CHAPTER 185 SENATE BILL No. 39 (Amends Chapter 89) An  Act relating to taxation; amending K.S.A. 12-187, 12-189, 17-4634, 17-7507, 79-2401a,
79-2803a, 79-3226, 79-3271, 79-3279, 79-3310 and 79-3312 and K.S.A. 2001 Supp. 17-
2036, 17-7503, 17-7504, 17-7505, 17-76,139, 56-1a606, 56-1a607, 56a-1201, 56a-1202,
56a-1203, 79-201w, 79-1476, 79-3295, 79-32,100a, 79-32,205, 79-32,206, 79-32,211, 79-
3311, 79-3603, 79-3620, 79-3635, 79-3703 and 79-3710 and repealing the existing sec-
tions; also repealing K.S.A. 12-189e and K.S.A. 2001 Supp. 79-3603, as amended by
section 1 of 2002 Senate Bill No. 372.
Be it enacted by the Legislature of the State of Kansas:

      Section.  1. On and after July 1, 2002, K.S.A. 79-3310 is hereby
amended to read as follows: 79-3310. There is imposed a tax upon all
cigarettes sold, distributed or given away within the state of Kansas. On
and after July 1, 2002, and before January 1, 2003, the rate of such tax
shall be $.24 $.70 on each 20 cigarettes or fractional part thereof or $.30
$.875 on each 25 cigarettes, as the case requires. On and after January
1, 2003, the rate of such tax shall be $.79 on each 20 cigarettes or fractional
part thereof or $.99 on each 25 cigarettes, as the case requires. Such tax
shall be collected and paid to the director as provided in this act. Such
tax shall be paid only once and shall be paid by the wholesale dealer first
receiving the cigarettes as herein provided.

      The taxes imposed by this act are hereby levied upon all sales of ciga-
rettes made to any department, institution or agency of the state of Kan-
sas, and to the political subdivisions thereof and their departments, insti-
tutions and agencies.

      New Sec.  2. (1) On or before July 30, 2002, each wholesale dealer,
retail dealer and vending machine operator shall file a report with the
director in such form as the director may prescribe showing cigarettes,
cigarette stamps and meter imprints on hand at 12:01 a.m. on July 1,
2002. A tax of $.46 on each 20 cigarettes or fractional part thereof or
$.575 on each 25 cigarettes, as the case requires and $.46 or $.575, as the
case requires upon all tax stamps and all meter imprints purchased from
the director and not affixed to cigarettes prior to July 1, 2002, is hereby
imposed and shall be due and payable in equal installments on or before
July 30, 2002, on or before September 30, 2002, and on or before De-
cember 30, 2002. The tax imposed upon such cigarettes, tax stamps and
meter imprints shall be imposed only once under this act. The director
shall remit all moneys collected pursuant to this section to the state trea-
surer who shall credit the entire amount thereof to the state general fund.

      (2) On or before January 30, 2003, each wholesale dealer, retail
dealer and vending machine operator shall file a report with the director
in such form as the director may prescribe showing cigarettes, cigarette
stamps and meter imprints on hand at 12:01 a.m. on January 1, 2003. A
tax of $.09 on each 20 cigarettes or fractional part thereof or $.115 on
each 25 cigarettes, as the case requires and $.09 or $.115, as the case
requires upon all tax stamps and all meter imprints purchased from the
director and not affixed to cigarettes prior to January 1, 2003, is hereby
imposed and shall be due and payable in equal installments on or before
January 30, 2003, on or before March 30, 2003, and on or before June
30, 2003. The tax imposed upon such cigarettes, tax stamps and meter
imprints shall be imposed only once under this act. The director shall
remit all moneys collected pursuant to this section to the state treasurer
who shall credit the entire amount thereof to the state general fund.

      Sec.  3. On and after July 1, 2002, K.S.A. 2001 Supp. 79-3311 is
hereby amended to read as follows: 79-3311. The director shall design
and designate indicia of tax payment to be affixed to each package of
cigarettes as provided by this act. The director shall sell water applied
stamps only to licensed wholesale dealers in the amounts of 1,000 or
multiples thereof. Stamps applied by the heat process shall be sold only
in amounts of 30,000 or multiples thereof, except that such stamps which
are suitable for packages containing 25 cigarettes each shall be sold in
amounts prescribed by the director. Meter imprints shall be sold only in
amounts of 10,000 or multiples thereof. Water applied stamps in amounts
of 10,000 or multiples thereof and stamps applied by the heat process
and meter imprints shall be supplied to wholesale dealers at a discount
of 2.65% .90% on and after July 1, 2002, and before January 1, 2003, and
.80% thereafter from the face value thereof, and shall be deducted at the
time of purchase or from the remittance therefor as hereinafter provided.
Any wholesale cigarette dealer who shall file with the director a bond, of
acceptable form, payable to the state of Kansas with a corporate surety
authorized to do business in Kansas, shall be permitted to purchase
stamps, and remit therefor to the director within 30 days after each such
purchase, up to a maximum outstanding at any one time of 85% of the
amount of the bond. Failure on the part of any wholesale dealer to remit
as herein specified shall be cause for forfeiture of such dealer's bond. All
revenue received from the sale of such stamps or meter imprints shall be
remitted to the state treasurer in accordance with the provisions of K.S.A.
75-4215, and amendments thereto. Upon receipt of each such remittance,
the state treasurer shall deposit the entire amount in the state treasury.
The state treasurer shall first credit such amount as the director shall
order to the cigarette tax refund fund and shall credit the remaining
balance to the state general fund. A refund fund designated the cigarette
tax refund fund not to exceed $10,000 at any time shall be set apart and
maintained by the director from taxes collected under this act and held
by the state treasurer for prompt payment of all refunds authorized by
this act. Such cigarette tax refund fund shall be in such amount as the
director shall determine is necessary to meet current refunding require-
ments under this act.

      The wholesale cigarette dealer shall affix to each package of cigarettes
stamps or tax meter imprints required by this act prior to the sale of
cigarettes to any person, by such dealer or such dealer's agent or agents,
within the state of Kansas. The director is empowered to authorize whole-
sale dealers to affix revenue tax meter imprints upon original packages of
cigarettes and is charged with the duty of regulating the use of tax meters
to secure payment of the proper taxes. No wholesale dealer shall affix
revenue tax meter imprints to original packages of cigarettes without first
having obtained permission from the director to employ this method of
affixation. If the director approves the wholesale dealer's application for
permission to affix revenue tax meter imprints to original packages of
cigarettes, the director shall require such dealer to file a suitable bond
payable to the state of Kansas executed by a corporate surety authorized
to do business in Kansas. The director may, to assure the proper collection
of taxes imposed by the act, revoke or suspend the privilege of imprinting
tax meter imprints upon original packages of cigarettes. All meters shall
be under the direct control of the director, and all transfer assignments
or anything pertaining thereto must first be authorized by the director.
All inks used in the stamping of cigarettes must be of a special type
devised for use in connection with the machine employed and approved
by the director. All repairs to the meter are strictly prohibited except by
a duly authorized representative of the director. Requests for service shall
be directed to the director. Meter machine ink imprints on all packages
shall be clear and legible. If a wholesale dealer continuously issues illeg-
ible cigarette tax meter imprints, it shall be considered sufficient cause
for revocation of such dealer's permit to use a cigarette tax meter.

      A licensed wholesale dealer may, for the purpose of sale in another
state, transport cigarettes not bearing Kansas indicia of tax payment
through the state of Kansas provided such cigarettes are contained in
sealed and original cartons.

      Sec.  4. On and after July 1, 2002, K.S.A. 79-3312 is hereby amended
to read as follows: 79-3312. The director shall redeem any unused stamps
or meter imprints that any wholesale dealer presents for redemption
within six months after the purchase thereof, at the face value less 2.65%
.90% on and after July 1, 2002, and before January 1, 2003, and .80%
thereafter thereof if such stamps or meter imprints have been purchased
from the director. The director shall prepare a voucher showing the net
amount of such refund due, and the director of accounts and reports shall
draw a warrant on the state treasurer for the same. Wholesale dealers
shall be entitled to a refund of the tax paid on cigarettes which have
become unfit for sale upon proof thereof less 2.65% .90% on and after
July 1, 2002, and before January 1, 2003, and .80% thereafter of such tax.

      New Sec.  5. (a) In addition to the tax imposed by the Kansas estate
tax act, a tax is hereby imposed on the privilege of succeeding to the
ownership of any property, corporeal or incorporeal, and any interest
therein within the jurisdiction of this state by any relative, or stranger in
the blood, of a decedent other than the spouse, brothers and sisters, lineal
ancestors, lineal descendants, step-parents, step-children, adopted chil-
dren, lineal descendants of any adopted child or step-child, the spouse or
surviving spouse of a son or daughter, or the spouse or surviving spouse
of an adopted child or step-child of the decedent. In the case of an
adopted child or step-child, a spouse or surviving spouse of an adopted
child or step-child or the lineal descendant of an adopted child or step-
child of the decedent, such person shall file with the department of rev-
enue an affidavit setting forth the relationship of such person to the de-
cedent. Such affidavit shall be sufficient proof of the adoptive or
step-child relationship in question, and the department, or any officer or
employee thereof, shall not require any additional proof of such relation-
ship. As used in this paragraph, ``step-child'' means a child of a spouse or
former spouse of the decedent or the brothers and sisters of the decedent.

      (b) The tax shall be charged upon the value of the property succeeded
to and shall be in an amount equal to a percentage of such value as follows:
On any amount up to $100,000, 10%; or any amount in excess of $100,000
and up to $200,000, 12%; on all sums in excess of $200,000, 15%.

      (c) All moneys collected pursuant to the provisions of this section
shall be remitted to the state treasurer who shall credit the entire amount
thereof to the state general fund.

      (d) The provisions of this section shall be deemed supplemental to
the Kansas estate tax act.

      Sec.  6. On and after July 1, 2002, K.S.A. 2001 Supp. 79-3603 is
hereby amended to read as follows: 79-3603. For the privilege of engaging
in the business of selling tangible personal property at retail in this state
or rendering or furnishing any of the services taxable under this act, there
is hereby levied and there shall be collected and paid a tax at the rate of
4.9% 5.3% on and after July 1, 2002, and before July 1, 2004, 5.2% on
and after July 1, 2004, and before July 1, 2005, and 5% on and after July
1, 2005, and, within a redevelopment district established pursuant to
K.S.A. 74-8921, and amendments thereto, there is hereby levied and
there shall be collected and paid an additional tax at the rate of 2% until
the earlier of the date the bonds issued to finance or refinance the re-
development project have been paid in full or the final scheduled maturity
of the first series of bonds issued to finance any part of the project upon:

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

      (b)  (1) the gross receipts from intrastate telephone or telegraph serv-
ices; (2) the gross receipts received from the sale of interstate telephone
or telegraph services, which (A) originate within this state and terminate
outside the state and are billed to a customer's telephone number or
account in this state; or (B) originate outside this state and terminate
within this state and are billed to a customer's telephone number or ac-
count in this state except that the sale of interstate telephone or telegraph
service does not include: (A) Any interstate incoming or outgoing wide
area telephone service or wide area transmission type service which en-
titles the subscriber to make or receive an unlimited number of com-
munications to or from persons having telephone service in a specified
area which is outside the state in which the station provided this service
is located; (B) any interstate private communications service to the per-
sons contracting for the receipt of that service that entitles the purchaser
to exclusive or priority use of a communications channel or group of
channels between exchanges; (C) any value-added nonvoice service in
which computer processing applications are used to act on the form, con-
tent, code or protocol of the information to be transmitted; (D) any tel-
ecommunication service to a provider of telecommunication services
which will be used to render telecommunications services, including car-
rier access services; or (E) any service or transaction defined in this sec-
tion among entities classified as members of an affiliated group as pro-
vided by section 1504 of the federal internal revenue code of 1986, as in
effect on January 1, 2001. For the purposes of this subsection the term
gross receipts does not include purchases of telephone, telegraph or tel-
ecommunications using a prepaid telephone calling card or prepaid au-
thorization number. As used in this subsection, a prepaid telephone call-
ing card or prepaid authorization number means the right to exclusively
make telephone calls, paid for in advance, with the prepaid value meas-
ured in minutes or other time units, that enables the origination of calls
using an access number or authorization code or both, whether manually
or electronically dialed; and (3) the gross receipts from the provision of
services taxable under this subsection which are billed on a combined
basis with nontaxable services, shall be accounted for and the tax remitted
as follows: The taxable portion of the selling price of those combined
services shall include only those charges for taxable services if the selling
price for the taxable services can be readily distinguishable in the retailer's
books and records from the selling price for the nontaxable services. Oth-
erwise, the gross receipts from the sale of both taxable and nontaxable
services billed on a combined basis shall be deemed attributable to the
taxable services included therein. Within 90 days of billing taxable services
on a combined basis with nontaxable services, the retailer shall enter into
a written agreement with the secretary identifying the methodology to be
used in determining the taxable portion of the selling price of those com-
bined services. The burden of proving that any receipt or charge is not
taxable shall be upon the retailer. Upon request from the customer, the
retailer shall disclose to the customer the selling price for the taxable
services included in the selling price for the taxable and nontaxable serv-
ices billed on a combined basis;

      (c) the gross receipts from the sale or furnishing of gas, water, elec-
tricity and heat, which sale is not otherwise exempt from taxation under
the provisions of this act, and whether furnished by municipally or pri-
vately owned utilities but such tax shall not be levied and collected upon
the gross receipts from: (1) The sale of a rural water district benefit unit;
(2) a water system impact fee, system enhancement fee or similar fee
collected by a water supplier as a condition for establishing service; or (3)
connection or reconnection fees collected by a water supplier;

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

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

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

      (g) the gross receipts from the service of renting of rooms by hotels,
as defined by K.S.A. 36-501 and amendments thereto, or by accommo-
dation brokers, as defined by K.S.A. 12-1692, and amendments thereto
but such tax shall not be levied and collected upon the gross receipts
received from sales of such service to the federal government and any
agency, officer or employee thereof in association with the performance
of official government duties;

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

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

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

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

      (l)  (1) except as otherwise provided by paragraph (2), the gross re-
ceipts received from the sales of tangible personal property to all con-
tractors, subcontractors or repairmen for use by them in erecting struc-
tures, or building on, or otherwise improving, altering, or repairing real
or personal property.

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

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

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

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

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

      For the purposes of this subsection:

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

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

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

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

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

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

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

      (t) the gross receipts received for telephone answering services, in-
cluding mobile phone mobile telecommunication services, beeper services
and other similar services. On and after August 1, 2002, the provisions of
the federal mobile telecommunications sourcing act as in effect on January
1, 2002, shall be applicable to all sales of mobile telecommunication serv-
ices taxable pursuant to this subsection. The secretary of revenue is hereby
authorized and directed to perform any act deemed necessary to properly
implement such provisions;

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

      (v) the gross receipts received from the sales of bingo cards, bingo
faces and instant bingo tickets by licensees under K.S.A. 79-4701, et seq.,
and amendments thereto, shall be taxed at a rate of: (1) 4.9% on July 1,
2000, and before July 1, 2001; and (2) 2.5% on July 1, 2001, and before
July 1, 2002. From and after July 1, 2002, all sales of bingo cards, bingo
faces and instant bingo tickets by licensees under K.S.A. 79-4701 et seq.,
and amendments thereto, shall be exempt from taxes imposed pursuant
to this section.

      Sec.  7. On and after July 1, 2002, K.S.A. 2001 Supp. 79-3620 is
hereby amended to read as follows: 79-3620. (a) All revenue collected or
received by the director of taxation from the taxes imposed by this act
shall be remitted to the state treasurer in accordance with the provisions
of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such
remittance, the state treasurer shall deposit the entire amount in the state
treasury, less amounts withheld as provided in subsection (b) and amounts
credited as provided in subsection (c) and (d), to the credit of the state
general fund.

      (b) A refund fund, designated as ``sales tax refund fund'' not to exceed
$100,000 shall be set apart and maintained by the director from sales tax
collections and estimated tax collections and held by the state treasurer
for prompt payment of all sales tax refunds including refunds authorized
under the provisions of K.S.A. 79-3635, and amendments thereto. Such
fund shall be in such amount, within the limit set by this section, as the
director shall determine is necessary to meet current refunding require-
ments under this act. In the event such fund as established by this section
is, at any time, insufficient to provide for the payment of refunds due
claimants thereof, the director shall certify the amount of additional funds
required to the director of accounts and reports who shall promptly trans-
fer the required amount from the state general fund to the sales tax refund
fund, and notify the state treasurer, who shall make proper entry in the
records.

      (c)  (1) The state treasurer shall credit 5/98 of the revenue collected
or received from the tax imposed by K.S.A. 79-3603, and amendments
thereto, at the rate of 4.9%, and deposited as provided in subsection (a),
exclusive of amounts credited pursuant to subsection (d), in the state
highway fund.

      (2) The state treasurer shall credit 5/104 of the revenue collected or
received from the tax imposed by K.S.A. 79-3603, and amendments
thereto, at the rate of 5.2%, and deposited as provided in subsection (a),
exclusive of amounts credited pursuant to subsection (d), in the state high-
way fund.

      (3) The state treasurer shall credit 5/106 of the revenue collected or
received from the tax imposed by K.S.A. 79-3603, and amendments
thereto, at the rate of 5.3%, and deposited as provided in subsection (a),
exclusive of amounts credited pursuant to subsection (d), in the state high-
way fund.

      (4) The state treasurer shall credit 1/20 of the revenue collected and
received from the tax imposed by K.S.A. 79-3603, and amendments
thereto, at the rate of 5%, and deposited as provided by subsection (a),
exclusive of amounts credited pursuant to subsection (d), in the state high-
way fund.

      (d) The state treasurer shall credit all revenue collected or received
from the tax imposed by K.S.A. 79-3603, and amendments thereto, as
certified by the director, from taxpayers doing business within that por-
tion of a redevelopment district occupied by a redevelopment project that
was determined by the secretary of commerce and housing to be of state-
wide as well as local importance or will create a major tourism area for
the state as defined in K.S.A. 12-1770a, and amendments thereto, to the
city bond finance fund, which fund is hereby created. The provisions of
this subsection shall expire when the total of all amounts credited here-
under and under subsection (d) of K.S.A. 79-3710, and amendments
thereto, is sufficient to retire the special obligation bonds issued for the
purpose of financing all or a portion of the costs of such redevelopment
project.

      Sec.  8. On and after July 1, 2002, K.S.A. 2001 Supp. 79-3635 is
hereby amended to read as follows: 79-3635. (a)  (1) A claimant shall be
entitled to a refund of retailers' sales taxes paid upon food during the
calendar year 1998 and each year thereafter in the amount hereinafter
provided. There shall be allowed for each member of a household of a
claimant having income of $12,500 or less, an amount equal to $60 $72.
There shall be allowed for each member of a household of a claimant
having income of more than $12,500 but not more than $25,000, an
amount equal to $30 $36. There shall be allowed for a claimant who
qualifies for an additional personal exemption amount pursuant to K.S.A.
79-32,121, and amendments thereto, an additional amount of $30 or $60
$36 or $72, as the case requires. All such claims shall be paid from the
sales tax refund fund upon warrants of the director of accounts and re-
ports pursuant to vouchers approved by the director of taxation or by a
person or persons designated by the director.

      (2) As an alternative to the procedure described by paragraph 1, for
all taxable years commencing after December 31, 1997 2001, there shall
be allowed as a credit against the tax liability of a resident individual
imposed under the Kansas income tax act an amount equal to $60 or $30
$36 or $72, as the case requires, for each member of a household. There
shall be allowed for a claimant who qualifies for an additional personal
exemption amount pursuant to K.S.A. 79-32,121, and amendments
thereto, an additional amount of $30 or $60 $36 or $72, as the case re-
quires. If the amount of such tax credit exceeds the claimant's income tax
liability for such taxable year, such excess amount shall be refunded to
the claimant.

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

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

      (d) In the case of all tax years commencing after December 31, 2001,
the threshold income amounts prescribed in this section and subsection
(c) of K.S.A. 79-3633, and amendments thereto, shall be increased by an
amount equal to such threshold amount multiplied by the cost-of-living
adjustment determined under section 1  (f)(3) of the federal internal rev-
enue code for the calendar year in which the taxable year commences.

      Sec.  9. On and after July 1, 2002, K.S.A. 2001 Supp. 79-3703 is
hereby amended to read as follows: 79-3703. There is hereby levied and
there shall be collected from every person in this state a tax or excise for
the privilege of using, storing, or consuming within this state any article
of tangible personal property. Such tax shall be levied and collected in an
amount equal to the consideration paid by the taxpayer multiplied by the
rate of 4.9% 5.3% on and after July 1, 2002, and before July 1, 2004,
5.2% on and after July 1, 2004, and before July 1, 2005, and 5% on and
after July 1, 2005. Within a redevelopment district established pursuant
to K.S.A. 2001 Supp. 74-8921, and amendments thereto, there is hereby
levied and there shall be collected and paid an additional tax of 2% until
the earlier of: (1) The date the bonds issued to finance or refinance the
redevelopment project undertaken in the district have been paid in full;
or (2) the final scheduled maturity of the first series of bonds issued to
finance the redevelopment project. All property purchased or leased
within or without this state and subsequently used, stored or consumed
in this state shall be subject to the compensating tax if the same property
or transaction would have been subject to the Kansas retailers' sales tax
had the transaction been wholly within this state.

      Sec.  10. On and after July 1, 2002, K.S.A. 2001 Supp. 79-3710 is
hereby amended to read as follows: 79-3710. (a) All revenue collected or
received by the director under the provisions of this act shall be remitted
to the state treasurer in accordance with the provisions of K.S.A. 75-4215,
and amendments thereto. Upon receipt of each such remittance, the state
treasurer shall deposit the entire amount in the state treasury, less
amounts set apart as provided in subsection (b) and amounts credited as
provided in subsection (c) and (d), to the credit of the state general fund.

      (b) A revolving fund, designated as ``compensating tax refund fund''
not to exceed $10,000 shall be set apart and maintained by the director
from compensating tax collections and estimated tax collections and held
by the state treasurer for prompt payment of all compensating tax refunds.
Such fund shall be in such amount, within the limit set by this section,
as the director shall determine is necessary to meet current refunding
requirements under this act.

      (c)  (1) The state treasurer shall credit 5/98 of the revenue collected
or received from the tax imposed by K.S.A. 79-3703, and amendments
thereto, at the rate of 4.9%, and deposited as provided in subsection (a),
exclusive of amounts credited pursuant to subsection (d), in the state
highway fund.

      (2) The state treasurer shall credit 5/104 of the revenue collected or
received from the tax imposed by K.S.A. 79-3703, and amendments
thereto, at the rate of 5.2%, and deposited as provided in subsection (a),
exclusive of amounts credited pursuant to subsection (d), in the state high-
way fund.

      (3) The state treasurer shall credit 5/106 of the revenue collected or
received from the tax imposed by K.S.A. 79-3703, and amendments
thereto, at the rate of 5.3%, and deposited as provided in subsection (a),
exclusive of amounts credited pursuant to subsection (d), in the state high-
way fund.

      (4) The state treasurer shall credit 1/20 of the revenue collected or
received from the tax imposed by K.S.A. 79-3703, and amendments
thereto, at the rate of 5%, and deposited as provided by subsection (a),
exclusive of amounts credited pursuant to subsection (d), in the state high-
way fund.

      (d) The state treasurer shall credit all revenue collected or received
from the tax imposed by K.S.A. 79-3703, and amendments thereto, as
certified by the director, from taxpayers doing business within that por-
tion of a redevelopment district occupied by a redevelopment project that
was determined by the secretary of commerce and housing to be of state-
wide as well as local importance or will create a major tourism area for
the state as defined in K.S.A. 12-1770a, and amendments thereto, to the
city bond finance fund created by subsection (d) of K.S.A. 79-3620, and
amendments thereto. The provisions of this subsection shall expire when
the total of all amounts credited hereunder and under subsection (d) of
K.S.A. 79-3620, and amendments thereto, is sufficient to retire the special
obligation bonds issued for the purpose of financing all or a portion of
the costs of such redevelopment project.

      Sec.  11. K.S.A. 2001 Supp. 79-32,206 is hereby amended to read as
follows: 79-32,206. For all taxable years commencing after December 31,
1997 2001, there shall be allowed as a credit against the tax liability of a
taxpayer imposed under the Kansas income tax act, the premiums tax
upon insurance companies imposed pursuant to K.S.A. 40-252, and
amendments thereto, and the privilege tax as measured by net income of
financial institutions imposed pursuant to article 11 of chapter 79 of the
Kansas Statutes Annotated, an amount equal to 15% of the property tax
levied for property tax year 1998 years 2002, 2003 and 2004, 20% of the
property tax levied for property tax years 2005 and 2006, and 25% of the
property tax levied for property tax year 2007, and all such years there-
after, actually and timely paid during an income or privilege taxable year
upon commercial and industrial machinery and equipment classified for
property taxation purposes pursuant to section 1 of article 11 of the Kan-
sas constitution in subclass (5) or (6) of class 2 and, machinery and equip-
ment classified for such purposes in subclass (2) of class 2. For all taxable
years commencing after December 31, 2004, there shall be allowed as a
credit against the tax liability of a taxpayer imposed under the Kansas
income tax act an amount equal to 20% of the property tax levied for
property tax years 2005 and 2006, and 25% of the property tax levied for
property tax year 2007 and all such years thereafter, actually and timely
paid during an income taxable year upon machinery and equipment clas-
sified for property tax purposes pursuant to section 1 of article 11 of the
Kansas constitution in subclass (3) of class 2. Prior to the 2004 legislative
session, the joint committee on economic development shall conduct a
study of the economic impact of the foregoing provision. If the amount
of such tax credit exceeds the taxpayer's income tax liability for the taxable
year, the amount thereof which exceeds such tax liability shall be refunded
to the taxpayer. If the taxpayer is a corporation having an election in effect
under subchapter S of the federal internal revenue code, a partnership
or a limited liability company, the credit provided by this section shall be
claimed by the shareholders of such corporation, the partners of such
partnership or the members of such limited liability company in the same
manner as such shareholders, partners or members account for their pro-
portionate shares of the income or loss of the corporation, partnership or
limited liability company.

      Sec.  12. K.S.A. 79-3271 is hereby amended to read as follows: 79-
3271. As used in this act, unless the context otherwise requires: (a) ``Busi-
ness income'' means income arising from transactions and activity in the
regular course of the taxpayer's trade or business and includes income
from tangible and intangible property if the acquisition, management, and
disposition of the property constitute integral parts of the taxpayer's reg-
ular trade or business operations, except that for taxable years commenc-
ing after December 31, 1995, a taxpayer may elect that all income derived
from the acquisition, management, use or disposition of tangible or in-
tangible property constitutes business income. The election shall be ef-
fective and irrevocable for the taxable year of the election and the follow-
ing nine taxable years. The election shall be binding on all members of a
unitary group of corporations.

      (b) ``Commercial domicile'' means the principal place from which the
trade or business of the taxpayer is directed or managed.

      (c) ``Compensation'' means wages, salaries, commissions and any
other form of remuneration paid to employees for personal services.

      (d) ``Financial organization'' means any bank, trust company, savings
bank, industrial bank, land bank, safe deposit company, private banker,
savings and loan association, credit union, cooperative bank, investment
company, or any type of insurance company, but such term shall not be
deemed to include any business entity, other than those hereinbefore
enumerated, whose primary business activity is making consumer loans
or purchasing retail installment contracts from one or more sellers.

      (e) ``Nonbusiness income'' means all income other than business in-
come.

      (f) ``Public utility'' means any business entity which owns or operates
for public use any plant, equipment, property, franchise, or license for
the transmission of communications, transportation of goods or persons,
or the production, storage, transmission, sale, delivery, or furnishing of
electricity, water, steam, oil, oil products or gas.

      (g) ``Original return'' means the first return filed to report the income
of a taxpayer for a taxable year or period, irrespective of whether such
return is filed on a single entity basis or a combined basis.

      (g) (h) ``Sales'' means all gross receipts of the taxpayer not allocated
under K.S.A. 79-3274 through 79-3278, and amendments thereto.

      (h) (i) ``State'' means any state of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, any territory or possession
of the United States, and any foreign country or political subdivision
thereof.

      (i) (j) ``Telecommunications company'' means any business entity or
unitary group of entities whose primary business activity is the transmis-
sion of communications in the form of voice, data, signals or facsimile
communications by wire or fiber optic cable.

      (j) (k) ``Distressed area taxpayer'' means a corporation which: (1) Is
located in a county which has a population of not more than 45,000 per-
sons and which, as certified by the department of commerce and housing,
has sustained an adverse economic impact due to the closure of a state
hospital in such county pursuant to the recommendations of the hospital
closure commission; and (2) which has a total annual payroll of
$20,000,000 or more for employees employed within such county.

      (l) For the purposes of this subsection and subsection (b)(5) of K.S.A.
79-3279, and amendments thereto, the following terms are defined:

      (1) ``Administration services'' include clerical, fund or shareholder ac-
counting, participant record keeping, transfer agency, bookkeeping, data
processing, custodial, internal auditing, legal and tax services performed
for an investment company;

      (2) ``distribution services'' include the services of advertising, servic-
ing, marketing, underwriting or selling shares of an investment company,
but, in the case of advertising, servicing or marketing shares, only where
such service is performed by a person who is, or in the case of a closed
end company, was, either engaged in the services of underwriting or sell-
ing investment company shares or affiliated with a person who is engaged
in the service of underwriting or selling investment company shares. In
the case of an open end company, such service of underwriting or selling
shares must be performed pursuant to a contract entered into pursuant
to 15 U.S.C.§ 80a-15(b), as in effect on the effective date this act;

      (3) ``investment company'', means any person registered under the
federal Investment Company Act of 1940, as in effect on the effective date
of this act, or a company which would be required to register as an in-
vestment company under such act except that such person is exempt to
such registration pursuant to § 80a-3(c)(1) of such act;

      (4) ``investment funds service corporation'' includes any corporation
or S corporation headquartered in and doing business in this state which
derives more than 50% of its gross income from the provision of manage-
ment, distribution or administration services to or on behalf of an invest-
ment company or from trustees, sponsors and participants of employee
benefit plans which have accounts in an investment company;

      (5) ``management services'' include the rendering of investment advice
to an investment company making determinations as to when sales and
purchases of securities are to be made on behalf of the investment com-
pany, or the selling or purchasing of securities constituting assets of an
investment company, and related activities, but only where such activity
or activities are performed:

      (A) Pursuant to a contract with the investment company entered into
pursuant to 15 U.S.C. § 80a-15(a), in effect on the effective date of this
act; or

      (B) for a person that has entered into such contract with the invest-
ment company;

      (6) ``qualifying business income'' is business income derived from the
provision of management, distribution or administration services to or on
behalf of an investment company or from trustees, sponsors and partici-
pants of employee benefit plans which have accounts in an investment
company; and

      (7) ``residence'' is the fund shareholder's primary residence address.

      Sec.  13. K.S.A. 79-3279 is hereby amended to read as follows: 79-
3279. (a) All business income of railroads and interstate motor carriers of
persons or property for-hire shall be apportioned to this state by multi-
plying the business income by a fraction, in the case of railroads, the
numerator of which is the freight car miles in this state and the denom-
inator of which is the freight car miles everywhere, and, in the case of
interstate motor carriers, the numerator of which is the total number of
miles operated in this state and the denominator of which is the total
number of miles operated everywhere.

      (b) All business income of any other taxpayer shall be apportioned to
this state by one of the following methods:

      (1) By multiplying the business income by a fraction, the numerator
of which is the property factor plus the payroll factor plus the sales factor,
and the denominator of which is three; or

      (2) at the election of a qualifying taxpayer, by multiplying the business
income by a fraction, the numerator of which is the property factor plus
the sales factor, and the denominator of which is two.

      (A) For purposes of this subsection (b)(2), a qualifying taxpayer is any
taxpayer whose payroll factor for a taxable year exceeds 200% of the
average of the property factor and the sales factor. Whenever two or more
corporations are engaged in a unitary business and required to file a com-
bined report, the percentage fraction comparison provided by this sub-
section (b)(2) shall be calculated by using the payroll factor, property
factor and sales factor of the combined group of unitary corporations.

      (B) An election under this subsection (b)(2) shall be made by includ-
ing a statement with the original tax return indicating that the taxpayer
elects to apply the apportionment method under this subsection (b)(2).
The election shall be effective and irrevocable for the taxable year of the
election and the following nine taxable years. The election shall be bind-
ing on all members of a unitary group of corporations. Notwithstanding
the above, the secretary of revenue may upon the request of the taxpayer,
grant permission to terminate the election under this subsection (b)(2)
prior to expiration of the ten-year period.

      (3) At the election of a qualifying telecommunications company, by
multiplying the business income by a fraction, the numerator of which is
the information carrying capacity of wire and fiber optic cable available
for use in this state, and the denominator of which is the information
carrying capacity of wire and fiber optic cable available for use everywhere
during the tax year.

      (A) For purposes of this subsection (b)(3), a qualifying telecommu-
nications company is a telecommunications company that is a qualifying
taxpayer under paragraph (A) of subsection (b)(2).

      (B) A qualifying telecommunications company shall make the elec-
tion under this subsection (b)(3) in the same manner as provided under
paragraph (B) of subsection (b)(2).

      (4) At the election of a distressed area taxpayer, by multiplying the
business income by the sales factor. The election shall be made by in-
cluding a statement with the original tax return indicating that the tax-
payer elects to apply this apportionment method. The election may be
made only once, it must be made on or before December 31, 1999 and
it shall be effective for the taxable year of the election and the following
nine taxable years for so long as the taxpayer maintains the payroll amount
prescribed by subsection (j) of K.S.A. 79-3271.

      (5) At the election of the taxpayer made at the time of filing of the
original return, the qualifying business income of any investment funds
service corporation organized as a corporation or S corporation which
maintains its primary headquarters and operations or is a branch facility
that employs at least 100 individuals on a full-time equivalent basis in this
state and has any investment company fund shareholders residenced in
this state shall be apportioned to this state as provided in this subsection,
as follows:

      (A) By multiplying the investment funds service corporation's quali-
fying business income from administration, distribution and management
services provided to each investment company by a fraction, the numer-
ator of which shall be the average of the number of shares owned by the
investment company's fund shareholders residenced in this state at the
beginning of and at the end of the investment company's taxable year that
ends with or within the investment funds service corporation's taxable
year, and the denominator of which shall be the average of the number
of shares owned by the investment company's fund shareholders every-
where at the beginning of and at the end of the investment company's
taxable year that ends with or within the investment funds service cor-
poration's taxable year.

      (B) A separate computation shall be made to determine the qualifying
business income from each fund of each investment company. The qual-
ifying business income from each investment company shall be multiplied
by the fraction calculated pursuant to paragraph (A) for each fund of such
investment company.

      (C) The qualifying portion of total business income of an investment
funds service corporation shall be determined by multiplying such total
business income by a fraction, the numerator of which is the gross receipts
from the provision of management, distribution and administration serv-
ices to or on behalf of an investment company, and the denominator of
which is the gross receipts of the investment funds service company. To
the extent an investment funds service corporation has business income
that is not qualifying business income, such business income shall be ap-
portioned to this state pursuant to subsection (b)(1).

      (D) For tax year 2002, the tax liability of an investment funds service
corporation that has elected to apportion its business income pursuant to
paragraph (5) shall be increased by an amount equal to 50% of the dif-
ference of the amount of such tax liability if determined pursuant to sub-
section (b)(1) less the amount of such tax liability determined with regard
to paragraph (5).

      (E) When an investment funds service corporation is part of a unitary
group, the business income of the unitary group attributable to the in-
vestment funds service corporation shall be determined by multiplying
the business income of the unitary group by a fraction, the numerator of
which is the property factor plus the payroll factor plus the sales factor,
and the denominator of which is three. The property factor is a fraction,
the numerator of which is the average value of the investment funds serv-
ice corporation's real and tangible personal property owned or rented and
used during the tax period and the denominator of which is the average
value of the unitary group's real and tangible personal property owned
or rented and used during the tax period. The payroll factor is a fraction,
the numerator of which is the total amount paid during the tax period by
the investment funds service corporation for compensation, and the de-
nominator of which is the total compensation paid by the unitary group
during the tax period. The sales factor is a fraction, the numerator of
which is the total sales of the investment funds service corporation during
the tax period, and the denominator of which is the total sales of the
unitary group during the tax period.

      (F) A taxpayer seeking to make the election available pursuant to
subsection (b)(5) of K.S.A. 79-3279, and amendments thereto, shall only
be eligible to continue to make such election if the taxpayer maintains at
least 95% of the Kansas employees in existence at the time the taxpayer
first makes such an election.

      New Sec.  14. The provisions of sections 12 and 13 of this act shall
be applicable to all taxable years commencing after December 31, 2001.

      New Sec.  15. As used in sections 15 through 18 of this act:

      (a) ``Establishment'' means a business that:

      (1) Has at least $100,000,000 in existing annual gross compensation
paid to jobs located in Kansas, according to reports filed with the secretary
of human resources, for the previous three years;

      (2) has an average annual gross compensation of at least $40,000 paid
per existing employee;

      (3) currently has at least $200,000,000 total investment in Kansas;

      (4) intends to add investment, in the state as defined in subsection
(d), for modernization and retooling of at least $50,000,000 within five
years from the effective date of this act or within five years of contracting
with the department of commerce and housing; and

      (5) is described by north American industrial classification code num-
ber 326211, tire manufacturing.

      (b) ``Gross compensation'' means wages and benefits paid to or on
behalf of employees receiving wages.

      (c) ``Secretary'' means the secretary of commerce and housing.

      (d) ``Invest'' or ``investment'' for the purpose of determining the eli-
gibility of an establishment for the incentive payments created pursuant
to this act, means an amount greater than the average amount invested
by the establishment over the five years prior to the effective date of this
act or for investments made after July 1, 2003, over the five years prior
to entering into a contract with the secretary. If an establishment has
been engaged in commercial operations for less than five years, the
amount invested shall be greater than the annual average amount invested
by the establishment for the entire period of commercial operation.

      New Sec.  16. The Kansas development finance authority is hereby
authorized to issue obligations in a principal amount not to exceed
$10,000,000 upon certification by the department of commerce and hous-
ing that an establishment has entered into a contract with the secretary
pursuant to this act. The authority shall issue such obligations in an
amount of $1 for every $5 the establishment shall invest as required pur-
suant to section 15, and amendments thereto. The maximum maturity of
bonds issued pursuant to this act shall be 15 years. Such obligations shall
be issued within 60 days of the date by which the secretary receives the
signed contract required pursuant to section 17, and amendments
thereto. The proceeds of such issuance shall be used by the authority for
acquiring or improving real property or acquiring or replacing personal
property for modernizing and retooling of an establishment in the state.
Subject to appropriation, the debt service on such obligations shall be
paid by the transfer of an amount not to exceed 75% of the revenue
realized from payments by employees of the establishment pursuant to
K.S.A. 79-3294, et seq., and amendments thereto, but no such transfer
shall commence prior to July 1, 2003.

      New Sec.  17. An establishment shall enter into a contract with the
secretary in which in return for incentive payments authorized pursuant
to section 16, and amendments thereto, the establishment agrees that, in
the event that insufficient revenue is realized by the payments made pur-
suant to section 16, and amendments thereto, the establishment shall be
responsible for the debt services on obligations issued pursuant to this
act. The contract shall include a specified amount which the establish-
ment agrees to invest in the state and shall be the basis for determining
the amount of obligations issued pursuant to section 16, and amendments
thereto. In the event the establishment invests a lesser amount the es-
tablishment shall repay any amount received at a ratio of $1 for each $5
of the difference between the amount pledged and the amount actually
invested. The contract shall further specify that, in the event the rate of
taxation set forth in the Kansas income tax act is abolished and insufficient
revenue is realized to meet the debt service on the obligations issued
pursuant to this act, the establishment shall not be responsible for any
amount of shortfall attributable to such reduction in rates. The contract
may specify such additional terms and conditions as may be necessary to
administer this act. The secretary may include provisions in the contract
to reduce the amount of eligible tax credits or other benefits on the in-
vestment to support such bond repayment.

      New Sec.  18. The establishment shall not be allowed credits pursu-
ant to K.S.A. 79-32,160a, and amendments thereto, for any amount of
investment related to or computed on the basis of any investment of the
proceeds of obligations issued pursuant to this act.

      Sec.  19. K.S.A. 2001 Supp. 79-201w is hereby amended to read as
follows: 79-201w. The following described property, to the extent speci-
fied by this section, shall be exempt from all property or ad valorem taxes
levied under the laws of the state of Kansas:

      (a) Any item of machinery, equipment, materials and supplies which,
except for the operation of the provisions of this section, would be re-
quired to be listed for the purpose of taxation pursuant to K.S.A. 79-306,
and amendments thereto, and which is used or to be used in the conduct
of the owner's business, or in the conduct of activities by an entity not
subject to Kansas income taxation pursuant to K.S.A. 79-32,113, and
amendments thereto, whose original retail cost when new is $250 or less
for tax year 2002, and $400 or less for tax year 2003, and all tax years
thereafter.

      (b) The provisions of this section shall apply to all taxable years com-
mencing after December 31, 1995.

      Sec.  20. K.S.A. 79-2803a is hereby amended to read as follows: 79-
2803a. Lots or tracts may be sold or transferred as a single group or unit
or in more than one group or unit either:

      (a) Upon the motion of any party to the action, the court may, if it
finds and the court grants such motion by order after making a finding
that any two or more lots or tracts constitute a single unit for usual uses
and will sell for a higher price if sold together, order said lots or tracts
sold together as a single unit; or

      (b) by the county, without a court order, if such lots or tracts previ-
ously have been offered at public auction for delinquent property taxes,
but which did not sell at the previous public auction.

      New Sec.  21. (a) As a part of an order issued pursuant to K.S.A. 79-
2803a, and amendments thereto, and upon application of the county, a
court may authorize the county to dispose of one or more lots or tracts
by negotiated public or private sale or transfer if the court finds that such
property or properties had been included as a part of a prior judgment
and order of sale and had not been purchased at the sale.

      (b) Any sale or transfer authorized pursuant to subsection (a), shall
be conducted in accordance with this subsection. The county may ne-
gotiate the sale or transfer of the property on such terms and conditions
it deems advisable and shall publish notice of the proposed sale or transfer
in the official county newspaper. Such notice shall describe the property
and shall state the name of the purchaser or recipient and the sales price
or other consideration, or shall state the other manner of transfer. The
notice also shall state the date, time, and general location of the hearing
to confirm the sale or transfer of the property. The purchaser or recipient
of the property shall execute an affidavit pursuant to the provisions of
K.S.A. 79-2804h, and amendments thereto, and the county may not sell
or transfer of the property to any person who is prohibited from pur-
chasing the property under the provisions of K.S.A. 79-2812, and amend-
ments thereto. Any sale or transfer of real estate by the county under this
section shall be subject to a hearing upon and order of confirmation by
the court and, thereafter, shall be conveyed to the purchaser or recipient
by the sheriff of the county, who shall issue a sheriffs deed, in confor-
mance with K.S.A. 79-2804, and amendments thereto, upon receipt of
the courts order confirming the sale or transfer of the property. The deed
shall convey the property with all rights provided by K.S.A. 79-2804, and
amendments thereto.

      Sec.  22. K.S.A. 79-2401a is hereby amended to read as follows: 79-
2401a. (a) (1) Except as provided by paragraph (2) and subsection (b),
real estate bid off by the county for both delinquent taxes and special
assessments, as defined by subsection (c), shall be held by the county
until the expiration of two years from the date of the sale, subject only to
the right of redemption as provided by this section. Any owner or holder
of the record title, the owner's or holder's heirs, devisees, executors, ad-
ministrators, assigns or any mortgagee or the owner's or holder's assigns
may redeem the real estate sold in the sale at any time within two years
after the sale by paying to the county treasurer the amount for which the
real estate was sold plus the interest accrued, all delinquent taxes and
special assessments and interest thereon that have accrued after the date
of such sale which remain unpaid as of the date of redemption and costs
and expenses of the sale and redemption, including but not limited to,
abstracting costs incurred in anticipation of a tax sale.

      (2) Any abandoned building or structure and the land accommodat-
ing such building or structure bid off by the county for both delinquent
taxes and special assessments, as defined by subsection (c), shall be held
by the county until the expiration of one year from the date of the sale,
subject only to the right of redemption as provided by this section. Any
owner or holder of the record title, the owner's or holder's heirs, devisees,
executors, administrators, assigns or any mortgagee or the owner's or
holder's assigns may redeem the real estate sold in the sale at any time
within one year after the sale by paying to the county treasurer the amount
for which the real estate was sold plus the interest accrued, all delinquent
taxes and special assessments and interest thereon that have accrued after
the date of such sale which remain unpaid as of the date of redemption
and costs and expenses of the sale and redemption, including but not
limited to abstracting costs incurred in anticipation of a tax sale.

      When used in this subsection ``abandoned building or structure and
the land accommodating such building or structure'' shall mean a building
or structure which, for a period of at least one year, has been unoccupied
and which there has been a failure to perform reasonable maintenance
of such building or structure and the land accommodating such building
or structure.

      (b)  (1) Except as provided by paragraph (2), real estate which is a
homestead under section 9 of article 15 of the Kansas Constitution and
all real estate not described in subsection (a) shall be held by the county
until the expiration of three years from the date of the sale and may be
redeemed partially by paying to the county treasurer the amount of taxes
for which the real estate was sold for one or more years, beginning with
the first year for which the real estate was carried on the tax-sale book of
the county plus interest at the rate prescribed by K.S.A. 79-2004, and
amendments thereto, on the amount from the date the same was carried
on the sale book. Upon payment and partial redemption, the time when
a tax foreclosure sale may be commenced shall be extended by the num-
ber of years paid in the partial redemption.

      (2) In Johnson and Wyandotte counties county, real estate which is
a homestead under section 9 of article 15 of the Kansas constitution and
all real estate not described in subsection (a) shall be held by the county
until the expiration of three years from the date of the sale and may be
redeemed partially by paying to the county treasurer the amount of taxes
for which the real estate was sold for one or more years, beginning with
the most recent year for which the real estate was carried on the tax-sale
book of the county plus interest at the rate prescribed by K.S.A. 79-2004,
and amendments thereto, on the amount from the date the same was
carried on the sale book.

      (c) For the purpose of this act, the term ``real estate bid off by the
county for both delinquent taxes and special assessments'' shall include
only real estate on which there are delinquent taxes of a general ad va-
lorem property tax nature and delinquent special assessments or other
special taxes levied by a city, county or other municipality in response to
a petition or request of the landowners. Upon publication of the listing
of real estate subject to sale under the provisions of K.S.A. 79-2302, and
amendments thereto, the clerk of any city, county or other municipality
which has levied special assessments during the past 10 years shall certify
to the county treasurer those listed parcels of real estate which are located
within a special assessment district, but no parcel shall be so certified
unless the public improvement was constructed pursuant to a petition or
request of one or more landowners sufficient to authorize the improve-
ment under the applicable statutory special assessment procedure used
by the city, county or other municipality.

      (d) If at the expiration of the redemption period, the real estate has
not been redeemed, the real estate shall be disposed of by foreclosure
and sale in the manner provided by K.S.A. 79-2801 et seq., and amend-
ments thereto.

      New Sec.  23. (a) Any correspondence issued by the department of
revenue to a taxpayer or the taxpayer's representative demanding pay-
ment of an assessment of any tax the imposition and collection of which
is administered by the department shall consist of a detailed, clear and
accurate explanation of the assessment demand including, but not limited
to, the specific tax and tax year to which such assessment applies and
penalties and interest which apply thereto. If the department proposes
to change the tax or refund due on a return filed by a taxpayer, corre-
spondence detailing the change shall be sent to the taxpayer. The cor-
respondence shall specifically identify the proposed change and explain
in simple and nontechnical terms the reasons for the change.

      (b) Any such correspondence demanding the payment of an assess-
ment of tax, penalties and interest in an amount in excess of $750 for
individual accounts and in excess of $2,000 for business accounts shall be
reviewed prior to issuance for accuracy by an employee of the department
and shall provide the employer identification number and contact tele-
phone number of the employee performing any such review.

      New Sec.  24. In the event a taxpayer has designated a third party or
other representative to discuss an income tax return upon the taxpayer's
Kansas return, the department shall adhere and comply with such des-
ignation, and shall discuss or correspond with such designee or represen-
tative regarding matters concerning the return, including collection mat-
ters.

      New Sec.  25. In addition to the authority to waive any civil penalty
imposed by law for the violation of any law pertaining to any tax admin-
istered by the department of revenue, the secretary or the secretary's
designee shall waive any such penalty upon the finding of any circum-
stance allowing waiver of civil penalties pursuant to the federal internal
revenue code, as in effect on January 1, 2002.

      New Sec.  26. Upon a resolution of any assessment of tax, penalties
and interest of any tax the imposition and collection of which is admin-
istered by the department, a closing letter evidencing such resolution shall
be issued to the affected taxpayer or the taxpayer's representative, as the
case may require, within 30 days of the date upon which such resolution
is agreed to. The taxpayer shall be entitled to rely on such closing letter
as it relates to the issues resolved.

      New Sec.  27. (a) Notwithstanding any provision of K.S.A. 79-3235,
and amendments thereto, to the contrary, the procedures set forth by
this section shall apply to the issuance of any warrant and the levy upon
property pursuant to such provisions.

      (b) The secretary or the secretary's designee shall notify in writing
the person who is the subject of the warrant of the filing of a warrant
under K.S.A. 79-3235, and amendments thereto. The notice required
shall be given in person, left at the dwelling or usual place of business of
such person or sent by certified or registered mail to such person's last
known dwelling address, not more than five business days after the day
of the filing of the notice of lien. The notice shall include in simple and
nontechnical terms the amount of unpaid taxes, the administrative appeals
available to the taxpayer with respect to such warrant and the procedures
relating to such appeals, and the provisions of law and procedures relating
to the release of warrants on property.

      Sec.  28. K.S.A. 79-3226 is hereby amended to read as follows: 79-
3226. (a) As soon as practicable after the return is filed, the director of
taxation shall examine it and shall determine the correct amount of the
tax. If the tax found due shall be greater than the amount theretofore
paid, or if a claim for a refund is denied, notice shall be mailed to the
taxpayer. Within 60 days after the mailing of such notice the taxpayer may
request an informal conference with the secretary of revenue or the sec-
retary's designee relating to the tax liability or denial of refund by filing
a written request with the secretary of revenue or the secretary's designee
which sets forth the objections to the proposed liability or proposed denial
of refund. The purpose of such conference shall be to review and recon-
sider all facts and issues that underlie the proposed liability or proposed
denial of refund. The secretary of revenue or the secretary's designee
shall hold an informal conference with the taxpayer and shall issue a
written final determination thereon. The informal conference shall not
constitute an adjudicative proceeding under the Kansas administrative
procedure act. Informal conferences held pursuant to this section may
be conducted by the secretary of revenue or the secretary's designee. The
rules of evidence shall not apply to an informal conference and no record
shall be made, except at the request and expense of the secretary of
revenue or the secretary's designee or taxpayer. The taxpayer may bring
to the informal conference an attorney, certified public accountant and
any other person to represent the taxpayer or to provide information.
Because the purpose of the department staff is to aid the secretary or
secretary's designee in the proper discharge of the secretary's or secre-
tary's designee's duties, the secretary or secretary's designee may confer
at any time with any staff member with respect to the case under recon-
sideration. The secretary of revenue or the secretary's designee shall issue
a written final determination within 270 days of the date of the request
for informal conference unless the parties agree in writing to extend the
time for issuing such final determination. A final determination consti-
tutes final agency action subject to administrative review by the state
board of tax appeals. In the event that a written final determination is not
rendered within 270 days, the taxpayer may appeal to the state board of
tax appeals.

      (b) A final determination finding additional tax shall be accompanied
by a notice and demand for payment. Notice under this section shall be
sent by first-class mail in the case of individual taxpayers and by registered
or certified mail in the case of all other taxpayers. The tax shall be paid
within 20 days thereafter, together with interest at the rate per month
prescribed by subsection (a) of K.S.A. 79-2968, and amendments thereto,
on the additional tax from the date the tax was due unless an appeal is
taken in the manner provided by K.S.A. 74-2438 and amendments
thereto, but no additional tax shall be assessed for less than $5 unless the
secretary or the secretary's designee determines the administration and
collection cost involved in collecting an amount over $5 but less than $100
would not warrant collection of the amount due. Interest at such rate shall
continue to accrue on any additional tax liability during the course of any
appeal.

      Sec.  29. K.S.A. 2001 Supp. 79-3295 is hereby amended to read as
follows: 79-3295. (a) The term ``employee'' means a resident of this state
as defined by subsection (b) of K.S.A. 79-32,109, and amendments
thereto, performing services for an employer either within or without the
state and a nonresident performing services within this state, and includes
an officer, employee or elected official of the United States, a state, ter-
ritory, or any political subdivision thereof or any agency or instrumentality
thereof, and an officer of a corporation.

      (b) The term ``employer'' means any person, firm, partnership, lim-
ited liability company, corporation, association, trust or fiduciary of any
kind or other type organization qualifying as an employer for federal in-
come tax withholding purposes and who maintains an office, transacts
business in or derives any income from sources within the state of Kansas
for whom an individual performs or performed any services, of whatever
nature, as the employee of such employer, and who has control of the
payment of wages for such services, or is the officer, agent or employee
of the person having control of the payment of wages. It also includes the
United States, the state and all political subdivisions thereof, and all agen-
cies or instrumentalities of any of them.

      (c) The term ``distributee'' means any person or organization who
receives a distribution which is subject to withholding of income tax pur-
suant to this act.

      (d) The term ``distribution'' means a distribution from a corporation
for which an election as an S corporation under subchapter S of the fed-
eral internal revenue code is in effect, from a limited liability company
formed under the laws of the state of Kansas, or from a partnership.

      (e) The term ``payee'' means any person or organization who receives
a payment other than wages which is subject to withholding of income
tax pursuant to this act.

      (f) The term ``payment other than wages'' means a payment that is
subject to federal income tax withholding and taxable under the Kansas
income tax act, and that is a payment:

      (1) for any supplemental unemployment compensation, annuity, or
sick pay;

      (2) pursuant to a voluntary withholding agreement;

      (3) of gambling winnings;

      (4) of taxable payments of Indian casino profits;

      (5) for any vehicle fringe benefit;

      (6) of periodic payments of pensions, annuities, and other deferred
income;

      (7) of nonperiodic distributions of pensions, annuities, and other de-
ferred income; or

      (8) of eligible rollover distributions of pensions, annuities, and other
deferred income.

      (c) (g) The term ``payor'' means any person or organization, other
than an employer, who makes payments, other than wages or distribu-
tions, which are subject to withholding of income tax pursuant to this act.

      (d) (h) The term ``wages'' means wages as defined by section 3401(a)
of the federal internal revenue code which are taxable under the Kansas
income tax act, and shall include any prize or award paid to a professional
athlete at a sporting event held in this state.

      Sec.  30. K.S.A. 2001 Supp. 79-32,100a is hereby amended to read as
follows: 79-32,100a. (a) Every payor who withholds federal income tax:

      (a) For any supplemental unemployment compensation, annuity or
sick pay;

      (b) pursuant to a voluntary withholding agreement;

      (c) on gambling winnings;

      (d) on taxable payments of Indian casino profits;

      (e) for any vehicle fringe benefit;

      (f) on periodic payments of pensions, annuities and other deferred
income;

      (g) on nonperiodic distributions of pensions, annuities and other de-
ferred income; or

      (h) on eligible rollover distributions of pensions, annuities and other
deferred income, from payments made to those persons whose primary
residence is in Kansas shall withhold and deduct an amount to be deter-
mined in accordance with K.S.A. 2001 Supp. 79-32,100b 79-32,100d, and
amendments thereto. is required under federal law to withhold upon
payments other than wages pursuant to the federal internal revenue code
shall withhold and deduct an amount to be determined in accordance
with K.S.A. 79-32,100d, and amendments thereto, whenever the payee is
a person whose primary residence is in Kansas.

      (b) A determination by the internal revenue service that relieves a
payor from withholding responsibility with respect to payments other
than wages to a payee shall also apply for Kansas income tax withholding
purposes. Whenever a payor is required to reinstate withholding for fed-
eral income tax with regard to any payee, such obligation shall be equally
applicable for Kansas withholding purposes.

      (c) Every payor who makes a distribution as defined by subsection
(d) of K.S.A. 79-3295, and amendments thereto, shall withhold and deduct
an amount to be determined in accordance with K.S.A. 79-32,100d, and
amendments thereto, from amounts distributed or distributable to each
nonresident shareholder or partner.

      Sec.  31. K.S.A. 2001 Supp. 79-32,211 is hereby amended to read as
follows: 79-32,211. (a) For all taxable years commencing after December
31, 2000 2001, there shall be allowed a tax credit against the income,
privilege or premium tax liability imposed upon a taxpayer pursuant to
the Kansas income tax act, the privilege tax imposed upon any national
banking association, state bank, trust company or savings and loan as-
sociation pursuant to article 11 of chapter 79 of the Kansas Statutes An-
notated, or the premiums tax and privilege fees imposed upon an insur-
ance company pursuant to K.S.A. 40-252, and amendments thereto, in an
amount equal to 25% of qualified expenditures incurred in the restoration
and preservation of a qualified historic structure pursuant to a qualified
rehabilitation plan by a qualified taxpayer if the total amount of such
expenditures equal $5,000 or more. If the amount of such tax credit ex-
ceeds the qualified taxpayer's income, privilege or premium tax liability
for the year in which such costs and expenses were incurred, the qualified
rehabilitation plan was placed in service, as defined by section 47(b)(1)
of the federal internal revenue code and federal regulation section 1.48-
12(f)(2), such excess amount may be carried over for deduction from such
taxpayer's income, privilege or premium tax liability in the next succeed-
ing year or years until the total amount of the credit has been deducted
from tax liability, except that no such credit shall be carried over for
deduction after the 10th taxable year succeeding the taxable year in which
the qualified expenditures were incurred rehabilitation plan was placed
in service.

      (b) As used in this section, unless the context clearly indicates oth-
erwise:

      (1) ``Qualified expenditures'' means the costs and expenses incurred
by a qualified taxpayer in the restoration and preservation of a qualified
historic structure pursuant to a qualified rehabilitation plan which are
defined as a qualified rehabilitation expenditure by section 47(c)(2) of the
federal internal revenue code;

      (2) ``qualified historic structure'' means any building, whether or not
income producing, which is defined as a certified historic structure by
section 47(c)(3) of the federal internal revenue code, is individually listed
on the register of Kansas historic places, or is located and contributes to
a district listed on the register or of Kansas historic places;

      (3) ``qualified rehabilitation plan'' means a project which is approved
by the cultural resources division of the state historical society, or by a
local government certified by the division to so approve, as being consis-
tent with the standards for rehabilitation and guidelines for rehabilitation
of historic buildings as adopted by the federal secretary of interior and in
effect on the effective date of this act. The society shall adopt rules and
regulations providing application and approval procedures necessary to
effectively and efficiently provide compliance with this act, and may col-
lect fees in order to defray its approval costs in accordance with rules and
regulations adopted therefor; and

      (4) ``qualified taxpayer'' means the owner of the qualified historic
structure or any other person who may qualify for the federal rehabili-
tation credit allowed by section 47 of the federal internal revenue code.

      If the taxpayer is a corporation having an election in effect under sub-
chapter S of the federal internal revenue code, a partnership or a limited
liability company, the credit provided by this section shall be claimed by
the shareholders of such corporation, the partners of such partnership or
the members of such limited liability company in the same manner as such
shareholders, partners or members account for their proportionate shares
of the income or loss of the corporation, partnership or limited liability
company, or as the corporation, partnership or limited liability company
mutually agree as provided in the bylaws or other executed agreement.
Credits granted to a partnership, a limited liability company taxed as a
partnership or other multiple owners of property shall be passed through
to the partners, members or owners respectively pro rata or pursuant to
an executed agreement among the partners, members or owners docu-
menting any alternate distribution method.

      (c) Any person, hereinafter designated the assignor, may sell, assign,
convey or otherwise transfer tax credits allowed and earned pursuant to
subsection (a). The taxpayer acquiring credits, hereinafter designated the
assignee, may use the amount of the acquired credits to offset up to 100%
of its income, privilege or premiums tax liability for either the taxable year
in which the qualified rehabilitation plan was first placed into service or
the taxable year in which such acquisition was made. Unused credit
amounts claimed by the assignee may be carried forward for up to five
years, except that all such amounts shall be claimed within 10 years fol-
lowing the tax year in which the qualified rehabilitation plan was first
placed into service. The assignor shall enter into a written agreement with
the assignee establishing the terms and conditions of the agreement and
shall perfect such transfer by notifying the cultural resources division of
the state historical society in writing within 90 calendar days following
the effective date of the transfer and shall provide any information as may
be required by such division to administer and carry out the provisions
of this section. The amount received by the assignor of such tax credit
shall be taxable as income of the assignor, and the excess of the value of
such credit over the amount paid by the assignee for such credit shall be
taxable as income of the assignee.

      New Sec.  32. (a) As used in this section:

      (1) ``Administrative fee'' means those amounts charged by the pro-
fessional employer organization to the client over and above amounts
applied to the mandatory state and federal taxes, wages of assigned work-
ers and amounts applied to premiums or contributions for benefits pro-
vided for assigned workers.

      (2) ``Assigned worker'' means a person having an employment rela-
tionship with both the professional employer organization and the client.

      (3) ``Client'' means a person who contracts with a professional em-
ployer organization to obtain employer services from another person
through a professional employer arrangement.

      (4) ``Person'' means an individual, an association, a company, a firm,
a partnership, a corporation or any other form of legally recognized entity.

      (5) ``Professional employer arrangement'' means an arrangement, un-
der contract or whereby:

      (A) A professional employer organization agrees to employ all or a
majority of a client's workforce;

      (B) the arrangement is intended to be, or is, ongoing rather than
temporary in nature;

      (C) employer responsibilities for workers under the arrangement are
in fact shared by the professional employer organization and the client;
and

      (D) for the purposes of this act, a professional employer arrangement
shall not include:

      (i) Arrangements wherein a person, whose principal business activity
is not entering into professional employer arrangements, shares employ-
ees with a commonly owned company within the meaning of section
414(b) and (c) of the federal internal revenue code of 1986, as amended,
and which does not hold itself out as a professional employer organization.

      (ii) Arrangements in which a person assumes full responsibility for
the product or service performed by such person or such person's agents
and retains and exercises, both legally and in fact, a right of direction and
control over the individuals whose services are supplied under such con-
tractual arrangements, and such person and such person's agents perform
a specified function for the client which is separate and divisible from the
primary business or operations of the client.

      (iii) Any person otherwise subject to this act if, during any fiscal year
of the person commencing after July 1, 2000, the person pays total gross
wages to employees employed by the person in the state under one or
more professional employer arrangements which do not exceed 5% of the
total gross wages paid to all employees employed by the person in the
state during the same fiscal year under all arrangements described in
paragraph (4) and that each person does not advertise or hold itself out
to the public as providing services as a professional employer organization.

      (6) ``Professional employer organization'' means any person engaged
in providing the services of employees pursuant to one or more profes-
sional employer arrangements or any person that represents itself to the
public as providing services pursuant to a professional employer arrange-
ment.

      (b) A professional employer organization shall be considered an em-
ployer for the purposes of withholding state income tax of the assigned
workers pursuant to the Kansas income tax act. Commencing after De-
cember 31, 1999, the client shall be considered as the employer of an
assigned worker under the terms of the professional employer arrange-
ment between the client and the professional employer organization, for
purposes of: (1) subsection (d) of K.S.A. 79-32,154, subsection (d) of
K.S.A. 74-50,114, K.S.A. 79-32,160a or K.S.A. 2001 Supp. 74-50,131, and
amendments thereto; and (2) calculating the client's payroll factor under
K.S.A. 79-3283. The client shall provide to the department of revenue
the payroll information for assigned workers needed for purposes of ad-
ministering the above provisions.

      New Sec.  33. (a) The value for property tax purposes of any vessel,
as defined by K.S.A. 32-1102, and amendments thereto, which is acquired
or sold after January 1 and prior to September 1 of any taxable year shall
be equal to the value determined therefor pursuant to K.S.A. 79-503a,
and amendments thereto, multiplied by: (1) In the case of a sale, a fraction
the numerator of which is the number of months, or major portion
thereof, such vessel was owned by the record owner thereof during the
taxable year in which such vessel was sold, and the denominator of which
is 12; and (2) in the case of an acquisition, a fraction the numerator of
which is the number of months, or major portion thereof, remaining in
the taxable year after the date of acquisition by the record owner thereof,
and the denominator of which is 12.

      (b) Notice of the acquisition or sale of any such vessel shall be pro-
vided by the record owner thereof to the appropriate county appraiser
within 30 days after such acquisition or sale. Upon receipt of such notice,
and after computation of the value of any such vessel in accordance with
the provision of subsection (a), a notification or revised notification of
value shall be mailed to the taxpayer.

      (c) Vessels acquired after September 1 of a taxable year shall not be
subject to assessment and taxation for such year, except as provided by
paragraph (1) of subsection (a).

      (d) The provisions of this section shall apply to all taxable years com-
mencing after December 31, 2002.

      Sec.  34. K.S.A. 12-187 is hereby amended to read as follows: 12-187.
(a) (1) No city shall impose a retailers' sales tax under the provisions of
this act without the governing body of such city having first submitted
such proposition to and having received the approval of a majority of the
electors of the city voting thereon at an election called and held therefor.
The governing body of any city may submit the question of imposing a
retailers' sales tax and the governing body shall be required to submit the
question upon submission of a petition signed by electors of such city
equal in number to not less than 10% of the electors of such city.

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

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

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

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

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

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

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

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

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

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

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

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

      (11) The board of county commissioners of Douglas county may sub-
mit to the question of imposing a countywide retailers' sales tax at the
rate of .25% and pledging the revenue received therefrom for the purposes
of preservation, access and management of open space, and for industrial
and business park related economic development.

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

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

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

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

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

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

      Sec.  35. K.S.A. 12-189 is hereby amended to read as follows: 12-189.
Except as otherwise provided by paragraph (2) of subsection (a) of K.S.A.
12-187, and amendments thereto, the rate of any class A, class B or class
C city retailers' sales tax shall be fixed in the amount of .25%, .5%, .75%
or 1% which amount shall be determined by the governing body of the
city. Except as otherwise provided by paragraph (2) of subsection (a) of
K.S.A. 12-187, and amendments thereto, the rate of any class D city
retailers' sales tax shall be fixed in the amount of .10%, .25%, .5%, .75%,
1%, 1.125%, 1.25%, 1.5% or 1.75%. The rate of any countywide retailers'
sales tax shall be fixed in an amount of either .25%, .5%, .75% or 1%
which amount shall be determined by the board of county commissioners,
except that:

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

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

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

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

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

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

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

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

      (i) the board of county commissioners of Douglas county, for the pur-
poses of paragraph (11) of subsection (b) of K.S.A. 12-187, and amend-
ments thereto, may fix such rate at 1.25%.

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

      Upon receipt of a certified copy of an ordinance or resolution author-
izing the levy of a local retailers' sales tax, the director of taxation shall
cause such taxes to be collected within or without the boundaries of such
taxing subdivision at the same time and in the same manner provided for
the collection of the state retailers' sales tax. Such copy shall be submitted
to the director of taxation within 30 days after adoption of any such or-
dinance or resolution. All moneys collected by the director of taxation
under the provisions of this section shall be credited to a county and city
retailers' sales tax fund which fund is hereby established in the state treas-
ury. Any refund due on any county or city retailers' sales tax collected
pursuant to this act shall be paid out of the sales tax refund fund and
reimbursed by the director of taxation from collections of local retailers'
sales tax revenue. Except for local retailers' sales tax revenue required to
be deposited in the redevelopment bond fund established under K.S.A.
2001 Supp. 74-8927, and amendments thereto, all local retailers' sales tax
revenue collected within any county or city pursuant to this act shall be
apportioned and remitted at least quarterly by the state treasurer, on
instruction from the director of taxation, to the treasurer of such county
or city.

      Revenue that is received from the imposition of a local retailers' sales
tax which exceeds the amount of revenue required to pay the costs of a
special project for which such revenue was pledged shall be credited to
the city or county general fund, as the case requires.

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

      New Sec.  36. On or before September 1, 2002, the director of prop-
erty valuation of the department of revenue shall issue and submit a
report pertaining to the interpretation and implementation of the provi-
sions of K.S.A. 79-1476, and amendments thereto, relating to the pro-
cedures of valuation of land devoted to agriculture use. Such report shall
include a summary of changes in each class of land which have been
implemented within the past 10 years, when the change was made, and
an explanation of the rationale for each such change. Such report shall
be submitted to the following: The governor, the legislative coordinating
council, the house taxation committee and the senate assessment and
taxation committee, and shall be made available to the public on the
internet.

      Sec.  37. K.S.A. 2001 Supp. 79-1476 is hereby amended to read as
follows: 79-1476. The director of property valuation is hereby directed
and empowered to administer and supervise a statewide program of re-
appraisal of all real property located within the state. Except as otherwise
authorized by K.S.A. 19-428, and amendments thereto, each county shall
comprise a separate appraisal district under such program, and the county
appraiser shall have the duty of reappraising all of the real property in
the county pursuant to guidelines and timetables prescribed by the di-
rector of property valuation and of updating the same on an annual basis.
In the case of multi-county appraisal districts, the district appraiser shall
have the duty of reappraising all of the real property in each of the coun-
ties comprising the district pursuant to such guidelines and timetables
and of updating the same on an annual basis. Commencing in 2000, every
parcel of real property shall be actually viewed and inspected by the
county or district appraiser once every six years. Any county or district
appraiser shall be deemed to be in compliance with the foregoing re-
quirement in any year if 17% or more of the parcels in such county or
district are actually viewed and inspected.

      Compilation of data for the initial preparation or updating of invento-
ries for each parcel of real property and entry thereof into the state com-
puter system as provided for in K.S.A. 79-1477, and amendments thereto,
shall be completed not later than January 1, 1989. Whenever the director
determines that reappraisal of all real property within a county is com-
plete, notification thereof shall be given to the governor and to the state
board of tax appeals.

      Valuations shall be established for each parcel of real property at its
fair market value in money in accordance with the provisions of K.S.A.
79-503a, and amendments thereto.

      In addition thereto valuations shall be established for each parcel of
land devoted to agricultural use upon the basis of the agricultural income
or productivity attributable to the inherent capabilities of such land in its
current usage under a degree of management reflecting median produc-
tion levels in the manner hereinafter provided. A classification system for
all land devoted to agricultural use shall be adopted by the director of
property valuation using criteria established by the United States depart-
ment of agriculture soil conservation service. For all taxable years com-
mencing after December 31, 1989, all land devoted to agricultural use
which is subject to the federal conservation reserve program shall be
classified as cultivated dry land for the purpose of valuation for property
tax purposes pursuant to this section. For all taxable years commencing
after December 31, 1999, all land devoted to agricultural use which is
subject to the federal wetlands reserve program shall be classified as na-
tive grassland for the purpose of valuation for property tax purposes pur-
suant to this section. Productivity of land devoted to agricultural use shall
be determined for all land classes within each county or homogeneous
region based on an average of the eight calendar years immediately pre-
ceding the calendar year which immediately precedes the year of valua-
tion, at a degree of management reflecting median production levels. The
director of property valuation shall determine median production levels
based on information available from state and federal crop and livestock
reporting services, the soil conservation service, and any other sources of
data that the director considers appropriate.

      The share of net income from land in the various land classes within
each county or homogeneous region which is normally received by the
landlord shall be used as the basis for determining agricultural income
for all land devoted to agricultural use except pasture or rangeland. The
net income normally received by the landlord from such land shall be
determined by deducting expenses normally incurred by the landlord
from the share of the gross income normally received by the landlord.
The net rental income normally received by the landlord from pasture or
rangeland within each county or homogeneous region shall be used as
the basis for determining agricultural income from such land. The net
rental income from pasture and rangeland which is normally received by
the landlord shall be determined by deducting expenses normally in-
curred from the gross income normally received by the landlord. Com-
modity prices, crop yields and pasture and rangeland rental rates and
expenses shall be based on an average of the eight calendar years im-
mediately preceding the calendar year which immediately precedes the
year of valuation. Net income for every land class within each county or
homogeneous region shall be capitalized at a rate determined to be the
sum of the contract rate of interest on new federal land bank loans in
Kansas on July 1 of each year averaged over a five-year period which
includes the five years immediately preceding the calendar year which
immediately precedes the year of valuation, plus a percentage not less
than .75% nor more than 2.75%, as determined by the director of prop-
erty valuation, except that the capitalization rate calculated for property
tax year 2003, and all such years thereafter, shall not be less than 11%
nor more than 12%.

      Based on the foregoing procedures the director of property valuation
shall make an annual determination of the value of land within each of
the various classes of land devoted to agricultural use within each county
or homogeneous region and furnish the same to the several county ap-
praisers who shall classify such land according to its current usage and
apply the value applicable to such class of land according to the valuation
schedules prepared and adopted by the director of property valuation
under the provisions of this section.

      It is the intent of the legislature that appraisal judgment and appraisal
standards be followed and incorporated throughout the process of data
collection and analysis and establishment of values pursuant to this sec-
tion.

      For the purpose of the foregoing provisions of this section the phrase
``land devoted to agricultural use'' shall mean and include land, regardless
of whether it is located in the unincorporated area of the county or within
the corporate limits of a city, which is devoted to the production of plants,
animals or horticultural products, including but not limited to: Forages;
grains and feed crops; dairy animals and dairy products; poultry and poul-
try products; beef cattle, sheep, swine and horses; bees and apiary prod-
ucts; trees and forest products; fruits, nuts and berries; vegetables; nurs-
ery, floral, ornamental and greenhouse products. Land devoted to
agricultural use shall not include those lands which are used for recrea-
tional purposes, other than that land established as a controlled shooting
area pursuant to K.S.A. 32-943, and amendments thereto, which shall be
deemed to be land devoted to agricultural use, suburban residential acre-
ages, rural home sites or farm home sites and yard plots whose primary
function is for residential or recreational purposes even though such prop-
erties may produce or maintain some of those plants or animals listed in
the foregoing definition.

      The term ``expenses'' shall mean those expenses typically incurred in
producing the plants, animals and horticultural products described above
including management fees, production costs, maintenance and depre-
ciation of fences, irrigation wells, irrigation laterals and real estate taxes,
but the term shall not include those expenses incurred in providing tem-
porary or permanent buildings used in the production of such plants,
animals and horticultural products.

      The provisions of this act shall not be construed to conflict with any
other provisions of law relating to the appraisal of tangible property for
taxation purposes including the equalization processes of the county and
state board of tax appeals.

      Sec.  38. K.S.A. 2001 Supp. 79-32,205 is hereby amended to read as
follows: 79-32,205. (a) There shall be allowed as a credit against the tax
liability of a resident individual imposed under the Kansas income tax act
an amount equal to 10% 15% for tax year 1998 2002, and all tax years
thereafter, of the amount of the earned income credit allowed against
such taxpayer's federal income tax liability pursuant to section 32 of the
federal internal revenue code for the taxable year in which such credit
was claimed against the taxpayer's federal income tax liability.

      (b) If the amount of the credit allowed by subsection (a) exceeds the
taxpayer's income tax liability imposed under the Kansas income tax act,
such excess amount shall be refunded to the taxpayer.

      (c) The provisions of this section shall be applicable to all taxable
years commencing after December 31, 1997.

      Sec.  39. On and after July 1, 2002, K.S.A. 2001 Supp. 17-2036 is
hereby amended to read as follows: 17-2036. Every business trust shall
make an annual report in writing to the secretary of state, showing its
financial condition at the close of business on the last day of its tax period
under the Kansas income tax act next preceding the date of filing, but if
a business trust's tax period is other than the calendar year, it shall give
notice thereof to the secretary of state prior to December 31 of the year
it commences such tax period. The reports shall be made on forms pro-
vided by the secretary of state and shall be filed at the time prescribed
by law for filing the business trust's annual Kansas income tax return,
except that if any such business trust shall receive an extension of time
for filing its annual income tax return from the internal revenue service
or pursuant to subsection (c) of K.S.A. 79-3221, and amendments thereto,
the time for filing the report hereunder shall be extended, correspond-
ingly, upon filing with the secretary of state a copy of the extension
granted by the internal revenue service or the director of taxation. The
report shall contain the following:

      (a) Executed copies of all amendments to the instrument by which
the business trust was created, or to prior amendments thereto, which
have been adopted and have not theretofore been filed under K.S.A. 17-
2033, and amendments thereto, and accompanied by the fee prescribed
therein for each such amendment;

      (b) a verified list of the names and addresses of its trustees as of the
end of its tax period; and

      (c) a balance sheet as of the end of its tax period, certified by the
trustee, fairly and truly reflecting its assets and liabilities and specifically
setting out its corpus, and, in the case of a foreign business trust, fairly
and truly reflecting an allocation of its moneys and other assets as between
those located, used, or to be used in this state and those located, used or
to be used elsewhere.

      At the time of filing its annual report, the business trust shall pay to
the secretary of state an annual franchise tax in an amount equal to $1 $2
for each $1,000 of its corpus as shown by its balance sheet, or, in the case
of a foreign business trust, in an amount equal to $1 $2 for each $1,000
of that portion of its corpus which is located in or which it uses or intends
to use in this state as shown by its balance sheet, except that in any case
no such tax shall be less than $20 $40 nor more than $2,500 $5,000.

      The failure of any domestic or foreign business trust to file its annual
report and pay its annual franchise tax within 90 days from the date on
which they are due, as aforesaid, shall work a forfeiture of its authority
to transact business in this state and all of the remedies, procedures, and
penalties specified in K.S.A. 17-7509 and 17-7510, and amendments
thereto, with respect to a corporation which fails to file its annual report
or pay its annual franchise tax within 90 days after they are due, shall be
applicable to such business trust.

      Sec.  40. On and after July 1, 2002, K.S.A. 17-4634 is hereby
amended to read as follows: 17-4634. (a) Every corporation organized
under the electric cooperative act of this state shall make an annual report
in writing to the secretary of state, showing the financial condition of the
corporation at the close of business on the last day of its tax period next
preceding the date of filing, but if any such corporation's tax period is
other than the calendar year, it shall give notice thereof to the secretary
of state prior to December 31 of the year it commences such tax period.
The report shall be filed on or before the fifteenth day of the fourth
month following the close of the tax year of the electric cooperative. An
extension for filing the annual report may be granted upon the filing of
a written application with the secretary of state prior to the due date of
the report, except that no such extension may be granted for a period of
more than ninety (90) days. The report shall be made on a form provided
by the secretary of state, containing the following information:

      (1) The name of the corporation;

      (2) The location of the principal office;

      (3) The name of the president, secretary and treasurer and the names
of directors with the residence address of each;

      (4) The number of memberships issued;

      (5) A balance sheet showing the financial condition of the corporation
at the close of business on the last day of its tax period next preceding
the date of filing; and

      (6) The change or changes, if any, in the particulars made since the
last annual report.

      (b) Such reports shall be signed by the president, vice-president or
secretary of the corporation, sworn to before an officer duly authorized
to administer oaths and forwarded to the secretary of state. At the time
of filing such annual report, each such corporation shall pay an annual
franchise tax of twenty dollars ($20) $40.

      Sec.  41. On and after July 1, 2002, K.S.A. 2001 Supp. 17-7503 is
hereby amended to read as follows: 17-7503. (a) Every domestic corpo-
ration organized for profit shall make an annual report in writing to the
secretary of state, stating the prescribed information concerning the cor-
poration at the close of business on the last day of its tax period next
preceding the date of filing, but if a corporation's tax period is other than
the calendar year, it shall give notice thereof to the secretary of state prior
to December 31 of the year it commences such tax period. The reports
shall be made on forms prescribed by the secretary of state. The report
shall be filed at the time prescribed by law for filing the corporation's
annual Kansas income tax return, except that if any such corporation shall
apply for an extension of time for filing its annual income tax return under
the internal revenue service or under subsection (c) of K.S.A. 79-3221,
and amendments thereto, such corporation shall also apply, not more than
90 days after the due date of its annual report, to the secretary of state
for an extension of the time for filing the report and an extension shall
be granted for a period of time corresponding to that granted under the
internal revenue code or K.S.A. 79-3221, and amendments thereto. Such
application shall include a copy of the application to income tax authori-
ties. The report shall contain the following information:

      (1) The name of the corporation;

      (2) the location of the principal office;

      (3) the names of the president, secretary, treasurer and members of
the board of directors, with the residence address of each;

      (4) the number of shares of capital stock issued and the amount of
capital stock paid up;

      (5) the nature and kind of business in which the corporation is en-
gaged; and

      (6) a list of stockholders owning at least 5% of the capital stock of the
corporation, with the post office address of each.

      (b) Every corporation subject to the provisions of this section which
holds agricultural land, as defined in K.S.A. 17-5903, and amendments
thereto, within this state shall show the following additional information
on the report:

      (1) The acreage and location listed by section, range, township and
county of each lot, tract or parcel of agricultural land in this state owned
or leased by or to the corporation;

      (2) the purposes for which such agricultural land is owned or leased
and, if leased, to whom such agricultural land is leased;

      (3) the value of the nonagricultural assets and the agricultural assets,
stated separately, owned and controlled by the corporation both within
and without the state of Kansas and where situated;

      (4) the total number of stockholders of the corporation;

      (5) the number of acres owned or operated by the corporation, the
number of acres leased by the corporation and the number of acres leased
to the corporation;

      (6) the number of acres of agricultural land, held and reported in
each category under provision (5), state separately, being irrigated; and

      (7) whether any of the agricultural land held and reported under this
subsection was acquired after July 1, 1981.

      (c) The report shall be signed by its president, secretary, treasurer or
other officer duly authorized so to act, or by any two of its directors, or
by an incorporator in the event its board of directors shall not have been
elected. The fact that an individual's name is signed on such report shall
be prima facie evidence that such individual is authorized to sign the
report on behalf of the corporation; however, the official title or position
of the individual signing the report shall be designated. This report will
be dated and subscribed by the person as true, under penalty of perjury.
At the time of filing such annual report it shall be the duty of each do-
mestic corporation organized for profit to pay to the secretary of state an
annual franchise tax in an amount equal to $1 $2 for each $1,000 of the
corporation's shareholder's equity attributable to Kansas, except that no
such tax shall be less than $20 $40 or more than $2,500 $5,000. The
amount of any such franchise tax paid by the corporation to the secretary
as provided by this subsection shall not be disclosed by the secretary.

      Sec.  42. On and after July 1, 2002, K.S.A. 2001 Supp. 17-7504 is
hereby amended to read as follows: 17-7504. (a) Every corporation or-
ganized not for profit shall make an annual report in writing to the sec-
retary of state, stating the prescribed information concerning the corpo-
ration at the close of business on the last day of its tax period next
preceding the date of filing, but if a corporation's tax period is other than
the calendar year, it shall give notice thereof to the secretary of state prior
to December 31 of the year it commences such tax period. The reports
shall be made on forms prescribed by the secretary of state. The report
shall be filed on the 15th day of the sixth month following the close of
the taxable year, except that such corporation may apply to the secretary
of state not more than 90 days after the due date of its annual report for
an extension of the time for filing the report, and an extension shall be
granted for a period of time corresponding to that granted under the
internal revenue code or K.S.A. 79-3221, and amendments thereto. The
report shall contain the following information:

      (1) The name of the corporation;

      (2) the location of the principal office;

      (3) the names of the president, secretary and treasurer, and the mem-
bers of the board of directors, with the residence address of each;

      (4) the number of memberships or the number of shares of capital
stock issued and the amount of capital stock paid up.

      (b) Every corporation subject to the provisions of this section which
holds agricultural land, as defined in K.S.A. 17-5903, and amendments
thereto, within this state shall show the following additional information
on the report:

      (1) The acreage and location listed by section, range, township and
county of each lot, tract or parcel of agricultural land in this state owned
or leased by or to the corporation;

      (2) the purposes for which such agricultural land is owned or leased
and, if leased, to whom such agricultural land is leased;

      (3) the value of the nonagricultural assets and the agricultural assets,
stated separately, owned and controlled by the corporation both within
and without the state of Kansas and where situated;

      (4) the total number of stockholders of the corporation;

      (5) the number of acres owned or operated by the corporation, the
number of acres leased by the corporation and the number of acres leased
to the corporation;

      (6) the number of acres of agricultural land, held and reported in
each category under paragraph (5) of this subsection (b), stated sepa-
rately, being irrigated; and

      (7) whether any of the agricultural land held and reported under this
subsection was acquired after July 1, 1981.

      (c) The report shall be signed by its president, secretary, treasurer or
other officer duly authorized so to act, or by any two of its directors, or
by an incorporator in the event its board of directors shall not have been
elected. The fact that an individual's name is signed on such report shall
be prima facie evidence that such individual is authorized to sign the
report on behalf of the corporation; however, the official title or position
of the individual signing the report shall be designated. This report will
be dated and subscribed by the person as true, under penalty of perjury.
At the time of filing such report, each nonprofit corporation shall pay an
annual privilege fee of $5, except that the annual fee for tax periods
ending after December 31, 1992, shall be $20 $40 for all tax years com-
mencing after December 31, 2001.

      Sec.  43. On and after July 1, 2002, K.S.A. 2001 Supp. 17-7505 is
hereby amended to read as follows: 17-7505. (a) Every foreign corpora-
tion organized for profit, or organized under the cooperative type statutes
of the state, territory or foreign country of incorporation, now or hereafter
doing business in this state, and owning or using a part or all of its capital
in this state, and subject to compliance with the laws relating to the ad-
mission of foreign corporations to do business in Kansas, shall make an
annual report in writing to the secretary of state, stating the prescribed
information concerning the corporation at the close of business on the
last day of its tax period next preceding the date of filing, but if a cor-
poration operates on a fiscal year other than the calendar year it shall give
written notice thereof to the secretary of state prior to December 31 of
the year commencing such fiscal year. The report shall be made on a form
prescribed by the secretary of state. The report shall be filed at the time
prescribed by law for filing the corporation's annual Kansas income tax
return, except that if any such corporation shall apply for an extension of
time for filing its annual income tax return under the internal revenue
service or under subsection (c) of K.S.A. 79-3221, and amendments
thereto, such corporation shall also apply, not more than 90 days after
the due date of its annual report, to the secretary of state for an extension
of the time for filing the report and an extension shall be granted for a
period of time corresponding to that granted under the internal revenue
code or K.S.A. 79-3221, and amendments thereto. Such application shall
include a copy of the application to income tax authorities. The report
shall contain the following facts:

      (1) The name of the corporation and under the laws of what state or
country organized;

      (2) the location of its principal office;

      (3) the names of the president, secretary, treasurer and members of
the board of directors, with the residence address of each;

      (4) the number of shares of capital stock issued and the amount of
capital stock paid up;

      (5) the nature and kind of business in which the company is engaged
and its place or places of business both within and without the state of
Kansas;

      (6) the value of the property owned and used by the company in
Kansas, where situated, and the value of the property owned and used
outside of Kansas and where situated; and

      (7) the corporation's shareholder's equity attributable to Kansas.

      (b) Every corporation subject to the provisions of this section which
holds agricultural land, as defined in K.S.A. 17-5903, and amendments
thereto, within this state shall show the following additional information
on the report:

      (1) The acreage and location listed by section, range, township and
county of each lot, tract or parcel of agricultural land in this state owned
or leased by or to the corporation;

      (2) the purposes for which such agricultural land is owned or leased
and, if leased, to whom such agricultural land is leased;

      (3) the value of the nonagricultural assets and the agricultural assets,
stated separately, owned and controlled by the corporation both within
and without the state of Kansas and where situated;

      (4) the total number of stockholders of the corporation;

      (5) the number of acres owned or operated by the corporation, the
number of acres leased by the corporation and the number of acres leased
to the corporation;

      (6) the number of acres of agricultural land, held and reported in
each category under paragraph (5) of this subsection (b), stated sepa-
rately, being irrigated; and

      (7) whether any of the agricultural land held and reported under this
subsection was acquired after July 1, 1981.

      The report shall be signed by its president, secretary, treasurer or other
officer duly authorized so to act, or by any two of its directors, or by an
incorporator in the event its board of directors shall not have been
elected. The fact that an individual's name is signed on such report shall
be prima facie evidence that such individual is authorized to sign the
report on behalf of the corporation; however, the official title or position
of the individual signing the report shall be designated. This report will
be dated and subscribed by the person as true, under penalty of perjury.
At the time of filing its annual report, each such foreign corporation shall
pay to the secretary of state an annual franchise tax in an amount equal
to $1 $2 for each $1,000 of the corporation's shareholder's equity attrib-
utable to Kansas, except that no such tax shall be less than $20 $40 or
more than $2,500 $5,000. The amount of any such franchise tax paid by
the foreign corporation to the secretary as provided by this subsection
shall not be disclosed by the secretary.

      Sec.  44. On and after July 1, 2002, K.S.A. 2001 Supp. 17-76,139 is
hereby amended to read as follows: 17-76,139. (a) Every limited liability
company organized under the laws of this state shall make an annual
report in writing to the secretary of state, stating the prescribed infor-
mation concerning the limited liability company at the close of business
on the last day of its tax period next preceding the date of filing. If the
limited liability company's tax period is other than the calendar year, it
shall give notice of its different tax period in writing to the secretary of
state prior to December 31 of the year it commences the different tax
period. The annual report shall be filed at the time prescribed by law for
filing the limited liability company's annual Kansas income tax return. If
the limited liability company applies for an extension of time for filing its
annual income tax return under the internal revenue code, the limited
liability company shall also apply, not more than 90 days after the due
date of its annual report, to the secretary of state for an extension of the
time for filing its report and an extension shall be granted for a period of
time corresponding to that granted under the internal revenue code. The
application shall include a copy of the application to income tax authori-
ties. The annual report shall be made on a form prescribed by the sec-
retary of state. The report shall contain the following information:

      (1) The name of the limited liability company; and

      (2) a list of the members owning at least 5% of the capital of the
company, with the post office address of each.

      (b) Every foreign limited liability company shall make an annual re-
port in writing to the secretary of state, stating the prescribed information
concerning the limited liability company at the close of business on the
last day of its tax period next preceding the date of filing. If the limited
liability company's tax period is other than the calendar year, it shall give
notice in writing of its different tax period to the secretary of state prior
to December 31 of the year it commences the different tax period. The
annual report shall be filed at the time prescribed by law for filing the
limited liability company's annual Kansas income tax return. If the limited
liability company applies for an extension of time for filing its annual
income tax return under the internal revenue code, the limited liability
company also shall apply, not more than 90 days after the due date of its
annual report, to the secretary of state for an extension of the time for
filing its report and an extension shall be granted for a period of time
corresponding to that granted under the internal revenue code. The ap-
plication shall include a copy of the application to income tax authorities.
The annual report shall be made on a form prescribed by the secretary
of state. The report shall contain the name of the limited liability com-
pany.

      (c) The annual report required by this section shall be signed by a
member of the limited liability company and forwarded to the secretary
of state. At the time of filing the report, the limited liability company shall
pay to the secretary of state an annual franchise tax in an amount equal
to $1 $2 for each $1,000 of the net capital accounts located in or used in
this state at the end of the preceding taxable year as required to be re-
ported on the federal partnership return of income, or for a one-member
LLC taxed as a sole proprietorship, $1 $2 for each $1,000 of net book
value of the LLC as calculated on an income tax basis located in or used
in this state at the end of the preceding taxable year, except that no annual
tax shall be less than $20 $40 or more than $2,500 $5,000. The amount
of any such franchise tax paid by the limited liability company to the
secretary as provided by this subsection shall not be disclosed by the
secretary.

      (d) The provisions of K.S.A. 17-7509, and amendments thereto, re-
lating to penalties for failure of a corporation to file an annual report or
pay the required franchise tax, and the provisions of subsection (a) of
K.S.A. 17-7510 and amendments thereto, relating to penalties for failure
of a corporation to file an annual report or pay the required franchise tax,
shall be applicable to the articles of organization of any domestic limited
liability company or to the authority of any foreign limited liability com-
pany which fails to file its annual report or pay the franchise tax within
90 days of the time prescribed in this section for filing and paying the
same. Whenever the articles of organization of a domestic limited liability
company or the authority of any foreign limited liability company are
forfeited for failure to file an annual report or to pay the required fran-
chise tax, the domestic limited liability company or the authority of a
foreign limited liability company may be reinstated by filing a certificate
of reinstatement, in the manner and form to be prescribed by the sec-
retary of state and paying to the secretary of state all fees and taxes,
including any penalties thereon, due to the state. The fee for filing a
certificate of reinstatement shall be the same as that prescribed by K.S.A.
17-7506, and amendments thereto, for filing a certificate of extension,
restoration, renewal or revival of a corporation's articles of incorporation.

      (e) When reinstatement is effective, it relates back to and takes effect
as of the effective date of the forfeiture and the company may resume its
business as if the forfeiture had never occurred.

      (f) No limited liability company shall be required to file its first annual
report under this act, or pay any annual franchise tax required to accom-
pany such report, unless such limited liability company has filed its articles
of organization or application for authority at least six months prior to the
last day of its tax period. If any limited liability company files with the
secretary of state a notice of change in its tax period and the next annual
report filed by such limited liability company subsequent to such notice
is based on a tax period of less than 12 months, the annual tax liability
shall be determined by multiplying the annual franchise tax liability for
such year by a fraction, the numerator of which is the number of months
or any portion thereof covered by the annual report and the denominator
of which is 12, except that the tax shall not be less than $20 $40.

      Sec.  45. On and after July 1, 2002, K.S.A. 17-7507 is hereby
amended to read as follows: 17-7507. No corporation shall be required
to file its first annual report under this act, or pay any annual franchise
tax required to accompany such report, unless such corporation has filed
its articles of incorporation or certificate of good standing at least six
months prior to the last day of its tax period. If any corporation shall file
with the secretary of state a notice of change in its tax period, and the
next annual report filed by such corporation subsequent to such notice is
based on a tax period of less than 12 months. The annual tax liability shall
be determined by multiplying the annual franchise tax liability for such
year by a fraction the numerator of which is the number of months, or
any portion thereof, covered by the annual report and the denominator
of which is 12. Notwithstanding the foregoing, the minimum annual fran-
chise tax shall be $20. This section shall be applicable to all annual reports
filed by corporations with tax periods ending after November 30, 1987
$40.

      Sec.  46. On and after July 1, 2002, K.S.A. 2001 Supp. 56-1a606 is
hereby amended to read as follows: 56-1a606. (a) Every limited partner-
ship organized under the laws of this state shall make an annual report
in writing to the secretary of state, stating the prescribed information
concerning the limited partnership at the close of business on the last day
of its tax period next preceding the date of filing. If the limited partner-
ship's tax period is other than the calendar year, it shall give notice of its
different tax period to the secretary of state prior to December 31 of the
year it commences the different tax period. The annual report shall be
filed at the time prescribed by law for filing the limited partnership's
annual Kansas income tax return. If the limited partnership applies for
an extension of time for filing its annual income tax return under the
internal revenue code or under K.S.A. 79-3221 and amendments thereto,
the limited partnership shall also apply, not more than 90 days after the
due date of its annual report, to the secretary of state for an extension of
the time for filing its report and an extension shall be granted for a period
of time corresponding to that granted under the internal revenue code
or K.S.A. 79-3221 and amendments thereto. The application shall include
a copy of the application to income tax authorities.

      (b) The annual report shall be made on a form prescribed by the
secretary of state. The report shall contain the following information:

      (1) The name of the limited partnership; and

      (2) a list of the partners owning at least 5% of the capital of the
partnership, with the post office address of each.

      (c) Every limited partnership subject to the provisions of this section
which is a limited corporate partnership, as defined in K.S.A. 17-5903
and amendments thereto, and which holds agricultural land, as defined
in K.S.A. 17-5903 and amendments thereto, within this state shall show
the following additional information on the report:

      (1) The number of acres and location, listed by section, range, town-
ship and county of each lot, tract or parcel of agricultural land in this state
owned or leased by the limited partnership; and

      (2) whether any of the agricultural land held and reported under sub-
section (c)(1) was acquired after July 1, 1981.

      (d) The annual report shall be signed by the general partner or part-
ners of the limited partnership, sworn to before an officer duly authorized
to administer oaths and forwarded to the secretary of state. At the time
of filing the report, the limited partnership shall pay to the secretary of
state an annual franchise tax in an amount equal to $1 $2 for each $1,000
of the partners' net capital accounts located in or used in this state at the
end of the preceding taxable year as required to be reported on the fed-
eral partnership return of income, except that no annual tax shall be less
than $20 $40 or more than $2,500 $5,000. The amount of any such fran-
chise tax paid by the limited partnership to the secretary as provided by
this subsection shall not be disclosed by the secretary.

      (e) The provisions of K.S.A. 17-7509 and amendments thereto, re-
lating to penalties for failure of a corporation to file an annual report or
pay the required franchise tax, and the provisions of subsection (a) of
K.S.A. 17-7510 and amendments thereto, relating to forfeiture of a do-
mestic corporation's articles of incorporation for failure to file an annual
report or pay the required franchise tax, shall be applicable to the certif-
icate of partnership of any limited partnership which fails to file its annual
report or pay the franchise tax within 90 days of the time prescribed in
this section for filing and paying the same. Whenever the certificate of
partnership of a limited partnership is forfeited for failure to file an annual
report or to pay the required franchise tax, the limited partnership may
be reinstated by filing a certificate of reinstatement, in the manner and
form to be prescribed by the secretary of state and paying to the secretary
of state all fees and taxes, including any penalties thereon, due to the
state. The fee for filing a certificate of reinstatement shall be the same as
that prescribed by K.S.A. 17-7506 and amendments thereto for filing a
certificate of extension, restoration, renewal or revival of a corporation's
articles of incorporation.

      Sec.  47. On and after July 1, 2002, K.S.A. 2001 Supp. 56-1a607 is
hereby amended to read as follows: 56-1a607. (a) Every foreign limited
partnership shall make an annual report in writing to the secretary of
state, stating the prescribed information concerning the limited partner-
ship at the close of business on the last day of its tax period next preceding
the date of filing. If the limited partnership's tax period is other than the
calendar year, it shall give notice of its different tax period to the secretary
of state prior to December 31 of the year it commences the different tax
period. The annual report shall be filed at the time prescribed by law for
filing the limited partnership's annual Kansas income tax return. If the
limited partnership applies for an extension of time for filing its annual
income tax return under the internal revenue code or under K.S.A. 79-
3221 and amendments thereto, the limited partnership shall also apply,
not more than 90 days after the due date of its annual report, to the
secretary of state for an extension of the time for filing its report and an
extension shall be granted for a period of time corresponding to that
granted under the internal revenue code or K.S.A. 79-3221 and amend-
ments thereto. The application shall include a copy of the application to
income tax authorities.

      (b) The annual report shall be made on a form prescribed by the
secretary of state. The report shall contain the name of the limited part-
nership.

      (c) Every foreign limited partnership subject to the provisions of this
section which is a limited corporate partnership, as defined in K.S.A. 17-
5903 and amendments thereto, and which holds agricultural land, as de-
fined in K.S.A. 17-5903 and amendments thereto, within this state shall
show the following additional information on the report:

      (1) The number of acres and location, listed by section, range, town-
ship and county of agricultural land in this state owned or leased by the
limited partnership; and

      (2) whether any of the agricultural land held and reported under sub-
section (c)(1) was acquired after July 1, 1981.

      (d) The annual report shall be signed by the general partner or part-
ners of the limited partnership, sworn to before an officer duly authorized
to administer oaths and forwarded to the secretary of state. At the time
of filing the report, the foreign limited partnership shall pay to the sec-
retary of state an annual franchise tax in an amount equal to $1 $2 for
each $1,000 of the partners' net capital accounts located in or used in this
state at the end of the preceding taxable year as required to be reported
on the federal partnership return of income, except that no annual tax
shall be less than $20 $40 or more than $2,500 $5,000. The amount of
any such franchise tax paid by the limited partnership to the secretary as
provided by this subsection shall not be disclosed by the secretary.

      (e) The provisions of K.S.A. 17-7509 and amendments thereto, re-
lating to penalties for failure of a corporation to file an annual report or
pay the required franchise tax, and the provisions of subsection (b) of
K.S.A. 17-7510 and amendments thereto, relating to forfeiture of a for-
eign corporation's authority to do business in this state for failure to file
an annual report or pay the required franchise tax, shall be applicable to
the authority of any foreign limited partnership which fails to file its an-
nual report or pay the franchise tax within 90 days of the time prescribed
in this section for filing and paying the same. Whenever the authority of
a foreign limited partnership to do business in this state is forfeited for
failure to file an annual report or to pay the required franchise tax, the
foreign limited partnership's authority to do business in this state may be
reinstated by filing a certificate of reinstatement, in the manner and form
to be prescribed by the secretary of state and paying to the secretary of
state all fees and taxes, including any penalties thereon, due to the state.
The fee for filing a certificate of reinstatement shall be the same as that
prescribed by K.S.A. 17-7506 and amendments thereto for filing a cer-
tificate of extension, restoration, renewal or revival of a corporation's ar-
ticles of incorporation.

      Sec.  48. On and after July 1, 2002, K.S.A. 2001 Supp. 56a-1201 is
hereby amended to read as follows: 56a-1201. (a) Every limited liability
partnership organized under the laws of this state shall make an annual
report in writing to the secretary of state, stating the prescribed infor-
mation concerning the limited liability partnership at the close of business
on the last day of its tax period next preceding the date of filing. If the
limited liability partnership's tax period is other than the calendar year,
it shall give notice of its different tax period in writing to the secretary of
state prior to December 31 of the year it commences the different tax
period. The annual report shall be filed at the time prescribed by law for
filing the limited liability partnership's annual Kansas income tax return.
If the limited liability partnership applies for an extension of time for
filing its annual income tax return under the internal revenue code, the
limited liability partnership shall also apply, not more than 90 days after
the due date of its annual report, to the secretary of state for an extension
of the time for filing its report and an extension shall be granted for a
period of time corresponding to that granted under the internal revenue
code. The application shall include a copy of the application to income
tax authorities.

      (b) The annual report shall be made on a form prescribed by the
secretary of state. The report shall contain the following information:

      (1) The name of the limited liability partnership; and

      (2) a list of the partners owning at least 5% of the capital of the
partnership, with the post office address of each.

      (c) The annual report shall be signed by a partner of the limited
liability partnership and forwarded to the secretary of state. At the time
of filing the report, the limited liability partnership shall pay to the sec-
retary of state an annual franchise tax in an amount equal to $1 $2 for
each $1,000 of the net capital accounts located in or used in this state at
the end of the preceding taxable year as required to be reported on the
federal partnership return of income, except that no annual tax shall be
less than $20 $40 or more than $2,500 $5,000. The amount of any such
franchise tax paid by the limited liability partnership to the secretary as
provided by this subsection shall not be disclosed by the secretary.

      (d) The provisions of K.S.A. 17-7509, and amendments thereto, re-
lating to penalties for failure of a corporation to file an annual report or
pay the required franchise tax, and the provisions of subsection (a) of
K.S.A. 17-7510 and amendments thereto, relating to penalties for failure
of a corporation to file an annual report or pay the required franchise tax,
shall be applicable to the statement of qualification of any limited liability
partnership which fails to file its annual report or pay the franchise tax
within 90 days of the time prescribed in this section for filing and paying
the same. Whenever the statement of qualification of a limited liability
partnership is forfeited for failure to file an annual report or to pay the
required franchise tax, the limited liability partnership may be reinstated
by filing a certificate of reinstatement, in the manner and form to be
prescribed by the secretary of state and paying to the secretary of state
all fees and taxes, including any penalties thereon, due to the state. The
fee for filing a certificate of reinstatement shall be the same as that pre-
scribed by K.S.A. 17-7506, and amendments thereto, for filing a certifi-
cate of extension, restoration, renewal or revival of a corporation's articles
of incorporation.

      Sec.  49. On and after July 1, 2002, K.S.A. 2001 Supp. 56a-1202 is
hereby amended to read as follows: 56a-1202. (a) Every foreign limited
liability partnership shall make an annual report in writing to the secretary
of state, stating the prescribed information concerning the foreign limited
liability partnership at the close of business on the last day of its tax period
next preceding the date of filing. If the foreign limited liability partner-
ship's tax period is other than the calendar year, it shall give notice in
writing of its different tax period to the secretary of state prior to Decem-
ber 31 of the year it commences the different tax period. The annual
report shall be filed at the time prescribed by law for filing the foreign
limited liability partnership's annual Kansas income tax return. If the for-
eign limited liability partnership applies for an extension of time for filing
its annual income tax return under the internal revenue code, the foreign
limited liability partnership shall also apply, not more than 90 days after
the due date of its annual report, to the secretary of state for an extension
of the time for filing its report and an extension shall be granted for a
period of time corresponding to that granted under the internal revenue
code. The application shall include a copy of the application to income
tax authorities.

      (b) The annual report shall be made on a form prescribed by the
secretary of state. The report shall contain the name of the foreign limited
liability partnership.

      (c) The annual report shall be signed by a partner of the foreign
limited liability partnership and forwarded to the secretary of state. At
the time of filing the report, the foreign limited liability partnership shall
pay to the secretary of state an annual franchise tax in an amount equal
to $1 $2 for each $1,000 of the net capital accounts located in or used in
this state at the end of the preceding taxable year as required to be re-
ported on the federal partnership return of income, except that no annual
tax shall be less than $20 $40 or more than $2,500 $5,000. The amount
of any such franchise tax paid by the foreign limited liability partnership
to the secretary as provided by this subsection shall not be disclosed by
the secretary.

      (d) The provisions of K.S.A. 17-7509, and amendments thereto, re-
lating to penalties for failure of a corporation to file an annual report or
pay the required franchise tax, and the provisions of subsection (a) of
K.S.A. 17-7510, and amendments thereto, relating to penalties for failure
of a corporation to file an annual report or pay the required franchise tax,
shall be applicable to the statement of foreign qualification of any foreign
limited liability partnership which fails to file its annual report or pay the
franchise tax within 90 days of the time prescribed in this section for filing
and paying the same. Whenever the statement of foreign qualification of
a foreign limited liability partnership is forfeited for failure to file an
annual report or to pay the required franchise tax, the statement of foreign
qualification of the foreign limited liability partnership may be reinstated
by filing a certificate of reinstatement, in the manner and form to be
prescribed by the secretary of state and paying to the secretary of state
all fees and taxes, including any penalties thereon, due to the state. The
fee for filing a certificate of reinstatement shall be the same as that pre-
scribed by K.S.A. 17-7506, and amendments thereto, for filing a certifi-
cate of extension, restoration, renewal or revival of a corporation's articles
of incorporation.

      Sec.  50. On and after July 1, 2002, K.S.A. 2001 Supp. 56a-1203 is
hereby amended to read as follows: 56a-1203. No limited liability part-
nership or foreign limited liability partnership shall be required to file its
first annual report under this act, or pay any annual franchise tax required
to accompany such report, unless such partnership has filed its statement
of qualification or foreign qualification at least six months prior to the last
day of its tax period. If any such partnership files with the secretary of
state a notice of change in its tax period and the next annual report filed
by such partnership subsequent to such notice is based on a tax period
of less than 12 months, the annual tax liability shall be determined by
multiplying the annual franchise tax liability for such year by a fraction,
the numerator of which is the number of months or any portion thereof
covered by the annual report and the denominator of which is 12, except
that the tax shall not be less than $20 $40.

      Sec.  51. On and after July 1, 2002, K.S.A. 17-4634, 17-7507, 79-3310
and 79-3312 and K.S.A. 2001 Supp. 17-2036, 17-7503, 17-7504, 17-7505,
17-76,139, 56-1a606, 56-1a607, 56a-1201, 56a-1202, 56a-1203, 79-3311,
79-3603, 79-3603, as amended by section 1 of 2002 Senate Bill No. 372,
79-3620, 79-3635, 79-3703 and 79-3710 are hereby repealed.

      Sec.  52. K.S.A. 12-187, 12-189, 12-189e, 79-2401a, 79-2803a, 79-
3226, 79-3271 and 79-3279 and K.S.A. 2001 Supp. 79-201w, 79-1476, 79-
3295, 79-32,100a, 79-32,205, 79-32,206 and 79-32,211 are hereby re-
pealed.

      Sec.  53. This act shall take effect and be in force from and after its
publication in the Kansas register.

Approved May 30, 2002.
 Published in the Kansas Register June 6, 2002.
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