CHAPTER 123
HOUSE BILL No. 2011
(Amended by Chapter 140)
An Act relating to sales taxation; exempting sales of certain
business machinery and equip-
ment; concerning certain refunds; amending K.S.A. 79-3609 and
K.S.A. 1999 Supp. 79-
3606 and repealing the existing sections.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 1999 Supp.
79-3606 is hereby amended to read as
follows: 79-3606. The following shall be exempt from the tax
imposed by
this act:
(a) All sales of motor-vehicle fuel or
other articles upon which a sales
or excise tax has been paid, not subject to refund, under the laws
of this
state except cigarettes as defined by K.S.A. 79-3301 and
amendments
thereto, cereal malt beverages and malt products as defined by
K.S.A. 79-
3817 and amendments thereto, including wort, liquid malt, malt
syrup
and malt extract, which is not subject to taxation under the
provisions of
K.S.A. 79-41a02 and amendments thereto, motor vehicles taxed
pursuant
to K.S.A. 79-5117, and amendments thereto, tires taxed pursuant
to
K.S.A. 1999 Supp. 65-3424d, and amendments thereto, and
drycleaning
and laundry services taxed pursuant to K.S.A. 1999 Supp. 65-34,150,
and
amendments thereto;
(b) all sales of tangible personal
property or service, including the
renting and leasing of tangible personal property, purchased
directly by
the state of Kansas, a political subdivision thereof, other than a
school or
educational institution, or purchased by a public or private
nonprofit hos-
pital or public hospital authority or nonprofit blood, tissue or
organ bank
and used exclusively for state, political subdivision, hospital or
public hos-
pital authority or nonprofit blood, tissue or organ bank purposes,
except
when: (1) Such state, hospital or public hospital authority is
engaged or
proposes to engage in any business specifically taxable under the
provi-
sions of this act and such items of tangible personal property or
service
are used or proposed to be used in such business, or (2) such
political
subdivision is engaged or proposes to engage in the business of
furnishing
gas, water, electricity or heat to others and such items of
personal prop-
erty or service are used or proposed to be used in such
business;
(c) all sales of tangible personal
property or services, including the
renting and leasing of tangible personal property, purchased
directly by
a public or private elementary or secondary school or public or
private
nonprofit educational institution and used primarily by such school
or
institution for nonsectarian programs and activities provided or
sponsored
by such school or institution or in the erection, repair or
enlargement of
buildings to be used for such purposes. The exemption herein
provided
shall not apply to erection, construction, repair, enlargement or
equip-
ment of buildings used primarily for human habitation;
(d) all sales of tangible personal
property or services purchased by a
contractor for the purpose of constructing, equipping,
reconstructing,
maintaining, repairing, enlarging, furnishing or remodeling
facilities for
any public or private nonprofit hospital or public hospital
authority, public
or private elementary or secondary school or a public or private
nonprofit
educational institution, which would be exempt from taxation under
the
provisions of this act if purchased directly by such hospital or
public hos-
pital authority, school or educational institution; and all sales
of tangible
personal property or services purchased by a contractor for the
purpose
of constructing, equipping, reconstructing, maintaining, repairing,
en-
larging, furnishing or remodeling facilities for any political
subdivision of
the state, the total cost of which is paid from funds of such
political
subdivision and which would be exempt from taxation under the
provi-
sions of this act if purchased directly by such political
subdivision. Nothing
in this subsection or in the provisions of K.S.A. 12-3418 and
amendments
thereto, shall be deemed to exempt the purchase of any
construction
machinery, equipment or tools used in the constructing, equipping,
re-
constructing, maintaining, repairing, enlarging, furnishing or
remodeling
facilities for any political subdivision of the state. As used in
this subsec-
tion, K.S.A. 12-3418 and 79-3640, and amendments thereto, ``funds
of a
political subdivision'' shall mean general tax revenues, the
proceeds of
any bonds and gifts or grants-in-aid. Gifts shall not mean funds
used for
the purpose of constructing, equipping, reconstructing, repairing,
enlarg-
ing, furnishing or remodeling facilities which are to be leased to
the do-
nor. When any political subdivision of the state, public or private
non-
profit hospital or public hospital authority, public or private
elementary
or secondary school or public or private nonprofit educational
institution
shall contract for the purpose of constructing, equipping,
reconstructing,
maintaining, repairing, enlarging, furnishing or remodeling
facilities, it
shall obtain from the state and furnish to the contractor an
exemption
certificate for the project involved, and the contractor may
purchase ma-
terials for incorporation in such project. The contractor shall
furnish the
number of such certificate to all suppliers from whom such
purchases are
made, and such suppliers shall execute invoices covering the same
bearing
the number of such certificate. Upon completion of the project the
con-
tractor shall furnish to the political subdivision, hospital or
public hospital
authority, school or educational institution concerned a sworn
statement,
on a form to be provided by the director of taxation, that all
purchases so
made were entitled to exemption under this subsection. As an
alternative
to the foregoing procedure, any such contracting entity may apply
to the
secretary of revenue for agent status for the sole purpose of
issuing and
furnishing project exemption certificates to contractors pursuant
to rules
and regulations adopted by the secretary establishing conditions
and stan-
dards for the granting and maintaining of such status. All invoices
shall
be held by the contractor for a period of five years and shall be
subject
to audit by the director of taxation. If any materials purchased
under such
a certificate are found not to have been incorporated in the
building or
other project or not to have been returned for credit or the sales
or
compensating tax otherwise imposed upon such materials which will
not
be so incorporated in the building or other project reported and
paid by
such contractor to the director of taxation not later than the 20th
day of
the month following the close of the month in which it shall be
deter-
mined that such materials will not be used for the purpose for
which such
certificate was issued, the political subdivision, hospital or
public hospital
authority, school or educational institution concerned shall be
liable for
tax on all materials purchased for the project, and upon payment
thereof
it may recover the same from the contractor together with
reasonable
attorney fees. Any contractor or any agent, employee or
subcontractor
thereof, who shall use or otherwise dispose of any materials
purchased
under such a certificate for any purpose other than that for which
such a
certificate is issued without the payment of the sales or
compensating tax
otherwise imposed upon such materials, shall be guilty of a
misdemeanor
and, upon conviction therefor, shall be subject to the penalties
provided
for in subsection (g) of K.S.A. 79-3615, and amendments
thereto;
(e) all sales of tangible personal
property or services purchased by a
contractor for the erection, repair or enlargement of buildings or
other
projects for the government of the United States, its agencies or
instru-
mentalities, which would be exempt from taxation if purchased
directly
by the government of the United States, its agencies or
instrumentalities.
When the government of the United States, its agencies or
instrumen-
talities shall contract for the erection, repair, or enlargement of
any build-
ing or other project, it shall obtain from the state and furnish to
the
contractor an exemption certificate for the project involved, and
the con-
tractor may purchase materials for incorporation in such project.
The
contractor shall furnish the number of such certificates to all
suppliers
from whom such purchases are made, and such suppliers shall
execute
invoices covering the same bearing the number of such certificate.
Upon
completion of the project the contractor shall furnish to the
government
of the United States, its agencies or instrumentalities concerned a
sworn
statement, on a form to be provided by the director of taxation,
that all
purchases so made were entitled to exemption under this subsection.
As
an alternative to the foregoing procedure, any such contracting
entity may
apply to the secretary of revenue for agent status for the sole
purpose of
issuing and furnishing project exemption certificates to
contractors pur-
suant to rules and regulations adopted by the secretary
establishing con-
ditions and standards for the granting and maintaining of such
status. All
invoices shall be held by the contractor for a period of five years
and shall
be subject to audit by the director of taxation. Any contractor or
any agent,
employee or subcontractor thereof, who shall use or otherwise
dispose of
any materials purchased under such a certificate for any purpose
other
than that for which such a certificate is issued without the
payment of
the sales or compensating tax otherwise imposed upon such
materials,
shall be guilty of a misdemeanor and, upon conviction therefor,
shall be
subject to the penalties provided for in subsection (g) of K.S.A.
79-3615
and amendments thereto;
(f) tangible personal property purchased
by a railroad or public utility
for consumption or movement directly and immediately in
interstate
commerce;
(g) sales of aircraft including
remanufactured and modified aircraft,
sales of aircraft repair, modification and replacement parts and
sales of
services employed in the remanufacture, modification and repair of
air-
craft sold to persons using directly or through an authorized agent
such
aircraft and aircraft repair, modification and replacement parts as
certified
or licensed carriers of persons or property in interstate or
foreign com-
merce under authority of the laws of the United States or any
foreign
government or sold to any foreign government or agency or
instrumen-
tality of such foreign government and all sales of aircraft,
aircraft parts,
replacement parts and services employed in the remanufacture,
modifi-
cation and repair of aircraft for use outside of the United
States;
(h) all rentals of nonsectarian textbooks
by public or private elemen-
tary or secondary schools;
(i) the lease or rental of all films,
records, tapes, or any type of sound
or picture transcriptions used by motion picture exhibitors;
(j) meals served without charge or food
used in the preparation of
such meals to employees of any restaurant, eating house, dining
car, hotel,
drugstore or other place where meals or drinks are regularly sold
to the
public if such employees' duties are related to the furnishing or
sale of
such meals or drinks;
(k) any motor vehicle, semitrailer or
pole trailer, as such terms are
defined by K.S.A. 8-126 and amendments thereto, or aircraft sold
and
delivered in this state to a bona fide resident of another state,
which motor
vehicle, semitrailer, pole trailer or aircraft is not to be
registered or based
in this state and which vehicle, semitrailer, pole trailer or
aircraft will not
remain in this state more than 10 days;
(l) all isolated or occasional sales of
tangible personal property, serv-
ices, substances or things, except isolated or occasional sale of
motor
vehicles specifically taxed under the provisions of subsection (o)
of K.S.A.
79-3603 and amendments thereto;
(m) all sales of tangible personal
property which become an ingre-
dient or component part of tangible personal property or services
pro-
duced, manufactured or compounded for ultimate sale at retail
within or
without the state of Kansas; and any such producer, manufacturer
or
compounder may obtain from the director of taxation and furnish to
the
supplier an exemption certificate number for tangible personal
property
for use as an ingredient or component part of the property or
services
produced, manufactured or compounded;
(n) all sales of tangible personal
property which is consumed in the
production, manufacture, processing, mining, drilling, refining or
com-
pounding of tangible personal property, the treating of by-products
or
wastes derived from any such production process, the providing of
serv-
ices or the irrigation of crops for ultimate sale at retail within
or without
the state of Kansas; and any purchaser of such property may obtain
from
the director of taxation and furnish to the supplier an exemption
certifi-
cate number for tangible personal property for consumption in such
pro-
duction, manufacture, processing, mining, drilling, refining,
compound-
ing, treating, irrigation and in providing such services;
(o) all sales of animals, fowl and
aquatic plants and animals, the pri-
mary purpose of which is use in agriculture or aquaculture, as
defined in
K.S.A. 47-1901, and amendments thereto, the production of food
for
human consumption, the production of animal, dairy, poultry or
aquatic
plant and animal products, fiber or fur, or the production of
offspring for
use for any such purpose or purposes;
(p) all sales of drugs, as defined by
K.S.A. 65-1626 and amendments
thereto, dispensed pursuant to a prescription order, as defined by
K.S.A.
65-1626 and amendments thereto, by a licensed practitioner or a
mid-
level practitioner as defined by K.S.A. 65-1626, and amendments
thereto;
(q) all sales of insulin dispensed by a
person licensed by the state
board of pharmacy to a person for treatment of diabetes at the
direction
of a person licensed to practice medicine by the board of healing
arts;
(r) all sales of prosthetic and
orthopedic appliances prescribed in
writing by a person licensed to practice the healing arts,
dentistry or
optometry. For the purposes of this subsection, the term prosthetic
and
orthopedic appliances means any apparatus, instrument, device, or
equip-
ment used to replace or substitute for any missing part of the
body; used
to alleviate the malfunction of any part of the body; or used to
assist any
disabled person in leading a normal life by facilitating such
person's mo-
bility; such term shall include accessories attached or to be
attached to
motor vehicles, but such term shall not include motor vehicles or
personal
property which when installed becomes a fixture to real
property;
(s) all sales of tangible personal
property or services purchased di-
rectly by a groundwater management district organized or operating
un-
der the authority of K.S.A. 82a-1020 et seq. and amendments
thereto,
which property or services are used in the operation or maintenance
of
the district;
(t) all sales of farm machinery and
equipment or aquaculture ma-
chinery and equipment, repair and replacement parts therefor and
serv-
ices performed in the repair and maintenance of such machinery
and
equipment. For the purposes of this subsection the term ``farm
machinery
and equipment or aquaculture machinery and equipment'' shall
include
machinery and equipment used in the operation of Christmas tree
farm-
ing but shall not include any passenger vehicle, truck, truck
tractor, trailer,
semitrailer or pole trailer, other than a farm trailer, as such
terms are
defined by K.S.A. 8-126 and amendments thereto. Each purchaser
of
farm machinery and equipment or aquaculture machinery and
equipment
exempted herein must certify in writing on the copy of the invoice
or
sales ticket to be retained by the seller that the farm machinery
and
equipment or aquaculture machinery and equipment purchased will
be
used only in farming, ranching or aquaculture production. Farming
or
ranching shall include the operation of a feedlot and farm and
ranch work
for hire and the operation of a nursery;
(u) all leases or rentals of tangible
personal property used as a dwell-
ing if such tangible personal property is leased or rented for a
period of
more than 28 consecutive days;
(v) all sales of food products to any
contractor for use in preparing
meals for delivery to homebound elderly persons over 60 years of
age and
to homebound disabled persons or to be served at a group-sitting at
a
location outside of the home to otherwise homebound elderly
persons
over 60 years of age and to otherwise homebound disabled persons,
as
all or part of any food service project funded in whole or in part
by
government or as part of a private nonprofit food service project
available
to all such elderly or disabled persons residing within an area of
service
designated by the private nonprofit organization, and all sales of
food
products for use in preparing meals for consumption by indigent or
home-
less individuals whether or not such meals are consumed at a place
des-
ignated for such purpose;
(w) all sales of natural gas,
electricity, heat and water delivered
through mains, lines or pipes: (1) To residential premises for
noncom-
mercial use by the occupant of such premises; (2) for agricultural
use and
also, for such use, all sales of propane gas; (3) for use in the
severing of
oil; and (4) to any property which is exempt from property taxation
pur-
suant to K.S.A. 79-201b Second through Sixth. As used
in this paragraph,
``severing'' shall have the meaning ascribed thereto by subsection
(k) of
K.S.A. 79-4216, and amendments thereto;
(x) all sales of propane gas, LP-gas,
coal, wood and other fuel sources
for the production of heat or lighting for noncommercial use of an
oc-
cupant of residential premises;
(y) all sales of materials and services
used in the repairing, servicing,
altering, maintaining, manufacturing, remanufacturing, or
modification of
railroad rolling stock for use in interstate or foreign commerce
under
authority of the laws of the United States;
(z) all sales of tangible personal
property and services purchased di-
rectly by a port authority or by a contractor therefor as provided
by the
provisions of K.S.A. 12-3418 and amendments thereto;
(aa) all sales of materials and services
applied to equipment which is
transported into the state from without the state for repair,
service, al-
teration, maintenance, remanufacture or modification and which is
sub-
sequently transported outside the state for use in the transmission
of
liquids or natural gas by means of pipeline in interstate or
foreign com-
merce under authority of the laws of the United States;
(bb) all sales of used mobile homes or
manufactured homes. As used
in this subsection: (1) ``Mobile homes'' and ``manufactured homes''
shall
have the meanings ascribed thereto by K.S.A. 58-4202 and
amendments
thereto; and (2) ``sales of used mobile homes or manufactured
homes''
means sales other than the original retail sale thereof;
(cc) all sales of tangible personal
property or services purchased for
the purpose of and in conjunction with constructing,
reconstructing, en-
larging or remodeling a business or retail business which meets
the
requirements established in K.S.A. 74-50,115 and amendments
thereto,
and the sale and installation of machinery and equipment purchased
for
installation at any such business or retail business. When a person
shall
contract for the construction, reconstruction, enlargement or
remodeling
of any such business or retail business, such person shall obtain
from the
state and furnish to the contractor an exemption certificate for
the project
involved, and the contractor may purchase materials, machinery
and
equipment for incorporation in such project. The contractor shall
furnish
the number of such certificates to all suppliers from whom such
purchases
are made, and such suppliers shall execute invoices covering the
same
bearing the number of such certificate. Upon completion of the
project
the contractor shall furnish to the owner of the business or retail
business
a sworn statement, on a form to be provided by the director of
taxation,
that all purchases so made were entitled to exemption under this
subsec-
tion. All invoices shall be held by the contractor for a period of
five years
and shall be subject to audit by the director of taxation. Any
contractor
or any agent, employee or subcontractor thereof, who shall use or
oth-
erwise dispose of any materials, machinery or equipment purchased
un-
der such a certificate for any purpose other than that for which
such a
certificate is issued without the payment of the sales or
compensating tax
otherwise imposed thereon, shall be guilty of a misdemeanor and,
upon
conviction therefor, shall be subject to the penalties provided for
in sub-
section (g) of K.S.A. 79-3615 and amendments thereto. As used in
this
subsection, ``business'' and ``retail business'' have the meanings
respec-
tively ascribed thereto by K.S.A. 74-50,114 and amendments
thereto;
(dd) all sales of tangible personal
property purchased with food
stamps issued by the United States department of agriculture;
(ee) all sales of lottery tickets and
shares made as part of a lottery
operated by the state of Kansas;
(ff) on and after July 1, 1988, all sales
of new mobile homes or man-
ufactured homes to the extent of 40% of the gross receipts,
determined
without regard to any trade-in allowance, received from such sale.
As used
in this subsection, ``mobile homes'' and ``manufactured homes''
shall have
the meanings ascribed thereto by K.S.A. 58-4202 and amendments
thereto;
(gg) all sales of tangible personal
property purchased in accordance
with vouchers issued pursuant to the federal special supplemental
food
program for women, infants and children;
(hh) all sales of medical supplies and
equipment purchased directly
by a nonprofit skilled nursing home or nonprofit intermediate
nursing
care home, as defined by K.S.A. 39-923, and amendments thereto,
for
the purpose of providing medical services to residents thereof.
This ex-
emption shall not apply to tangible personal property customarily
used
for human habitation purposes;
(ii) all sales of tangible personal
property purchased directly by a non-
profit organization for nonsectarian comprehensive multidiscipline
youth
development programs and activities provided or sponsored by such
or-
ganization, and all sales of tangible personal property by or on
behalf of
any such organization. This exemption shall not apply to tangible
personal
property customarily used for human habitation purposes;
(jj) all sales of tangible personal
property or services, including the
renting and leasing of tangible personal property, purchased
directly on
behalf of a community-based mental retardation facility or mental
health
center organized pursuant to K.S.A. 19-4001 et seq., and
amendments
thereto, and licensed in accordance with the provisions of K.S.A.
75-
3307b and amendments thereto. This exemption shall not apply to
tan-
gible personal property customarily used for human habitation
purposes;
(kk) on and after January 1,
1989, all sales of machinery and equip-
ment used directly and primarily for the purposes of
manufacturing, as-
sembling, processing, finishing, storing, warehousing or
distributing ar-
ticles of tangible personal property in this state intended
for resale by a
manufacturing or processing plant or facility or a storage,
warehousing or
distribution facility, and all sales of repair and
replacement parts and
accessories purchased for such machinery and
equipment:
(1) For purposes of this
subsection, machinery and equipment shall
be deemed to be used directly and primarily in the
manufacture, assem-
blage, processing, finishing, storing, warehousing or
distributing of tan-
gible personal property where such machinery and equipment
is used
during a manufacturing, assembling, processing or
finishing, storing,
warehousing or distributing operation:
(A) To effect a direct and
immediate physical change upon the tan-
gible personal property;
(B) to guide or measure a direct
and immediate physical change upon
such property where such function is an integral and
essential part of
tuning, verifying or aligning the component parts of such
property;
(C) to test or measure such
property where such function is an in-
tegral part of the production flow or
function;
(D) to transport, convey or
handle such property during the manu-
facturing, processing, storing, warehousing or distribution
operation at
the plant or facility; or
(E) to place such property in the
container, package or wrapping in
which such property is normally sold or
transported.
(2) For purposes of this
subsection ``machinery and equipment used
directly and primarily'' shall include, but not be limited
to:
(A) Mechanical machines or
components thereof contributing to a
manufacturing, assembling or finishing
process;
(B) molds and dies that determine
the physical characteristics of the
finished product or its packaging
material;
(C) testing equipment to
determine the quality of the finished prod-
uct;
(D) computers and related
peripheral equipment that directly control
or measure the manufacturing process or which are utilized
for engi-
neering of the finished product; and
(E) computers and related
peripheral equipment utilized for research
and development and product design.
(3) ``Machinery and equipment
used directly and primarily'' shall not
include:
(A) Hand tools;
(B) machinery, equipment and
tools used in maintaining and repair-
ing any type of machinery and equipment;
(C) transportation equipment not
used in the manufacturing, assem-
bling, processing, furnishing, storing, warehousing or
distributing process
at the plant or facility;
(D) office machines and equipment
including computers and related
peripheral equipment not directly and primarily used in
controlling or
measuring the manufacturing process;
(E) furniture and buildings;
and
(F) machinery and equipment used
in administrative, accounting,
sales or other such activities of the
business;
(4) for purposes of this
subsection, ``repair and replacement parts and
accessories'' means all parts and accessories for exempt
machinery and
equipment, including but not limited to dies, jigs, molds,
and patterns
which are attached to exempt machinery or which are
otherwise used in
production, short-lived replaceable parts that can be
readily detached
from exempt machinery or equipment, such as belts, drill
bits, grinding
wheels, cutting bars and saws, and other replacement parts
for production
equipment, including refractory brick and other refractory
items for kiln
equipment used in production operations
(1) (A) all sales of machinery
and equipment which are used in this
state as an integral or essential part of an integrated
production operation
by a manufacturing or processing plant or facility;
(B) all sales of installation, repair
and maintenance services per-
formed on such machinery and equipment; and
(C) all sales of repair and
replacement parts and accessories pur-
chased for such machinery and equipment.
(2) For purposes of this
subsection:
(A) ``Integrated production
operation'' means an integrated series of
operations engaged in at a manufacturing or processing plant or
facility
to process, transform or convert tangible personal property by
physical,
chemical or other means into a different form, composition or
character
from that in which it originally existed. Integrated production
operations
shall include: (i) Production line operations, including
packaging opera-
tions; (ii) preproduction operations to handle, store and treat
raw mate-
rials; (iii) post production handling, storage, warehousing and
distribu-
tion operations; and (iv) waste, pollution and environmental
control
operations, if any;
(B) ``production line'' means the
assemblage of machinery and equip-
ment at a manufacturing or processing plant or facility where
the actual
transformation or processing of tangible personal property
occurs;
(C) ``manufacturing or processing
plant or facility'' means a single,
fixed location owned or controlled by a manufacturing or
processing busi-
ness that consists of one or more structures or buildings in a
contiguous
area where integrated production operations are conducted to
manufac-
ture or process tangible personal property to be ultimately sold
at retail.
Such term shall not include any facility primarily operated for
the purpose
of conveying or assisting in the conveyance of natural gas,
electricity, oil
or water. A business may operate one or more manufacturing or
process-
ing plants or facilities at different locations to manufacture
or process a
single product of tangible personal property to be ultimately
sold at retail;
(D) ``manufacturing or processing
business'' means a business that
utilizes an integrated production operation to manufacture,
process, fab-
ricate, finish, or assemble items for wholesale and retail
distribution as
part of what is commonly regarded by the general public as an
industrial
manufacturing or processing operation or an agricultural
commodity
processing operation. (i) Industrial manufacturing or processing
opera-
tions include, by way of illustration but not of limitation, the
fabrication
of automobiles, airplanes, machinery or transportation
equipment, the
fabrication of metal, plastic, wood, or paper products,
electricity power
generation, water treatment, petroleum refining, chemical
production,
wholesale bottling, newspaper printing, ready mixed concrete
production,
and the remanufacturing of used parts for wholesale or retail
sale. Such
processing operations shall include operations at an oil well,
gas well, mine
or other excavation site where the oil, gas, minerals, coal,
clay, stone, sand
or gravel that has been extracted from the earth is cleaned,
separated,
crushed, ground, milled, screened, washed, or otherwise treated
or pre-
pared before its transmission to a refinery or before any other
wholesale
or retail distribution. (ii) Agricultural commodity processing
operations
include, by way of illustration but not of limitation, meat
packing, poultry
slaughtering and dressing, processing and packaging farm and
dairy
products in sealed containers for wholesale and retail
distribution, feed
grinding, grain milling, frozen food processing, and grain
handling, clean-
ing, blending, fumigation, drying and aeration operations
engaged in by
grain elevators or other grain storage facilities. (iii)
Manufacturing or
processing businesses do not include, by way of illustration but
not of
limitation, nonindustrial businesses whose operations are
primarily retail
and that produce or process tangible personal property as an
incidental
part of conducting the retail business, such as retailers who
bake, cook or
prepare food products in the regular course of their retail
trade, grocery
stores, meat lockers and meat markets that butcher or dress
livestock or
poultry in the regular course of their retail trade, contractors
who alter,
service, repair or improve real property, and retail businesses
that clean,
service or refurbish and repair tangible personal property for
its owner;
(E) ``repair and replacement parts and
accessories'' means all parts
and accessories for exempt machinery and equipment, including,
but not
limited to, dies, jigs, molds, patterns and safety devices that
are attached
to exempt machinery or that are otherwise used in production,
and parts
and accessories that require periodic replacement such as belts,
drill bits,
grinding wheels, grinding balls, cutting bars, saws, refractory
brick and
other refractory items for exempt kiln equipment used in
production op-
erations;
(F) ``primary'' or ``primarily'' mean
more than 50% of the time.
(3) For purposes of this subsection,
machinery and equipment shall
be deemed to be used as an integral or essential part of an
integrated
production operation when used:
(A) To receive, transport, convey,
handle, treat or store raw materials
in preparation of its placement on the production
line;
(B) to transport, convey, handle or
store the property undergoing
manufacturing or processing at any point from the beginning of
the pro-
duction line through any warehousing or distribution operation
of the
final product that occurs at the plant or facility;
(C) to act upon, effect, promote or
otherwise facilitate a physical
change to the property undergoing manufacturing or
processing;
(D) to guide, control or direct the
movement of property undergoing
manufacturing or processing;
(E) to test or measure raw materials,
the property undergoing man-
ufacturing or processing or the finished product, as a necessary
part of
the manufacturer's integrated production operations;
(F) to plan, manage, control or record
the receipt and flow of inven-
tories of raw materials, consumables and component parts, the
flow of the
property undergoing manufacturing or processing and the
management
of inventories of the finished product;
(G) to produce energy for, lubricate,
control the operating of or oth-
erwise enable the functioning of other production machinery and
equip-
ment and the continuation of production operations;
(H) to package the property being
manufactured or processed in a
container or wrapping in which such property is normally sold or
trans-
ported;
(I) to transmit or transport
electricity, coke, gas, water, steam or sim-
ilar substances used in production operations from the point of
generation,
if produced by the manufacturer or processor at the plant site,
to that
manufacturer's production operation; or, if purchased or
delivered from
offsite, from the point where the substance enters the site of
the plant or
facility to that manufacturer's production
operations;
(J) to cool, heat, filter, refine or
otherwise treat water, steam, acid,
oil, solvents or other substances that are used in production
operations;
(K) to provide and control an
environment required to maintain cer-
tain levels of air quality, humidity or temperature in special
and limited
areas of the plant or facility, where such regulation of
temperature or
humidity is part of and essential to the production
process;
(L) to treat, transport or store waste
or other byproducts of produc-
tion operations at the plant or facility; or
(M) to control pollution at the plant
or facility where the pollution is
produced by the manufacturing or processing
operation.
(4) The following machinery, equipment
and materials shall be
deemed to be exempt even though it may not otherwise qualify as
ma-
chinery and equipment used as an integral or essential part of
an inte-
grated production operation: (A) Computers and related
peripheral
equipment that are utilized by a manufacturing or processing
business for
engineering of the finished product or for research and
development or
product design; (B) machinery and equipment that is utilized by
a man-
ufacturing or processing business to manufacture or rebuild
tangible per-
sonal property that is used in manufacturing or processing
operations,
including tools, dies, molds, forms and other parts of
qualifying machinery
and equipment; (C) portable plants for aggregate concrete, bulk
cement
and asphalt including cement mixing drums to be attached to a
motor
vehicle; (D) industrial fixtures, devices, support facilities
and special foun-
dations necessary for manufacturing and production operations,
and ma-
terials and other tangible personal property sold for the
purpose of fab-
ricating such fixtures, devices, facilities and foundations. An
exemption
certificate for such purchases shall be signed by the
manufacturer or pro-
cessor. If the fabricator purchases such material, the
fabricator shall also
sign the exemption certificate; and (E) a manufacturing or
processing
business' laboratory equipment that is not located at the plant
or facility,
but that would otherwise qualify for exemption under subsection
(3)(E).
(5) ``Machinery and equipment used as
an integral or essential part
of an integrated production operation'' shall not
include:
(A) Machinery and equipment used for
nonproduction purposes, in-
cluding, but not limited to, machinery and equipment used for
plant se-
curity, fire prevention, first aid, accounting, administration,
record keep-
ing, advertising, marketing, sales or other related activities,
plant
cleaning, plant communications, and employee work
scheduling;
(B) machinery, equipment and tools
used primarily in maintaining
and repairing any type of machinery and equipment or the
building and
plant;
(C) transportation, transmission and
distribution equipment not pri-
marily used in a production, warehousing or material handling
operation
at the plant or facility, including the means of conveyance of
natural gas,
electricity, oil or water, and equipment related thereto,
located outside
the plant or facility;
(D) office machines and equipment
including computers and related
peripheral equipment not used directly and primarily to control
or mea-
sure the manufacturing process;
(E) furniture and other
furnishings;
(F) buildings, other than exempt
machinery and equipment that is
permanently affixed to or becomes a physical part of the
building, and
any other part of real estate that is not otherwise
exempt;
(G) building fixtures that are not
integral to the manufacturing op-
eration, such as utility systems for heating, ventilation, air
conditioning,
communications, plumbing or electrical;
(H) machinery and equipment used for
general plant heating, cooling
and lighting;
(I) motor vehicles that are registered
for operation on public high-
ways; or
(J) employee apparel, except safety
and protective apparel that is pur-
chased by an employer and furnished gratuitously to employees
who are
involved in production or research activities.
(6) Subsections (3) and (5) shall not
be construed as exclusive listings
of the machinery and equipment that qualify or do not qualify as
an
integral or essential part of an integrated production
operation. When
machinery or equipment is used as an integral or essential part
of pro-
duction operations part of the time and for nonproduction
purpose at
other times, the primary use of the machinery or equipment shall
deter-
mine whether or not such machinery or equipment qualifies for
exemp-
tion.
(7) The secretary of revenue shall
adopt rules and regulations nec-
essary to administer the provisions of this subsection;
(ll) all sales of educational materials
purchased for distribution to the
public at no charge by a nonprofit corporation organized for the
purpose
of encouraging, fostering and conducting programs for the
improvement
of public health;
(mm) all sales of seeds and tree
seedlings; fertilizers, insecticides,
herbicides, germicides, pesticides and fungicides; and services,
purchased
and used for the purpose of producing plants in order to prevent
soil
erosion on land devoted to agricultural use;
(nn) except as otherwise provided in this
act, all sales of services ren-
dered by an advertising agency or licensed broadcast station or any
mem-
ber, agent or employee thereof;
(oo) all sales of tangible personal
property purchased by a community
action group or agency for the exclusive purpose of repairing or
weath-
erizing housing occupied by low income individuals;
(pp) all sales of drill bits and
explosives actually utilized in the explo-
ration and production of oil or gas;
(qq) all sales of tangible personal
property and services purchased by
a nonprofit museum or historical society or any combination
thereof, in-
cluding a nonprofit organization which is organized for the purpose
of
stimulating public interest in the exploration of space by
providing edu-
cational information, exhibits and experiences, which is exempt
from fed-
eral income taxation pursuant to section 501(c)(3) of the federal
internal
revenue code of 1986;
(rr) all sales of tangible personal
property which will admit the pur-
chaser thereof to any annual event sponsored by a nonprofit
organization
which is exempt from federal income taxation pursuant to
section
501(c)(3) of the federal internal revenue code of 1986;
(ss) all sales of tangible personal
property and services purchased by
a public broadcasting station licensed by the federal
communications
commission as a noncommercial educational television or radio
station;
(tt) all sales of tangible personal
property and services purchased by
or on behalf of a not-for-profit corporation which is exempt from
federal
income taxation pursuant to section 501(c)(3) of the federal
internal rev-
enue code of 1986, for the sole purpose of constructing a Kansas
Korean
War memorial;
(uu) all sales of tangible personal
property and services purchased by
or on behalf of any rural volunteer fire-fighting organization for
use ex-
clusively in the performance of its duties and functions;
(vv) all sales of tangible personal
property purchased by any of the
following organizations which are exempt from federal income
taxation
pursuant to section 501 (c)(3) of the federal internal revenue code
of
1986, for the following purposes, and all sales of any such
property by or
on behalf of any such organization for any such purpose:
(1) The American Heart Association,
Kansas Affiliate, Inc. for the
purposes of providing education, training, certification in
emergency car-
diac care, research and other related services to reduce disability
and
death from cardiovascular diseases and stroke;
(2) the Kansas Alliance for the Mentally
Ill, Inc. for the purpose of
advocacy for persons with mental illness and to education, research
and
support for their families;
(3) the Kansas Mental Illness Awareness
Council for the purposes of
advocacy for persons who are mentally ill and to education,
research and
support for them and their families;
(4) the American Diabetes Association
Kansas Affiliate, Inc. for the
purpose of eliminating diabetes through medical research, public
edu-
cation focusing on disease prevention and education, patient
education
including information on coping with diabetes, and professional
education
and training;
(5) the American Lung Association of
Kansas, Inc. for the purpose of
eliminating all lung diseases through medical research, public
education
including information on coping with lung diseases, professional
educa-
tion and training related to lung disease and other related
services to
reduce the incidence of disability and death due to lung disease;
and
(6) the Kansas chapters of the
Alzheimer's Disease and Related Dis-
orders Association, Inc. for the purpose of providing assistance
and sup-
port to persons in Kansas with Alzheimer's disease, and their
families and
caregivers; and
(ww) all sales of tangible personal
property purchased by the Habitat
for Humanity for the exclusive use of being incorporated within a
housing
project constructed by such
organization.;
(xx) all sales of tangible personal
property and services purchased by
a nonprofit zoo which is exempt from federal income taxation
pursuant
to section 501(c)(3) of the federal internal revenue code of 1986,
or on
behalf of such zoo by an entity itself exempt from federal income
taxation
pursuant to section 501(c)(3) of the federal internal revenue code
of 1986
contracted with to operate such zoo and all sales of tangible
personal
property or services purchased by a contractor for the purpose of
con-
structing, equipping, reconstructing, maintaining, repairing,
enlarging,
furnishing or remodeling facilities for any nonprofit zoo which
would be
exempt from taxation under the provisions of this section if
purchased
directly by such nonprofit zoo or the entity operating such zoo.
Nothing
in this subsection shall be deemed to exempt the purchase of any
con-
struction machinery, equipment or tools used in the constructing,
equip-
ping, reconstructing, maintaining, repairing, enlarging, furnishing
or re-
modeling facilities for any nonprofit zoo. When any nonprofit zoo
shall
contract for the purpose of constructing, equipping,
reconstructing, main-
taining, repairing, enlarging, furnishing or remodeling facilities,
it shall
obtain from the state and furnish to the contractor an exemption
certifi-
cate for the project involved, and the contractor may purchase
materials
for incorporation in such project. The contractor shall furnish the
number
of such certificate to all suppliers from whom such purchases are
made,
and such suppliers shall execute invoices covering the same bearing
the
number of such certificate. Upon completion of the project the
contractor
shall furnish to the nonprofit zoo concerned a sworn statement, on
a form
to be provided by the director of taxation, that all purchases so
made were
entitled to exemption under this subsection. All invoices shall be
held by
the contractor for a period of five years and shall be subject to
audit by
the director of taxation. If any materials purchased under such a
certifi-
cate are found not to have been incorporated in the building or
other
project or not to have been returned for credit or the sales or
compen-
sating tax otherwise imposed upon such materials which will not be
so
incorporated in the building or other project reported and paid by
such
contractor to the director of taxation not later than the 20th day
of the
month following the close of the month in which it shall be
determined
that such materials will not be used for the purpose for which such
cer-
tificate was issued, the nonprofit zoo concerned shall be liable
for tax on
all materials purchased for the project, and upon payment thereof
it may
recover the same from the contractor together with reasonable
attorney
fees. Any contractor or any agent, employee or subcontractor
thereof,
who shall use or otherwise dispose of any materials purchased under
such
a certificate for any purpose other than that for which such a
certificate
is issued without the payment of the sales or compensating tax
otherwise
imposed upon such materials, shall be guilty of a misdemeanor and,
upon
conviction therefor, shall be subject to the penalties provided for
in sub-
section (g) of K.S.A. 79-3615, and amendments thereto;
(yy) all sales of tangible personal
property and services purchased by
a parent-teacher association or organization, and all sales of
tangible per-
sonal property by or on behalf of such association or
organization;
(zz) all sales of machinery and equipment
purchased by over-the-air,
free access radio or television station which is used directly and
primarily
for the purpose of producing a broadcast signal or is such that the
failure
of the machinery or equipment to operate would cause broadcasting
to
cease. For purposes of this subsection, machinery and equipment
shall
include, but not be limited to, that required by rules and
regulations of
the federal communications commission, and all sales of electricity
which
are essential or necessary for the purpose of producing a broadcast
signal
or is such that the failure of the electricity would cause
broadcasting to
cease;
(aaa) all sales of tangible personal
property and services purchased
by a religious organization which is exempt from federal income
taxation
pursuant to section 501(c)(3) of the federal internal revenue code,
and
used exclusively for religious purposes, and all sales of tangible
personal
property or services purchased by a contractor for the purpose of
con-
structing, equipping, reconstructing, maintaining, repairing,
enlarging,
furnishing or remodeling facilities for any such organization which
would
be exempt from taxation under the provisions of this section if
purchased
directly by such organization. Nothing in this subsection shall be
deemed
to exempt the purchase of any construction machinery, equipment
or
tools used in the constructing, equipping, reconstructing,
maintaining,
repairing, enlarging, furnishing or remodeling facilities for any
such or-
ganization. When any such organization shall contract for the
purpose of
constructing, equipping, reconstructing, maintaining, repairing,
enlarg-
ing, furnishing or remodeling facilities, it shall obtain from the
state and
furnish to the contractor an exemption certificate for the project
involved,
and the contractor may purchase materials for incorporation in such
pro-
ject. The contractor shall furnish the number of such certificate
to all
suppliers from whom such purchases are made, and such suppliers
shall
execute invoices covering the same bearing the number of such
certifi-
cate. Upon completion of the project the contractor shall furnish
to such
organization concerned a sworn statement, on a form to be provided
by
the director of taxation, that all purchases so made were entitled
to ex-
emption under this subsection. All invoices shall be held by the
contractor
for a period of five years and shall be subject to audit by the
director of
taxation. If any materials purchased under such a certificate are
found
not to have been incorporated in the building or other project or
not to
have been returned for credit or the sales or compensating tax
otherwise
imposed upon such materials which will not be so incorporated in
the
building or other project reported and paid by such contractor to
the
director of taxation not later than the 20th day of the month
following
the close of the month in which it shall be determined that such
materials
will not be used for the purpose for which such certificate was
issued,
such organization concerned shall be liable for tax on all
materials pur-
chased for the project, and upon payment thereof it may recover the
same
from the contractor together with reasonable attorney fees. Any
contrac-
tor or any agent, employee or subcontractor thereof, who shall use
or
otherwise dispose of any materials purchased under such a
certificate for
any purpose other than that for which such a certificate is issued
without
the payment of the sales or compensating tax otherwise imposed
upon
such materials, shall be guilty of a misdemeanor and, upon
conviction
therefor, shall be subject to the penalties provided for in
subsection (g)
of K.S.A. 79-3615, and amendments thereto. Sales tax paid on and
after
July 1, 1998, but prior to the effective date of this act upon the
gross
receipts received from any sale exempted by the amendatory
provisions
of this subsection shall be refunded. Each claim for a sales tax
refund
shall be verified and submitted to the director of taxation upon
forms
furnished by the director and shall be accompanied by any
additional
documentation required by the director. The director shall review
each
claim and shall refund that amount of sales tax paid as determined
under
the provisions of this subsection. All refunds shall be paid from
the sales
tax refund fund upon warrants of the director of accounts and
reports
pursuant to vouchers approved by the director or the director's
designee;
(bbb) all sales of food for human
consumption by an organization
which is exempt from federal income taxation pursuant to section
501
(c)(3) of the federal internal revenue code of 1986, pursuant to a
food
distribution program which offers such food at a price below cost
in
exchange for the performance of community service by the
purchaser
thereof;
(ccc) on and after July 1, 1999, all
sales of tangible personal property
and services purchased by a primary care clinic or health center
the pri-
mary purpose of which is to provide services to medically
underserved
individuals and families, and which is exempt from federal income
taxa-
tion pursuant to section 501 (c)(3) of the federal internal revenue
code,
and all sales of tangible personal property or services purchased
by a
contractor for the purpose of constructing, equipping,
reconstructing,
maintaining, repairing, enlarging, furnishing or remodeling
facilities for
any such clinic or center which would be exempt from taxation under
the
provisions of this section if purchased directly by such clinic or
center.
Nothing in this subsection shall be deemed to exempt the purchase
of
any construction machinery, equipment or tools used in the
constructing,
equipping, reconstructing, maintaining, repairing, enlarging,
furnishing
or remodeling facilities for any such clinic or center. When any
such clinic
or center shall contract for the purpose of constructing,
equipping, re-
constructing, maintaining, repairing, enlarging, furnishing or
remodeling
facilities, it shall obtain from the state and furnish to the
contractor an
exemption certificate for the project involved, and the contractor
may
purchase materials for incorporation in such project. The
contractor shall
furnish the number of such certificate to all suppliers from whom
such
purchases are made, and such suppliers shall execute invoices
covering
the same bearing the number of such certificate. Upon completion of
the
project the contractor shall furnish to such clinic or center
concerned a
sworn statement, on a form to be provided by the director of
taxation,
that all purchases so made were entitled to exemption under this
subsec-
tion. All invoices shall be held by the contractor for a period of
five years
and shall be subject to audit by the director of taxation. If any
materials
purchased under such a certificate are found not to have been
incorpo-
rated in the building or other project or not to have been returned
for
credit or the sales or compensating tax otherwise imposed upon
such
materials which will not be so incorporated in the building or
other pro-
ject reported and paid by such contractor to the director of
taxation not
later than the 20th day of the month following the close of the
month in
which it shall be determined that such materials will not be used
for the
purpose for which such certificate was issued, such clinic or
center con-
cerned shall be liable for tax on all materials purchased for the
project,
and upon payment thereof it may recover the same from the
contractor
together with reasonable attorney fees. Any contractor or any
agent, em-
ployee or subcontractor thereof, who shall use or otherwise dispose
of
any materials purchased under such a certificate for any purpose
other
than that for which such a certificate is issued without the
payment of
the sales or compensating tax otherwise imposed upon such
materials,
shall be guilty of a misdemeanor and, upon conviction therefor,
shall be
subject to the penalties provided for in subsection (g) of K.S.A.
79-3615,
and amendments thereto;
(ddd) on and after January 1, 1999, and
before January 1, 2000, all
sales of materials and services purchased by any class II or III
railroad as
classified by the federal surface transportation board for the
construction,
renovation, repair or replacement of class II or III railroad track
and
facilities used directly in interstate commerce. In the event any
such track
or facility for which materials and services were purchased sales
tax ex-
empt is not operational for five years succeeding the allowance of
such
exemption, the total amount of sales tax which would have been
payable
except for the operation of this subsection shall be recouped in
accord-
ance with rules and regulations adopted for such purpose by the
secretary
of revenue; and
(eee) on and after January 1, 1999, and
before January 1, 2000, all
sales of materials and services purchased for the original
construction,
reconstruction, repair or replacement of grain storage facilities,
including
railroad sidings providing access thereto.;
and
(fff) all sales of material handling
equipment, racking systems and
other related machinery and equipment that is used for the
handling,
movement or storage of tangible personal property in a warehouse
or
distribution facility in this state; all sales of installation,
repair and main-
tenance services performed on such machinery and equipment; and
all
sales of repair and replacement parts for such machinery and
equipment.
For purposes of this subsection, a warehouse or distribution
facility means
a single, fixed location that consists of buildings or
structures in a contig-
uous area where storage or distribution operations are conducted
that are
separate and apart from the business' retail operations, if any,
and which
do not otherwise qualify for exemption as occurring at a
manufacturing
or processing plant or facility. Material handling and storage
equipment
shall include aeration, dust control, cleaning, handling and
other such
equipment that is used in a public grain warehouse or other
commercial
grain storage facility, whether used for grain handling, grain
storage,
grain refining or processing, or other grain treatment
operation.
Sec. 2. K.S.A. 79-3609 is hereby
amended to read as follows: 79-
3609. (a) Every person engaged in the business of selling tangible
personal
property at retail or furnishing services taxable in this state,
shall keep
records and books of all such sales, together with invoices, bills
of lading,
sales records, copies of bills of sale and other pertinent papers
and doc-
uments. Such books and records and other papers and documents
shall,
at all times during business hours of the day, be available for and
subject
to inspection by the director, or the director's duly authorized
agents and
employees, for a period of three years from the last day of the
calendar
year or of the fiscal year of the retailer, whichever comes later,
to which
the records pertain. Such records shall be preserved during the
entire
period during which they are subject to inspection by the director,
unless
the director in writing previously authorizes their disposal. Any
person
selling tangible personal property or furnishing taxable services
shall be
prohibited from asserting that any sales are exempt from taxation
unless
the retailer has in the retailer's possession a properly executed
exemption
certificate provided by the consumer claiming the exemption. Any
retailer
asserting a claim that certain sales are exempt who does not have
the
required exemption certificates in possession shall acquire such
certifi-
cates within 60 days after receiving notice from the director that
such
certificates are required. If such certificates are not obtained
within the
period set forth herein, the sales shall be deemed to be taxable
sales under
this act.
(b) The amount of tax imposed by this act
is to be assessed within
three years after the return is filed, and no proceedings in court
for the
collection of such taxes shall be begun after the expiration of
such period.
In the case of a false or fraudulent return with intent to evade
tax, the
tax may be assessed or a proceeding in court for collection of such
tax
may be begun at any time, within two years from the discovery of
such
fraud. No assessment shall be made for any period preceding the
date of
registration of the retailer by more than three years except in
cases of
fraud. No refund or credit shall be allowed by the director after
three
years from the date of payment of the tax as provided in this act
unless
before the expiration of such period a claim therefor is filed by
the tax-
payer, and no suit or action to recover on any claim for refund
shall be
commenced until after the expiration of six months from the date of
filing
a claim therefor with the director.
(c) Before the expiration of time
prescribed in this section for the
assessment of additional tax or the filing of a claim for refund,
the director
is hereby authorized to enter into an agreement in writing with the
tax-
payer consenting to the extension of the periods of limitations for
the
assessment of tax or for the filing of a claim for refund, at any
time prior
to the expiration of the period of limitations. The period so
agreed upon
may be extended by subsequent agreements in writing made before
the
expiration of the period previously agreed upon. In consideration
of such
agreement or agreements, interest due in excess of 48 months on
any
additional tax shall be waived.
(d) For all taxable periods subject to
assessment on January 1, 1998,
including periods subject to an agreement to extend the statute of
limi-
tations, and for all taxable periods commencing after December 31,
1997,
interest at the rate prescribed by K.S.A. 79-2968, and
amendments
thereto, shall be allowed on any overpayment of tax computed from
the
due date of the return if it was timely filed and accompanied by
the tax
due or, if the return was not timely filed, from the date of
payment, except
that no interest shall be allowed on any such refund if the same is
paid
within 60 days after the date of the return or the date of payment,
as the
case requires.
(e) Notwithstanding any other
provision of this section or the provi-
sions of the Kansas compensating tax act:
(1) (A) Any claim for refund of
tax imposed by the Kansas retailers'
sales tax act or the Kansas compensating tax act based upon the
provisions
of subsection (kk) of K.S.A. 79-3606 in existence prior to its
amendment
by this act which is without dispute shall be allowed, but, with
respect to
any claim exceeding $10,000, the refund associated therewith
shall not be
paid until after 510 days from the date such claim was filed and
shall not
include interest from such date. As used in this subparagraph, a
claim for
refund without dispute shall not include any claim the basis for
which is
a judicial or quasi-judicial interpretation of such subsection
occurring
after the effective date of this act.
(B) Any refund of tax resulting from a
final determination or adju-
dication with regard to any claim submitted or to be submitted
for refund
of tax imposed by the Kansas retailers' sales tax act or the
Kansas com-
pensating tax act based upon the provisions of subsection (kk)
of K.S.A.
79-3606 in existence prior to its amendment by this act not
described by
subparagraph (A) shall, with respect to any refund exceeding
$50,000, be
paid in equal annual installments over 10 years commencing with
the year
of such final determination or adjudication. Interest shall not
accrue dur-
ing the time period of such payment.
(2) No claim for refund of tax imposed
by the Kansas retailers' sales
tax act or the Kansas compensating tax act based upon the
application of
the provisions of subsection (n) of K.S.A. 79-3606 pursuant to
its inter-
pretation by the court of appeals of the state of Kansas in its
opinion filed
on August 13, 1999, in the case entitled In re appeal of Water
District
No. 1 of Johnson County shall be allowed for tax paid prior to
the effective
date of this act. The provisions of this subsection shall not be
applicable
to Water District No. 1 of Johnson county.
Sec. 3. K.S.A. 79-3609 and K.S.A.
1999 Supp. 79-3606 are hereby
repealed.
Sec. 4. This act shall take effect
and be in force from and after its
publication in the statute book.
Approved April 20, 2000.
__________