, repairing, enlarging, furnishing or remodeling facilities for
32       any public or private nonprofit hospital or public hospital authority, public
33       or private elementary or secondary school or a public or private nonprofit
34       educational institution, which would be exempt from taxation under the
35       provisions of this act if purchased directly by such hospital or public hos-
36       pital authority, school or educational institution; and all sales of tangible
37       personal property or services purchased by a contractor for the purpose
38       of constructing, equipping, reconstructing, maintaining, repairing, en-
39       larging, furnishing or remodeling facilities for any political subdivision of
40       the state, the total cost of which is paid from funds of such political
41       subdivision and which would be exempt from taxation under the provi-
42       sions of this act if purchased directly by such political subdivision. Nothing
43       in this subsection or in the provisions of K.S.A. 12-3418 and amendments

22
  1       thereto, shall be deemed to exempt the purchase of any construction
  2       machinery, equipment or tools used in the constructing, equipping, re-
  3       constructing, maintaining, repairing, enlarging, furnishing or remodeling
  4       facilities for any political subdivision of the state. As used in this subsec-
  5       tion, K.S.A. 12-3418 and 79-3640, and amendments thereto, ``funds of a
  6       political subdivision'' shall mean general tax revenues, the proceeds of
  7       any bonds and gifts or grants-in-aid. Gifts shall not mean funds used for
  8       the purpose of constructing, equipping, reconstructing, repairing, enlarg-
  9       ing, furnishing or remodeling facilities which are to be leased to the do-
10       nor. When any political subdivision of the state, public or private non-
11       profit hospital or public hospital authority, public or private elementary
12       or secondary school or public or private nonprofit educational institution
13       shall contract for the purpose of constructing, equipping, reconstructing,
14       maintaining, repairing, enlarging, furnishing or remodeling facilities, it
15       shall obtain from the state and furnish to the contractor an exemption
16       certificate for the project involved, and the contractor may purchase ma-
17       terials for incorporation in such project. The contractor shall furnish the
18       number of such certificate to all suppliers from whom such purchases are
19       made, and such suppliers shall execute invoices covering the same bearing
20       the number of such certificate. Upon completion of the project the con-
21       tractor shall furnish to the political subdivision, hospital or public hospital
22       authority, school or educational institution concerned a sworn statement,
23       on a form to be provided by the director of taxation, that all purchases so
24       made were entitled to exemption under this subsection. As an alternative
25       to the foregoing procedure, any such contracting entity may apply to the
26       secretary of revenue for agent status for the sole purpose of issuing and
27       furnishing project exemption certificates to contractors pursuant to rules
28       and regulations adopted by the secretary establishing conditions and stan-
29       dards for the granting and maintaining of such status. All invoices shall
30       be held by the contractor for a period of five years and shall be subject
31       to audit by the director of taxation. If any materials purchased under such
32       a certificate are found not to have been incorporated in the building or
33       other project or not to have been returned for credit or the sales or
34       compensating tax otherwise imposed upon such materials which will not
35       be so incorporated in the building or other project reported and paid by
36       such contractor to the director of taxation not later than the 20th day of
37       the month following the close of the month in which it shall be deter-
38       mined that such materials will not be used for the purpose for which such
39       certificate was issued, the political subdivision, hospital or public hospital
40       authority, school or educational institution concerned shall be liable for
41       tax on all materials purchased for the project, and upon payment thereof
42       it may recover the same from the contractor together with reasonable
43       attorney fees. Any contractor or any agent, employee or subcontractor

23
  1       thereof, who shall use or otherwise dispose of any materials purchased
  2       under such a certificate for any purpose other than that for which such a
  3       certificate is issued without the payment of the sales or compensating tax
  4       otherwise imposed upon such materials, shall be guilty of a misdemeanor
  5       and, upon conviction therefor, shall be subject to the penalties provided
  6       for in subsection (g) of K.S.A. 79-3615, and amendments thereto;
  7             (e) all sales of tangible personal property or services purchased by a
  8       contractor for the erection, repair or enlargement of buildings or other
  9       projects for the government of the United States, its agencies or instru-
10       mentalities, which would be exempt from taxation if purchased directly
11       by the government of the United States, its agencies or instrumentalities.
12       When the government of the United States, its agencies or instrumen-
13       talities shall contract for the erection, repair, or enlargement of any build-
14       ing or other project, it shall obtain from the state and furnish to the
15       contractor an exemption certificate for the project involved, and the con-
16       tractor may purchase materials for incorporation in such project. The
17       contractor shall furnish the number of such certificates to all suppliers
18       from whom such purchases are made, and such suppliers shall execute
19       invoices covering the same bearing the number of such certificate. Upon
20       completion of the project the contractor shall furnish to the government
21       of the United States, its agencies or instrumentalities concerned a sworn
22       statement, on a form to be provided by the director of taxation, that all
23       purchases so made were entitled to exemption under this subsection. As
24       an alternative to the foregoing procedure, any such contracting entity may
25       apply to the secretary of revenue for agent status for the sole purpose of
26       issuing and furnishing project exemption certificates to contractors pur-
27       suant to rules and regulations adopted by the secretary establishing con-
28       ditions and standards for the granting and maintaining of such status. All
29       invoices shall be held by the contractor for a period of five years and shall
30       be subject to audit by the director of taxation. Any contractor or any agent,
31       employee or subcontractor thereof, who shall use or otherwise dispose of
32       any materials purchased under such a certificate for any purpose other
33       than that for which such a certificate is issued without the payment of
34       the sales or compensating tax otherwise imposed upon such materials,
35       shall be guilty of a misdemeanor and, upon conviction therefor, shall be
36       subject to the penalties provided for in subsection (g) of K.S.A. 79-3615
37       and amendments thereto;
38             (f) tangible personal property purchased by a railroad or public utility
39       for consumption or movement directly and immediately in interstate
40       commerce;
41             (g) sales of aircraft including remanufactured and modified aircraft,
42       sales of aircraft repair, modification and replacement parts and sales of
43       services employed in the remanufacture, modification and repair of air-

24
  1       craft sold to persons using directly or through an authorized agent such
  2       aircraft and aircraft repair, modification and replacement parts as certified
  3       or licensed carriers of persons or property in interstate or foreign com-
  4       merce under authority of the laws of the United States or any foreign
  5       government or sold to any foreign government or agency or instrumen-
  6       tality of such foreign government and all sales of aircraft, aircraft parts,
  7       replacement parts and services employed in the remanufacture, modifi-
  8       cation and repair of aircraft for use outside of the United States;
  9             (h) all rentals of nonsectarian textbooks by public or private elemen-
10       tary or secondary schools;
11             (i) the lease or rental of all films, records, tapes, or any type of sound
12       or picture transcriptions used by motion picture exhibitors;
13             (j) meals served without charge or food used in the preparation of
14       such meals to employees of any restaurant, eating house, dining car, hotel,
15       drugstore or other place where meals or drinks are regularly sold to the
16       public if such employees' duties are related to the furnishing or sale of
17       such meals or drinks;
18             (k) any motor vehicle, semitrailer or pole trailer, as such terms are
19       defined by K.S.A. 8-126 and amendments thereto, or aircraft sold and
20       delivered in this state to a bona fide resident of another state, which motor
21       vehicle, semitrailer, pole trailer or aircraft is not to be registered or based
22       in this state and which vehicle, semitrailer, pole trailer or aircraft will not
23       remain in this state more than 10 days;
24             (l) all isolated or occasional sales of tangible personal property, serv-
25       ices, substances or things, except isolated or occasional sale of motor
26       vehicles specifically taxed under the provisions of subsection (o) of K.S.A.
27       79-3603 and amendments thereto;
28             (m) all sales of tangible personal property which become an ingre-
29       dient or component part of tangible personal property or services pro-
30       duced, manufactured or compounded for ultimate sale at retail within or
31       without the state of Kansas; and any such producer, manufacturer or
32       compounder may obtain from the director of taxation and furnish to the
33       supplier an exemption certificate number for tangible personal property
34       for use as an ingredient or component part of the property or services
35       produced, manufactured or compounded;
36             (n) all sales of tangible personal property which is consumed in the
37       production, manufacture, processing, mining, drilling, refining or com-
38       pounding of tangible personal property, the treating of by-products or
39       wastes derived from any such production process, the providing of serv-
40       ices or the irrigation of crops for ultimate sale at retail within or without
41       the state of Kansas; and any purchaser of such property may obtain from
42       the director of taxation and furnish to the supplier an exemption certifi-
43       cate number for tangible personal property for consumption in such pro-

25
  1       duction, manufacture, processing, mining, drilling, refining, compound-
  2       ing, treating, irrigation and in providing such services;
  3             (o) all sales of animals, fowl and aquatic plants and animals, the pri-
  4       mary purpose of which is use in agriculture or aquaculture, as defined in
  5       K.S.A. 47-1901, and amendments thereto, the production of food for
  6       human consumption, the production of animal, dairy, poultry or aquatic
  7       plant and animal products, fiber or fur, or the production of offspring for
  8       use for any such purpose or purposes;
  9             (p) all sales of drugs, as defined by K.S.A. 65-1626 and amendments
10       thereto, dispensed pursuant to a prescription order, as defined by K.S.A.
11       65-1626 and amendments thereto, by a licensed practitioner or a mid-
12       level practitioner as defined by K.S.A. 65-1626, and amendments thereto;
13             (q) all sales of insulin dispensed by a person licensed by the state
14       board of pharmacy to a person for treatment of diabetes at the direction
15       of a person licensed to practice medicine by the board of healing arts;
16             (r) all sales of prosthetic and orthopedic appliances prescribed in
17       writing by a person licensed to practice the healing arts, dentistry or
18       optometry. For the purposes of this subsection, the term prosthetic and
19       orthopedic appliances means any apparatus, instrument, device, or equip-
20       ment used to replace or substitute for any missing part of the body; used
21       to alleviate the malfunction of any part of the body; or used to assist any
22       disabled person in leading a normal life by facilitating such person's mo-
23       bility; such term shall include accessories attached or to be attached to
24       motor vehicles, but such term shall not include motor vehicles or personal
25       property which when installed becomes a fixture to real property;
26             (s) all sales of tangible personal property or services purchased di-
27       rectly by a groundwater management district organized or operating un-
28       der the authority of K.S.A. 82a-1020 et seq. and amendments thereto,
29       which property or services are used in the operation or maintenance of
30       the district;
31             (t) all sales of farm machinery and equipment or aquaculture ma-
32       chinery and equipment, repair and replacement parts therefor and serv-
33       ices performed in the repair and maintenance of such machinery and
34       equipment. For the purposes of this subsection the term ``farm machinery
35       and equipment or aquaculture machinery and equipment'' shall include
36       machinery and equipment used in the operation of Christmas tree farm-
37       ing but shall not include any passenger vehicle, truck, truck tractor, trailer,
38       semitrailer or pole trailer, other than a farm trailer, as such terms are
39       defined by K.S.A. 8-126 and amendments thereto. Each purchaser of
40       farm machinery and equipment or aquaculture machinery and equipment
41       exempted herein must certify in writing on the copy of the invoice or
42       sales ticket to be retained by the seller that the farm machinery and
43       equipment or aquaculture machinery and equipment purchased will be

26
  1       used only in farming, ranching or aquaculture production. Farming or
  2       ranching shall include the operation of a feedlot and farm and ranch work
  3       for hire and the operation of a nursery;
  4             (u) all leases or rentals of tangible personal property used as a dwell-
  5       ing if such tangible personal property is leased or rented for a period of
  6       more than 28 consecutive days;
  7             (v) all sales of food products to any contractor for use in preparing
  8       meals for delivery to homebound elderly persons over 60 years of age and
  9       to homebound disabled persons or to be served at a group-sitting at a
10       location outside of the home to otherwise homebound elderly persons
11       over 60 years of age and to otherwise homebound disabled persons, as
12       all or part of any food service project funded in whole or in part by
13       government or as part of a private nonprofit food service project available
14       to all such elderly or disabled persons residing within an area of service
15       designated by the private nonprofit organization, and all sales of food
16       products for use in preparing meals for consumption by indigent or home-
17       less individuals whether or not such meals are consumed at a place des-
18       ignated for such purpose;
19             (w) all sales of natural gas, electricity, heat and water delivered
20       through mains, lines or pipes: (1) To residential premises for noncom-
21       mercial use by the occupant of such premises; (2) for agricultural use and
22       also, for such use, all sales of propane gas; (3) for use in the severing of
23       oil; and (4) to any property which is exempt from property taxation pur-
24       suant to K.S.A. 79-201b Second through Sixth. As used in this paragraph,
25       ``severing'' shall have the meaning ascribed thereto by subsection (k) of
26       K.S.A. 79-4216, and amendments thereto;
27             (x) all sales of propane gas, LP-gas, coal, wood and other fuel sources
28       for the production of heat or lighting for noncommercial use of an oc-
29       cupant of residential premises;
30             (y) all sales of materials and services used in the repairing, servicing,
31       altering, maintaining, manufacturing, remanufacturing, or modification of
32       railroad rolling stock for use in interstate or foreign commerce under
33       authority of the laws of the United States;
34             (z) all sales of tangible personal property and services purchased di-
35       rectly by a port authority or by a contractor therefor as provided by the
36       provisions of K.S.A. 12-3418 and amendments thereto;
37             (aa) all sales of materials and services applied to equipment which is
38       transported into the state from without the state for repair, service, al-
39       teration, maintenance, remanufacture or modification and which is sub-
40       sequently transported outside the state for use in the transmission of
41       liquids or natural gas by means of pipeline in interstate or foreign com-
42       merce under authority of the laws of the United States;
43             (bb) all sales of used mobile homes or manufactured homes. As used

27
  1       in this subsection: (1) ``Mobile homes'' and ``manufactured homes'' shall
  2       have the meanings ascribed thereto by K.S.A. 58-4202 and amendments
  3       thereto; and (2) ``sales of used mobile homes or manufactured homes''
  4       means sales other than the original retail sale thereof;
  5             (cc) all sales of tangible personal property or services purchased for
  6       the purpose of and in conjunction with constructing, reconstructing, en-
  7       larging or remodeling a business or retail business which meets the
  8       requirements established in K.S.A. 74-50,115 and amendments thereto,
  9       and the sale and installation of machinery and equipment purchased for
10       installation at any such business or retail business. When a person shall
11       contract for the construction, reconstruction, enlargement or remodeling
12       of any such business or retail business, such person shall obtain from the
13       state and furnish to the contractor an exemption certificate for the project
14       involved, and the contractor may purchase materials, machinery and
15       equipment for incorporation in such project. The contractor shall furnish
16       the number of such certificates to all suppliers from whom such purchases
17       are made, and such suppliers shall execute invoices covering the same
18       bearing the number of such certificate. Upon completion of the project
19       the contractor shall furnish to the owner of the business or retail business
20       a sworn statement, on a form to be provided by the director of taxation,
21       that all purchases so made were entitled to exemption under this subsec-
22       tion. All invoices shall be held by the contractor for a period of five years
23       and shall be subject to audit by the director of taxation. Any contractor
24       or any agent, employee or subcontractor thereof, who shall use or oth-
25       erwise dispose of any materials, machinery or equipment purchased un-
26       der such a certificate for any purpose other than that for which such a
27       certificate is issued without the payment of the sales or compensating tax
28       otherwise imposed thereon, shall be guilty of a misdemeanor and, upon
29       conviction therefor, shall be subject to the penalties provided for in sub-
30       section (g) of K.S.A. 79-3615 and amendments thereto. As used in this
31       subsection, ``business'' and ``retail business'' have the meanings respec-
32       tively ascribed thereto by K.S.A. 74-50,114 and amendments thereto;
33             (dd) all sales of tangible personal property purchased with food
34       stamps issued by the United States department of agriculture;
35             (ee) all sales of lottery tickets and shares made as part of a lottery
36       operated by the state of Kansas;
37             (ff) on and after July 1, 1988, all sales of new mobile homes or man-
38       ufactured homes to the extent of 40% of the gross receipts, determined
39       without regard to any trade-in allowance, received from such sale. As used
40       in this subsection, ``mobile homes'' and ``manufactured homes'' shall have
41       the meanings ascribed thereto by K.S.A. 58-4202 and amendments
42       thereto;
43             (gg) all sales of tangible personal property purchased in accordance

28
  1       with vouchers issued pursuant to the federal special supplemental food
  2       program for women, infants and children;
  3             (hh) all sales of medical supplies and equipment purchased directly
  4       by a nonprofit skilled nursing home or nonprofit intermediate nursing
  5       care home, as defined by K.S.A. 39-923, and amendments thereto, for
  6       the purpose of providing medical services to residents thereof. This ex-
  7       emption shall not apply to tangible personal property customarily used
  8       for human habitation purposes;
  9             (ii) all sales of tangible personal property purchased directly by a non-
10       profit organization for nonsectarian comprehensive multidiscipline youth
11       development programs and activities provided or sponsored by such or-
12       ganization, and all sales of tangible personal property by or on behalf of
13       any such organization. This exemption shall not apply to tangible personal
14       property customarily used for human habitation purposes;
15             (jj) all sales of tangible personal property or services, including the
16       renting and leasing of tangible personal property, purchased directly on
17       behalf of a community-based mental retardation facility or mental health
18       center organized pursuant to K.S.A. 19-4001 et seq., and amendments
19       thereto, and licensed in accordance with the provisions of K.S.A. 75-
20       3307b and amendments thereto. This exemption shall not apply to tan-
21       gible personal property customarily used for human habitation purposes;
22             (kk) on and after January 1, 1989, all sales of machinery and equip-
23       ment used directly and primarily for the purposes of manufacturing, as-
24       sembling, processing, finishing, storing, warehousing or distributing ar-
25       ticles of tangible personal property in this state intended for resale by a
26       manufacturing or processing plant or facility or a storage, warehousing or
27       distribution facility, and all sales of repair and replacement parts and
28       accessories purchased for such machinery and equipment:
29             (1) For purposes of this subsection, machinery and equipment shall
30       be deemed to be used directly and primarily in the manufacture, assem-
31       blage, processing, finishing, storing, warehousing or distributing of tan-
32       gible personal property where such machinery and equipment is used
33       during a manufacturing, assembling, processing or finishing, storing,
34       warehousing or distributing operation:
35             (A) To effect a direct and immediate physical change upon the tan-
36       gible personal property;
37             (B) to guide or measure a direct and immediate physical change upon
38       such property where such function is an integral and essential part of
39       tuning, verifying or aligning the component parts of such property;
40             (C) to test or measure such property where such function is an in-
41       tegral part of the production flow or function;
42             (D) to transport, convey or handle such property during the manu-
43       facturing, processing, storing, warehousing or distribution operation at

29
  1       the plant or facility; or
  2             (E) to place such property in the container, package or wrapping in
  3       which such property is normally sold or transported.
  4             (2)  For purposes of this subsection ``machinery and equipment used
  5       directly and primarily'' shall include, but not be limited to:
  6             (A) Mechanical machines or components thereof contributing to a
  7       manufacturing, assembling or finishing process;
  8             (B) molds and dies that determine the physical characteristics of the
  9       finished product or its packaging material;
10             (C) testing equipment to determine the quality of the finished
11       product;
12             (D) computers and related peripheral equipment that directly control
13       or measure the manufacturing process or which are utilized for engi-
14       neering of the finished product; and
15             (E) computers and related peripheral equipment utilized for research
16       and development and product design.
17             (3) ``Machinery and equipment used directly and primarily'' shall not
18       include:
19             (A) Hand tools;
20             (B) machinery, equipment and tools used in maintaining and repair-
21       ing any type of machinery and equipment;
22             (C) transportation equipment not used in the manufacturing, assem-
23       bling, processing, furnishing, storing, warehousing or distributing process
24       at the plant or facility;
25             (D) office machines and equipment including computers and related
26       peripheral equipment not directly and primarily used in controlling or
27       measuring the manufacturing process;
28             (E) furniture and buildings; and
29             (F) machinery and equipment used in administrative, accounting,
30       sales or other such activities of the business;
31             (4) for purposes of this subsection, ``repair and replacement parts and
32       accessories'' means all parts and accessories for exempt machinery and
33       equipment, including but not limited to dies, jigs, molds, and patterns
34       which are attached to exempt machinery or which are otherwise used in
35       production, short-lived replaceable parts that can be readily detached
36       from exempt machinery or equipment, such as belts, drill bits, grinding
37       wheels, cutting bars and saws, and other replacement parts for production
38       equipment, including refractory brick and other refractory items for kiln
39       equipment used in production operations;
40             (ll) all sales of educational materials purchased for distribution to the
41       public at no charge by a nonprofit corporation organized for the purpose
42       of encouraging, fostering and conducting programs for the improvement
43       of public health;

30
  1             (mm) all sales of seeds and tree seedlings; fertilizers, insecticides,
  2       herbicides, germicides, pesticides and fungicides; and services, purchased
  3       and used for the purpose of producing plants in order to prevent soil
  4       erosion on land devoted to agricultural use;
  5             (nn) except as otherwise provided in this act, all sales of services ren-
  6       dered by an advertising agency or licensed broadcast station or any mem-
  7       ber, agent or employee thereof;
  8             (oo) all sales of tangible personal property purchased by a community
  9       action group or agency for the exclusive purpose of repairing or weath-
10       erizing housing occupied by low income individuals;
11             (pp) all sales of drill bits and explosives actually utilized in the explo-
12       ration and production of oil or gas;
13             (qq) all sales of tangible personal property and services purchased by
14       a nonprofit museum or historical society or any combination thereof, in-
15       cluding a nonprofit organization which is organized for the purpose of
16       stimulating public interest in the exploration of space by providing edu-
17       cational information, exhibits and experiences, which is exempt from fed-
18       eral income taxation pursuant to section 501(c)(3) of the federal internal
19       revenue code of 1986;
20             (rr) all sales of tangible personal property which will admit the pur-
21       chaser thereof to any annual event sponsored by a nonprofit organization
22       which is exempt from federal income taxation pursuant to section
23       501(c)(3) of the federal internal revenue code of 1986;
24             (ss) all sales of tangible personal property and services purchased by
25       a public broadcasting station licensed by the federal communications
26       commission as a noncommercial educational television or radio station;
27             (tt) all sales of tangible personal property and services purchased by
28       or on behalf of a not-for-profit corporation which is exempt from federal
29       income taxation pursuant to section 501(c)(3) of the federal internal rev-
30       enue code of 1986, for the sole purpose of constructing a Kansas Korean
31       War memorial;
32             (uu) all sales of tangible personal property and services purchased by
33       or on behalf of any rural volunteer fire-fighting organization for use ex-
34       clusively in the performance of its duties and functions;
35             (vv) all sales of tangible personal property purchased by any of the
36       following organizations which are exempt from federal income taxation
37       pursuant to section 501 (c)(3) of the federal internal revenue code of
38       1986, for the following purposes, and all sales of any such property by or
39       on behalf of any such organization for any such purpose:
40             (1) The American Heart Association, Kansas Affiliate, Inc. for the
41       purposes of providing education, training, certification in emergency car-
42       diac care, research and other related services to reduce disability and
43       death from cardiovascular diseases and stroke;

31
  1             (2) the Kansas Alliance for the Mentally Ill, Inc. for the purpose of
  2       advocacy for persons with mental illness and to education, research and
  3       support for their families;
  4             (3) the Kansas Mental Illness Awareness Council for the purposes of
  5       advocacy for persons who are mentally ill and to education, research and
  6       support for them and their families;
  7             (4) the American Diabetes Association Kansas Affiliate, Inc. for the
  8       purpose of eliminating diabetes through medical research, public edu-
  9       cation focusing on disease prevention and education, patient education
10       including information on coping with diabetes, and professional education
11       and training;
12             (5) the American Lung Association of Kansas, Inc. for the purpose of
13       eliminating all lung diseases through medical research, public education
14       including information on coping with lung diseases, professional educa-
15       tion and training related to lung disease and other related services to
16       reduce the incidence of disability and death due to lung disease;
17             (6) the Kansas chapters of the Alzheimer's Disease and Related Dis-
18       orders Association, Inc. for the purpose of providing assistance and sup-
19       port to persons in Kansas with Alzheimer's disease, and their families and
20       caregivers; and
21             (ww) all sales of tangible personal property purchased by the Habitat
22       for Humanity for the exclusive use of being incorporated within a housing
23       project constructed by such organization.
24             (xx) all sales of tangible personal property and services purchased by
25       a nonprofit zoo which is exempt from federal income taxation pursuant
26       to section 501(c)(3) of the federal internal revenue code of 1986, or on
27       behalf of such zoo by an entity itself exempt from federal income taxation
28       pursuant to section 501(c)(3) of the federal internal revenue code of 1986
29       contracted with to operate such zoo and all sales of tangible personal
30       property or services purchased by a contractor for the purpose of con-
31       structing, equipping, reconstructing, maintaining, repairing, enlarging,
32       furnishing or remodeling facilities for any nonprofit zoo which would be
33       exempt from taxation under the provisions of this section if purchased
34       directly by such nonprofit zoo or the entity operating such zoo. Nothing
35       in this subsection shall be deemed to exempt the purchase of any con-
36       struction machinery, equipment or tools used in the constructing, equip-
37       ping, reconstructing, maintaining, repairing, enlarging, furnishing or re-
38       modeling facilities for any nonprofit zoo. When any nonprofit zoo shall
39       contract for the purpose of constructing, equipping, reconstructing, main-
40       taining, repairing, enlarging, furnishing or remodeling facilities, it shall
41       obtain from the state and furnish to the contractor an exemption certifi-
42       cate for the project involved, and the contractor may purchase materials
43       for incorporation in such project. The contractor shall furnish the number

32
  1       of such certificate to all suppliers from whom such purchases are made,
  2       and such suppliers shall execute invoices covering the same bearing the
  3       number of such certificate. Upon completion of the project the contractor
  4       shall furnish to the nonprofit zoo concerned a sworn statement, on a form
  5       to be provided by the director of taxation, that all purchases so made were
  6       entitled to exemption under this subsection. All invoices shall be held by
  7       the contractor for a period of five years and shall be subject to audit by
  8       the director of taxation. If any materials purchased under such a certifi-
  9       cate are found not to have been incorporated in the building or other
10       project or not to have been returned for credit or the sales or compen-
11       sating tax otherwise imposed upon such materials which will not be so
12       incorporated in the building or other project reported and paid by such
13       contractor to the director of taxation not later than the 20th day of the
14       month following the close of the month in which it shall be determined
15       that such materials will not be used for the purpose for which such cer-
16       tificate was issued, the nonprofit zoo concerned shall be liable for tax on
17       all materials purchased for the project, and upon payment thereof it may
18       recover the same from the contractor together with reasonable attorney
19       fees. Any contractor or any agent, employee or subcontractor thereof,
20       who shall use or otherwise dispose of any materials purchased under such
21       a certificate for any purpose other than that for which such a certificate
22       is issued without the payment of the sales or compensating tax otherwise
23       imposed upon such materials, shall be guilty of a misdemeanor and, upon
24       conviction therefor, shall be subject to the penalties provided for in sub-
25       section (g) of K.S.A. 79-3615, and amendments thereto;
26             (yy) all sales of tangible personal property and services purchased by
27       a parent-teacher association or organization, and all sales of tangible per-
28       sonal property by or on behalf of such association or organization;
29             (zz) all sales of machinery and equipment purchased by over-the-air,
30       free access radio or television station which is used directly and primarily
31       for the purpose of producing a broadcast signal or is such that the failure
32       of the machinery or equipment to operate would cause broadcasting to
33       cease. For purposes of this subsection, machinery and equipment shall
34       include, but not be limited to, that required by rules and regulations of
35       the federal communications commission, and all sales of electricity which
36       are essential or necessary for the purpose of producing a broadcast signal
37       or is such that the failure of the electricity would cause broadcasting to
38       cease;
39             (aaa) all sales of tangible personal property and services purchased
40       by a religious organization which is exempt from federal income taxation
41       pursuant to section 501(c)(3) of the federal internal revenue code, and
42       used exclusively for religious purposes, and all sales of tangible personal
43       property or services purchased by a contractor for the purpose of con-

33
  1       structing, equipping, reconstructing, maintaining, repairing, enlarging,
  2       furnishing or remodeling facilities for any such organization which would
  3       be exempt from taxation under the provisions of this section if purchased
  4       directly by such organization. Nothing in this subsection shall be deemed
  5       to exempt the purchase of any construction machinery, equipment or
  6       tools used in the constructing, equipping, reconstructing, maintaining,
  7       repairing, enlarging, furnishing or remodeling facilities for any such or-
  8       ganization. When any such organization shall contract for the purpose of
  9       constructing, equipping, reconstructing, maintaining, repairing, enlarg-
10       ing, furnishing or remodeling facilities, it shall obtain from the state and
11       furnish to the contractor an exemption certificate for the project involved,
12       and the contractor may purchase materials for incorporation in such pro-
13       ject. The contractor shall furnish the number of such certificate to all
14       suppliers from whom such purchases are made, and such suppliers shall
15       execute invoices covering the same bearing the number of such certifi-
16       cate. Upon completion of the project the contractor shall furnish to such
17       organization concerned a sworn statement, on a form to be provided by
18       the director of taxation, that all purchases so made were entitled to ex-
19       emption under this subsection. All invoices shall be held by the contractor
20       for a period of five years and shall be subject to audit by the director of
21       taxation. If any materials purchased under such a certificate are found
22       not to have been incorporated in the building or other project or not to
23       have been returned for credit or the sales or compensating tax otherwise
24       imposed upon such materials which will not be so incorporated in the
25       building or other project reported and paid by such contractor to the
26       director of taxation not later than the 20th day of the month following
27       the close of the month in which it shall be determined that such materials
28       will not be used for the purpose for which such certificate was issued,
29       such organization concerned shall be liable for tax on all materials pur-
30       chased for the project, and upon payment thereof it may recover the same
31       from the contractor together with reasonable attorney fees. Any contrac-
32       tor or any agent, employee or subcontractor thereof, who shall use or
33       otherwise dispose of any materials purchased under such a certificate for
34       any purpose other than that for which such a certificate is issued without
35       the payment of the sales or compensating tax otherwise imposed upon
36       such materials, shall be guilty of a misdemeanor and, upon conviction
37       therefor, shall be subject to the penalties provided for in subsection (g)
38       of K.S.A. 79-3615, and amendments thereto. Sales tax paid on and after
39       July 1, 1998, but prior to the effective date of this act upon the gross
40       receipts received from any sale exempted by the amendatory provisions
41       of this subsection shall be refunded. Each claim for a sales tax refund
42       shall be verified and submitted to the director of taxation upon forms
43       furnished by the director and shall be accompanied by any additional

34
  1       documentation required by the director. The director shall review each
  2       claim and shall refund that amount of sales tax paid as determined under
  3       the provisions of this subsection. All refunds shall be paid from the sales
  4       tax refund fund upon warrants of the director of accounts and reports
  5       pursuant to vouchers approved by the director or the director's designee;
  6             (bbb) all sales of food for human consumption by an organization
  7       which is exempt from federal income taxation pursuant to section 501
  8       (c)(3) of the federal internal revenue code of 1986, pursuant to a food
  9       distribution program which offers such food at a price below cost in
10       exchange for the performance of community service by the purchaser
11       thereof;
12             (ccc) on and after July 1, 1999, all sales of tangible personal property
13       and services purchased by a primary care clinic or health center the pri-
14       mary purpose of which is to provide services to medically underserved
15       individuals and families, and which is exempt from federal income taxa-
16       tion pursuant to section 501 (c)(3) of the federal internal revenue code,
17       and all sales of tangible personal property or services purchased by a
18       contractor for the purpose of constructing, equipping, reconstructing,
19       maintaining, repairing, enlarging, furnishing or remodeling facilities for
20       any such clinic or center which would be exempt from taxation under the
21       provisions of this section if purchased directly by such clinic or center.
22       Nothing in this subsection shall be deemed to exempt the purchase of
23       any construction machinery, equipment or tools used in the constructing,
24       equipping, reconstructing, maintaining, repairing, enlarging, furnishing
25       or remodeling facilities for any such clinic or center. When any such clinic
26       or center shall contract for the purpose of constructing, equipping, re-
27       constructing, maintaining, repairing, enlarging, furnishing or remodeling
28       facilities, it shall obtain from the state and furnish to the contractor an
29       exemption certificate for the project involved, and the contractor may
30       purchase materials for incorporation in such project. The contractor shall
31       furnish the number of such certificate to all suppliers from whom such
32       purchases are made, and such suppliers shall execute invoices covering
33       the same bearing the number of such certificate. Upon completion of the
34       project the contractor shall furnish to such clinic or center concerned a
35       sworn statement, on a form to be provided by the director of taxation,
36       that all purchases so made were entitled to exemption under this subsec-
37       tion. All invoices shall be held by the contractor for a period of five years
38       and shall be subject to audit by the director of taxation. If any materials
39       purchased under such a certificate are found not to have been incorpo-
40       rated in the building or other project or not to have been returned for
41       credit or the sales or compensating tax otherwise imposed upon such
42       materials which will not be so incorporated in the building or other pro-
43       ject reported and paid by such contractor to the director of taxation not

35
  1       later than the 20th day of the month following the close of the month in
  2       which it shall be determined that such materials will not be used for the
  3       purpose for which such certificate was issued, such clinic or center con-
  4       cerned shall be liable for tax on all materials purchased for the project,
  5       and upon payment thereof it may recover the same from the contractor
  6       together with reasonable attorney fees. Any contractor or any agent, em-
  7       ployee or subcontractor thereof, who shall use or otherwise dispose of
  8       any materials purchased under such a certificate for any purpose other
  9       than that for which such a certificate is issued without the payment of
10       the sales or compensating tax otherwise imposed upon such materials,
11       shall be guilty of a misdemeanor and, upon conviction therefor, shall be
12       subject to the penalties provided for in subsection (g) of K.S.A. 79-3615,
13       and amendments thereto;
14             (ddd) on and after January 1, 1999, and before January 1, 2000, all
15       sales of materials and services purchased by any class II or III railroad as
16       classified by the federal surface transportation board for the construction,
17       renovation, repair or replacement of class II or III railroad track and
18       facilities used directly in interstate commerce. In the event any such track
19       or facility for which materials and services were purchased sales tax ex-
20       empt is not operational for five years succeeding the allowance of such
21       exemption, the total amount of sales tax which would have been payable
22       except for the operation of this subsection shall be recouped in accord-
23       ance with rules and regulations adopted for such purpose by the secretary
24       of revenue; and
25             (eee) on and after January 1, 1999, and before January 1, 2000, all
26       sales of materials and services purchased for the original construction,
27       reconstruction, repair or replacement of grain storage facilities, including
28       railroad sidings providing access thereto.; and
29             (fff) all sales of bingo cards, bingo faces and instant bingo tickets by
30       operators under the bingo act. 
31       Sec.  18. K.S.A. 79-4701, 79-4703, 79-4704, 79-4705, 79-4705a, 79-
32       4706, 79-4707, 79-4708, 79-4710, 79-4711, 79-4712a, 79-4713 and 79-
33       4714 and K.S.A. 1999 Supp. 79-3606 are hereby repealed.
34        Sec.  19. This act shall take effect and be in force from and after its
35       publication in the statute book.