CHAPTER 147
HOUSE BILL No. 2005
An Act concerning taxation; amending K.S.A. 12-188, 12-189a,
12-191, 12-192, 12-198, 72-
6431, 74-2433, 75-5151, 79-3607, 79-3608 and 79-3651 and K.S.A.
2002 Supp. 12-187,
12-189, 79-201x, 79-15,101, 79-15,102, 79-15,103, 79-15,109
79-3295, 79-3298, 79-3299,
79-32,100, 79-32,100a, 79-32,100b, 79-32,100c, 79-32,206, 79-3602,
79-3603, 79-3606
and 79-3650 and repealing the existing sections; also repealing
K.S.A. 12-191a, 79-
15,106, 79-15,107, 79-15,108, 79-15,114, 79-15,115 and
79-15,127.
Be it enacted by the Legislature of the State of Kansas:
Section 1. On and after July 1,
2003, K.S.A. 12-191 is hereby
amended to read as follows: 12-191. All retail transactions
consummated
within a county or city having a retail sales tax, which
transactions are
subject to the Kansas retailers' sales tax, shall also be subject
to such
county or city retail sales tax. Except as hereinafter provided,
all retail
sales, for the purpose of this act, shall be considered to have
been con-
summated at the place of business of the retailer
location determined by
the sourcing rules as provided in section 16, and amendments
thereto.
The retail sales or transfer of watercraft, modular homes,
manufactured
homes or mobile homes, shall be considered consummated at the
place of
business of the retailer and sourced to such location. The
retail sale, ex-
cluding the lease or rental, of motor vehicles, trailers,
semi-trailers or
aircraft that do not qualify as transportation equipment, as
defined in
subsection (d) of section 16, and amendments thereto, shall be
considered
consummated at the place of business of the retailer and sourced
to such
location. The isolated or occasional sale of any motor vehicle
or trailer
shall be considered consummated at the taxing jurisdiction where
the sale
is made. If the sale negotiations occurred in different cities
or counties,
the situs of the sale for local sales tax purposes shall be the
place where
the motor vehicle or trailer was kept at the time negotiations
were first
entered into. In the event the place of business of a
retailer is doubtful
the place or places at which the retail sales are consummated for
the
purposes of this act shall be determined under rules and
regulations
adopted by the secretary of revenue which rules and regulations
shall be
considered with state and federal law insofar as applicable.
Retail sales
involving the use, consumption, or furnishing of gas,
water, electricity and
heat, for the purposes of this act, shall be considered to
have been con-
summated at the situs of the user or recipient thereof, and
retail sales
involving the use or furnishing of telephone service or
services taxed un-
der subsection (k) of K.S.A. 79-3603, and amendments
thereto, shall be
considered to have been consummated at the situs of the
subscriber billed
therefor. Retail sales involving the leasing of
telecommunication or data
processing equipment commonly used in connection with
telephone serv-
ices shall be considered to have been consummated at the
situs of the
lessee. Retail sales involving the furnishing of services
taxable under sub-
sections (p), (q) and (r) of K.S.A. 79-3603, and amendments
thereto,
pursuant to a contract under which the sale of such
services and the
furnishing of tangible personal property exceeds $10,000
per contract per
contractor shall be considered to have been consummated at
the situs
where such services are performed. The director of
taxation is hereby
authorized to request and receive from any retailer or from any
city or
county levying the tax such information as may be reasonably
necessary
to determine the liability of retailers for any county or city
sales tax. The
collection of any sales tax of a county or city approved at any
election
shall commence on the first day of the calendar quarter next
following
the 90th day after the date that the city or county has provided
written
notice to the director of taxation of the election authorizing the
levy of
such tax. The collection of any such sales tax applicable to
printed catalog
purchases wherein the purchaser computed the tax based upon
local tax
rates published in the catalog, shall not commence until the
first day of
the calendar quarter next following the 150th day after the date
that the
city or county has provided written notice to the director of
taxation of
the election authorizing the levy of such tax. The director of
taxation shall
provide notice to sellers of such taxes within 30 days after
receiving such
notice from the city or county.
A city retailers' sales tax shall not become
effective within any area
annexed by a city levying such tax until the first day of the
calendar quarter
next following the 90th day after the date that the governing body
of such
city provided the state department of revenue with a certified copy
of the
annexation ordinance and a map of the city detailing the annexed
area.
The director of taxation shall provide notice to sellers of such
tax within
30 days after receiving such notice from the city or
county.
Whenever any sales tax, imposed by any city or
county under the
provisions of this act, shall become effective, at any time prior
to the time
that revenue derived therefrom may be budgeted for expenditure in
such
year, such revenue shall be credited to the funds of the taxing
subdivision
or subdivisions and shall be carried forward to the credit of such
funds
for the ensuing budget year in the manner provided for carrying
forward
balances remaining in such funds at the end of a budget year.
Sec. 2. On and after July 1, 2003,
K.S.A. 12-192 is hereby amended
to read as follows: 12-192. (a) Except as otherwise provided by
subsection
(b), (d) or (h), all revenue received by the director of taxation
from a
countywide retailers' sales tax shall be apportioned among the
county and
each city located in such county in the following manner: (1)
One-half of
all revenue received by the director of taxation shall be
apportioned
among the county and each city located in such county in the
proportion
that the total tangible property tax levies made in such county in
the
preceding year for all funds of each such governmental unit bear to
the
total of all such levies made in the preceding year, and (2) 1/2 of
all revenue
received by the director of taxation from such countywide
retailers' sales
tax shall be apportioned among the county and each city located in
such
county, first to the county that portion of the revenue equal to
the pro-
portion that the population of the county residing in the
unincorporated
area of the county bears to the total population of the county, and
second
to the cities in the proportion that the population of each city
bears to
the total population of the county, except that no persons residing
within
the Fort Riley military reservation shall be included in the
determination
of the population of any city located within Riley county. All
revenue
apportioned to a county shall be paid to its county treasurer and
shall be
credited to the general fund of the county.
(b) (1) As an alternative and in
lieu of the apportionment formula
provided in subsection (a), all revenue received by the director of
taxation
from a countywide retailers' sales tax imposed within Johnson
county at
the rate of .75% or 1% after the effective date of this act may be
appor-
tioned among the county and each city located in such county in
the
following manner: (A) The revenue received from the first .5% rate
of
tax shall be apportioned in the manner prescribed by subsection (a)
and
(B) the revenue received from the rate of tax exceeding .5% shall
be
apportioned as follows: (i) One-fourth shall be apportioned among
the
county and each city located in such county in the proportion that
the
total tangible property tax levies made in such county in the
preceding
year for all funds of each such governmental unit bear to the total
of all
such levies made in the preceding year and (ii) one-fourth shall be
ap-
portioned among the county and each city located in such county,
first to
the county that portion of the revenue equal to the proportion that
the
population of the county residing in the unincorporated area of the
county
bears to the total population of the county, and second to the
cities in the
proportion that the population of each city bears to the total
population
of the county and (iii) one-half shall be retained by the county
for its sole
use and benefit.
(2) In lieu of the apportionment formula
provided in subsection (a),
all money received by the director of taxation from a countywide
sales tax
imposed within Montgomery county pursuant to the election held
on
November 8, 1994, shall be remitted to and shall be retained by
the
county and expended only for the purpose for which the revenue
received
from the tax was pledged. All revenue apportioned and paid from
the
imposition of such tax to the treasurer of any city prior to the
effective
date of this act shall be remitted to the county treasurer and
expended
only for the purpose for which the revenue received from the tax
was
pledged.
(c) (1) Except as otherwise
provided by paragraph (2) of this sub-
section, for purposes of subsections (a) and (b), the term ``total
tangible
property tax levies'' means the aggregate dollar amount of tax
revenue
derived from ad valorem tax levies applicable to all tangible
property
located within each such city or county. The ad valorem property
tax levy
of any county or city district entity or subdivision shall be
included within
this term if the levy of any such district entity or subdivision is
applicable
to all tangible property located within each such city or
county.
(2) For the purposes of subsections (a)
and (b), any ad valorem prop-
erty tax levied on property located in a city in Johnson county for
the
purpose of providing fire protection service in such city shall be
included
within the term ``total tangible property tax levies'' for such
city regardless
of its applicability to all tangible property located within each
such city.
If the tax is levied by a district which extends across city
boundaries, for
purposes of this computation, the amount of such levy shall be
appor-
tioned among each city in which such district extends in the
proportion
that such tax levied within each city bears to the total tax levied
by the
district.
(d) (1) All revenue received from a
countywide retailers' sales tax
imposed pursuant to paragraphs (2), (6), (7), (8)
or, (9) or (12) of sub-
section (b) of K.S.A. 12-187, and amendments thereto, shall be
remitted
to and shall be retained by the county and expended only for the
purpose
for which the revenue received from the tax was pledged.
(2) Except as otherwise provided in
paragraph (5) of subsection (b)
of K.S.A. 12-187, and amendments thereto, all revenues received
from a
countywide retailers' sales tax imposed pursuant to paragraph (5)
of sub-
section (b) of K.S.A. 12-187, and amendments thereto, shall be
remitted
to and shall be retained by the county and expended only for the
purpose
for which the revenue received from the tax was pledged.
(e) All revenue apportioned to the
several cities of the county shall
be paid to the respective treasurers thereof and deposited in the
general
fund of the city. Whenever the territory of any city is located in
two or
more counties and any one or more of such counties do not levy a
coun-
tywide retailers' sales tax, or whenever such counties do not levy
coun-
tywide retailers' sales taxes at a uniform rate, the revenue
received by
such city from the proceeds of the countywide retailers' sales tax,
as an
alternative to depositing the same in the general fund, may be used
for
the purpose of reducing the tax levies of such city upon the
taxable tan-
gible property located within the county levying such countywide
retail-
ers' sales tax.
(f) Prior to March 1 of each year, the
secretary of revenue shall advise
each county treasurer of the revenue collected in such county from
the
state retailers' sales tax for the preceding calendar year.
(g) Prior to December 31 of each year,
the clerk of every county
imposing a countywide retailers' sales tax shall provide such
information
deemed necessary by the secretary of revenue to apportion and
remit
revenue to the counties and cities pursuant to this section.
(h) The provisions of subsections (a) and
(b) for the apportionment
of countywide retailers' sales tax shall not apply to any revenues
received
pursuant to a county or countywide retailers' sales tax levied or
collected
under K.S.A. 2001 Supp. 74-8929, and amendments
thereto. All such
revenue collected under K.S.A. 2001 Supp. 74-8929,
and amendments
thereto, shall be deposited into the redevelopment bond fund
established
by K.S.A. 2001 Supp. 74-8927, and amendments
thereto, for the period
of time set forth in K.S.A. 2001 Supp. 74-8927,
and amendments thereto.
Sec. 3. On and after July 1, 2003,
K.S.A. 12-198 is hereby amended
to read as follows: 12-198. (a) A compensating use tax for the
privilege of
using or storing within a city or county any tangible personal
property or
any vehicle which is required to be registered under the
provisions of
article 1 of chapter 8 of the Kansas Statutes Annotated, and
amendments
thereto, or any vessel, as defined by K.S.A. 82a-802, and
amendments
thereto, is hereby imposed by every city, county or municipal
university
imposing a retailers' sales tax. The rate of any such tax shall be
fixed at
the same rate as such city's, county's or university's retailers'
sales tax.
Any city, county or municipal university imposing a compensating
use tax
is prohibited from administering or collecting such tax locally,
but shall
utilize the services of the state department of revenue to
administer,
enforce and collect such tax. Such tax shall be identical in its
application
and exemptions therefrom to the Kansas compensating tax, and all
laws
and rules and regulations of the state department of revenue
relating to
the Kansas compensating tax shall apply to such local compensating
use
tax insofar as the same may be made applicable.
(b) The secretary of revenue is
authorized to administer, enforce and
collect a city's, county's or municipal university's compensating
use tax
and to adopt such rules and regulations necessary for the efficient
and
effective administration, enforcement and collection thereof. The
state
director of taxation shall cause such taxes to be collected within
the
boundaries of such taxing subdivision at the same time and in the
same
manner provided for the collection of the state compensating use
tax. All
moneys collected by the director of taxation pursuant to the
provisions of
this section shall be credited to the city and county compensating
use tax
fund or to the municipal university compensating use tax fund,
which
funds are hereby established in the state treasury. Any refund due
on any
city's, county's municipal university's compensating use tax
collected pur-
suant to this section shall be paid out of the sales tax refund
fund and
reimbursement to such fund shall be made by the director of
taxation
from collections of local compensating use tax revenue. All moneys
col-
lected pursuant to this section for a city or county shall be
remitted at
least quarterly by the state treasurer to the treasurer of such
city, county
or university.
(c) All revenue received by any county
treasurer from a countywide
compensating use tax shall be apportioned among the county and
each
city located in such county in the same manner as provided in
K.S.A. 12-
192, and amendments thereto, for the apportionment of revenue
received
from a countywide retailers' sales tax.
Sec. 4. On and after July 1, 2003,
K.S.A. 75-5151 is hereby amended
to read as follows: 75-5151. The secretary of revenue may require,
con-
sistent with sound cash management policies, that any taxpayer
whose
total sales tax liability exceeds $100,000 in any calendar year,
any taxpayer
whose total withholding tax liability exceeds $100,000 in any
calendar
year, and any person owing any taxes or fees in connection with
any
return, report or document other than for sales tax or withholding
tax
liability, shall remit their tax liability by electronic funds
transfer no later
than the date required for such remittance except that the
secretary may
adopt rules and regulations prescribing alternative filing and
payment
dates not later than the last day of the month in which the tax was
oth-
erwise due. Electronic funds transfers may be made by wire
transfers of
funds through the federal reserve system or by any other means
estab-
lished by the secretary, with the approval of the state treasurer,
which
insures the availability of such funds to the state on the date of
payment.
Evidence of such payment shall be furnished to the secretary on or
before
the due date of the tax as established by law. Failure to timely
make such
payment in immediately available funds or failure to provide such
evi-
dence of payment in a timely manner shall subject the taxpayer to
penalty
and interest as provided by law for delinquent or deficient tax
payments.
All sales and use tax remittances from model 1, 2 and 3 sellers
must be
remitted electronically. Any data that accompanies a remittance
must be
formatted using uniform tax type and payment type codes approved
by
the secretary.
Sec. 5. On and after July 1, 2003,
K.S.A. 2002 Supp. 79-3602 is
hereby amended to read as follows: 79-3602. (a) ``Persons''
means any
individual, firm, copartnership, joint adventure,
association, corporation,
estate or trust, receiver or trustee, or any group or
combination acting as
a unit, and the plural as well as the singular number; and
shall specifically
mean any city or other political subdivision of the state
of Kansas engaging
in a business or providing a service specifically taxable
under the provi-
sions of this act.
(b) ``Director'' means the state
director of taxation.
(c) ``Sale'' or ``sales'' means
the exchange of tangible personal prop-
erty, as well as the sale thereof for money, and every
transaction, condi-
tional or otherwise, for a consideration, constituting a
sale, including the
sale or furnishing of electrical energy, gas, water,
services or entertain-
ment taxable under the terms of this act and including,
except as provided
in the following provision, the sale of the use of tangible
personal property
by way of a lease, license to use or the rental thereof
regardless of the
method by which the title, possession or right to use the
tangible personal
property is transferred. The term ``sale'' or ``sales''
shall not mean the sale
of the use of any tangible personal property used as a
dwelling by way of
a lease or rental thereof for a term of more than 28
consecutive days.
(d) ``Retailer'' means a person
regularly engaged in the business of
selling tangible personal property at retail or furnishing
electrical energy,
gas, water, services or entertainment, and selling only to
the user or con-
sumer and not for resale.
(e) ``Retail sale'' or ``sale at
retail'' means all sales made within the
state of tangible personal property or electrical energy,
gas, water, services
or entertainment for use or consumption and not for
resale.
(f) ``Tangible personal
property'' means corporeal personal property.
Such term shall include: (1) Any computer software program
which is not
a custom computer software program, as described by
subsection (s) of
K.S.A. 79-3603, and amendments thereto; and (2) any prepaid
telephone
calling card or prepaid authorization number, or recharge
of such card
or number, as described by subsection (b) of K.S.A.
79-3603, and amend-
ments thereto.
(g) ``selling price'' means the
total cost to the consumer exclusive of
discounts allowed and credited, but including freight and
transportation
charges from retailer to consumer.
(h) ``Gross receipts'' means the
total selling price or the amount re-
ceived as defined in this act, in money, credits, property
or other consid-
eration valued in money from sales at retail within this
state; and em-
braced within the provisions of this act. The taxpayer, may
take credit in
the report of gross receipts for: (1) An amount equal to
the selling price
of property returned by the purchaser when the full sale
price thereof,
including the tax collected, is refunded in cash or by
credit; and (2) an
amount equal to the allowance given for the trade-in of
property.
(i) ``Taxpayer'' means any person
obligated to account to the director
for taxes collected under the terms of this
act.
(j) ``Isolated or occasional
sale'' means the nonrecurring sale of tan-
gible personal property, or services taxable hereunder by a
person not
engaged at the time of such sale in the business of selling
such property
or services. Any religious organization which makes a
nonrecurring sale
of tangible personal property acquired for the purpose of
resale shall be
deemed to be not engaged at the time of such sale in the
business of
selling such property. Such term shall include: (1) Any
sale by a bank,
savings and loan institution, credit union or any finance
company licensed
under the provisions of the Kansas uniform consumer credit
code of tan-
gible personal property which has been repossessed by any
such entity;
and (2) any sale of tangible personal property made by an
auctioneer or
agent on behalf of not more than two principals or
households if such
sale is nonrecurring and any such principal or household is
not engaged
at the time of such sale in the business of selling
tangible personal prop-
erty.
(k) ``Service'' means those
services described in and taxed under the
provisions of K.S.A. 79-3603 and amendments
thereto.
(l) ``Ingredient or component
part'' means tangible personal property
which is necessary or essential to, and which is actually
used in and be-
comes an integral and material part of tangible personal
property or serv-
ices produced, manufactured or compounded for sale by the
producer,
manufacturer or compounder in its regular course of
business. The fol-
lowing items of tangible personal property are hereby
declared to be
ingredients or component parts, but the listing of such
property shall not
be deemed to be exclusive nor shall such listing be
construed to be a
restriction upon, or an indication of, the type or types of
property to be
included within the definition of ``ingredient or component
part'' as
herein set forth:
(1) Containers, labels and
shipping cases used in the distribution of
property produced, manufactured or compounded for sale
which are not
to be returned to the producer, manufacturer or compounder
for reuse.
(2) Containers, labels, shipping
cases, paper bags, drinking straws,
paper plates, paper cups, twine and wrapping paper used in
the distri-
bution and sale of property taxable under the provisions of
this act by
wholesalers and retailers and which is not to be returned
to such whole-
saler or retailer for reuse.
(3) Seeds and seedlings for the
production of plants and plant prod-
ucts produced for resale.
(4) Paper and ink used in the
publication of newspapers.
(5) Fertilizer used in the
production of plants and plant products
produced for resale.
(6) Feed for animals, fowl and
aquatic plants and animals, the primary
purpose of which is use in agriculture or aquaculture, as
defined in K.S.A.
47-1901, and amendments thereto, the production of food for
human
consumption, the production of animal, dairy, poultry or
aquatic plant
and animal products, fiber, fur, or the production of
offspring for use for
any such purpose or purposes.
(m) ``Property which is
consumed'' means tangible personal property
which is essential or necessary to and which is used in the
actual process
of and consumed, depleted or dissipated within one year in
(1) the pro-
duction, manufacture, processing, mining, drilling,
refining or compound-
ing of tangible personal property, (2) the providing of
services, (3) the
irrigation of crops, for sale in the regular course of
business, or (4) the
storage or processing of grain by a public grain warehouse
or other grain
storage facility, and which is not reusable for such
purpose. The following
is a listing of tangible personal property, included by way
of illustration
but not of limitation, which qualifies as property which is
consumed:
(A) Insecticides, herbicides,
germicides, pesticides, fungicides, fu-
migants, antibiotics, biologicals, pharmaceuticals,
vitamins and chemicals
for use in commercial or agricultural production,
processing or storage of
fruit, vegetables, feeds, seeds, grains, animals or animal
products whether
fed, injected, applied, combined with or otherwise
used;
(B) electricity, gas and water;
and
(C) petroleum products,
lubricants, chemicals, solvents, reagents and
catalysts.
(n) ``Political subdivision''
means any municipality, agency or subdi-
vision of the state which is, or shall hereafter be,
authorized to levy taxes
upon tangible property within the state or which certifies
a levy to a
municipality, agency or subdivision of the state which is,
or shall hereafter
be, authorized to levy taxes upon tangible property within
the state. Such
term also shall include any public building commission,
housing, airport,
port, metropolitan transit or similar authority established
pursuant to law.
(o) ``Municipal corporation''
means any city incorporated under the
laws of Kansas.
(p) ``Quasi-municipal
corporation'' means any county, township,
school district, drainage district or any other
governmental subdivision in
the state of Kansas having authority to receive or hold
moneys or funds.
(q) ``Nonprofit blood bank''
means any nonprofit place, organization,
institution or establishment that is operated wholly or in
part for the
purpose of obtaining, storing, processing, preparing for
transfusing, fur-
nishing, donating or distributing human blood or parts or
fractions of
single blood units or products derived from single blood
units, whether
or not any remuneration is paid therefor, or whether such
procedures are
done for direct therapeutic use or for storage for future
use of such prod-
ucts.
(r) ``Educational institution''
means any nonprofit school, college and
university that offers education at a level above the
twelfth grade, and
conducts regular classes and courses of study required for
accreditation
by, or membership in, the North Central Association of
Colleges and
Schools, the state board of education, or that otherwise
qualify as an
``educational institution,'' as defined by K.S.A.
74-50,103, and amend-
ments thereto. Such phrase shall include: (1) A group of
educational in-
stitutions that operates exclusively for an educational
purpose; (2) non-
profit endowment associations and foundations organized and
operated
exclusively to receive, hold, invest and administer moneys
and property
as a permanent fund for the support and sole benefit of an
educational
institution; (3) nonprofit trusts, foundations and other
entities organized
and operated principally to hold and own receipts from
intercollegiate
sporting events and to disburse such receipts, as well as
grants and gifts,
in the interest of collegiate and intercollegiate athletic
programs for the
support and sole benefit of an educational institution; and
(4) nonprofit
trusts, foundations and other entities organized and
operated for the pri-
mary purpose of encouraging, fostering and conducting
scholarly inves-
tigations and industrial and other types of research for
the support and
sole benefit of an educational institution.
Except as otherwise provided, as used in
the Kansas retailers' sales tax
act:
(a) ``Agent'' means a person appointed
by a seller to represent the
seller before the member states.
(b) ``Agreement'' means the multistate
agreement entitled the stream-
lined sales and use tax agreement approved by the streamlined
sales tax
implementing states at Chicago, Illinois on November 12,
2002.
(c) ``Alcoholic beverages'' means
beverages that are suitable for hu-
man consumption and contain .05% or more of alcohol by
volume.
(d) ``Certified automated system
(CAS)'' means software certified un-
der the agreement to calculate the tax imposed by each
jurisdiction on a
transaction, determine the amount of tax to remit to the
appropriate state
and maintain a record of the transaction.
(e) ``Certified service provider
(CSP)'' means an agent certified under
the agreement to perform all the seller's sales and use tax
functions, other
than the seller's obligation to remit tax on its own
purchases.
(f) ``Computer'' means an electronic
device that accepts information
in digital or similar form and manipulates it for a result based
on a se-
quence of instructions.
(g) ``Computer software'' means a set
of coded instructions designed
to cause a computer or automatic data processing equipment to
perform
a task.
(h) ``Delivered electronically'' means
delivered to the purchaser by
means other than tangible storage media.
(i) ``Delivery charges'' means charges
by the seller of personal prop-
erty or services for preparation and delivery to a location
designated by
the purchaser of personal property or services including, but
not limited
to, transportation, shipping, postage, handling, crating and
packing.
(j) ``Direct mail'' means printed
material delivered or distributed by
United States mail or other delivery services to a mass audience
or to
addressees on a mailing list provided by the purchaser or at the
direction
of the purchaser when the cost of the items are not billed
directly to the
recipients. Direct mail includes tangible personal property
supplied di-
rectly or indirectly by the purchaser to the direct mail seller
for inclusion
in the package containing the printed material. Direct mail does
not in-
clude multiple items of printed material delivered to a single
address.
(k) ``Director'' means the state
director of taxation.
(l) ``Educational institution'' means
any nonprofit school, college and
university that offers education at a level above the twelfth
grade, and
conducts regular classes and courses of study required for
accreditation
by, or membership in, the North Central Association of Colleges
and
Schools, the state board of education, or that otherwise qualify
as an
``educational institution,'' as defined by K.S.A. 74-50,103, and
amend-
ments thereto. Such phrase shall include: (1) A group of
educational in-
stitutions that operates exclusively for an educational purpose;
(2) non-
profit endowment associations and foundations organized and
operated
exclusively to receive, hold, invest and administer moneys and
property
as a permanent fund for the support and sole benefit of an
educational
institution; (3) nonprofit trusts, foundations and other
entities organized
and operated principally to hold and own receipts from
intercollegiate
sporting events and to disburse such receipts, as well as grants
and gifts,
in the interest of collegiate and intercollegiate athletic
programs for the
support and sole benefit of an educational institution; and (4)
nonprofit
trusts, foundations and other entities organized and operated
for the pri-
mary purpose of encouraging, fostering and conducting scholarly
inves-
tigations and industrial and other types of research for the
support and
sole benefit of an educational institution.
(m) ``Electronic'' means relating to
technology having electrical, dig-
ital, magnetic, wireless, optical, electromagnetic or similar
capabilities.
(n) ``Food and food ingredients''
means substances, whether in liquid,
concentrated, solid, frozen, dried or dehydrated form, that are
sold for
ingestion or chewing by humans and are consumed for their taste
or
nutritional value. ``Food and food ingredients'' does not
include alcoholic
beverages or tobacco.
(o) ``Gross receipts'' means the total
selling price or the amount re-
ceived as defined in this act, in money, credits, property or
other consid-
eration valued in money from sales at retail within this state;
and em-
braced within the provisions of this act. The taxpayer, may take
credit in
the report of gross receipts for: (1) An amount equal to the
selling price
of property returned by the purchaser when the full sale price
thereof,
including the tax collected, is refunded in cash or by credit;
and (2) an
amount equal to the allowance given for the trade-in of
property.
(p) ``Ingredient or component part''
means tangible personal property
which is necessary or essential to, and which is actually used
in and
becomes an integral and material part of tangible personal
property or
services produced, manufactured or compounded for sale by the
producer,
manufacturer or compounder in its regular course of business.
The fol-
lowing items of tangible personal property are hereby declared
to be in-
gredients or component parts, but the listing of such property
shall not
be deemed to be exclusive nor shall such listing be construed to
be a
restriction upon, or an indication of, the type or types of
property to be
included within the definition of ``ingredient or component
part'' as herein
set forth:
(1) Containers, labels and shipping
cases used in the distribution of
property produced, manufactured or compounded for sale which are
not
to be returned to the producer, manufacturer or compounder for
reuse.
(2) Containers, labels, shipping
cases, paper bags, drinking straws,
paper plates, paper cups, twine and wrapping paper used in the
distri-
bution and sale of property taxable under the provisions of this
act by
wholesalers and retailers and which is not to be returned to
such whole-
saler or retailer for reuse.
(3) Seeds and seedlings for the
production of plants and plant prod-
ucts produced for resale.
(4) Paper and ink used in the
publication of newspapers.
(5) Fertilizer used in the production
of plants and plant products
produced for resale.
(6) Feed for animals, fowl and aquatic
plants and animals, the pri-
mary purpose of which is use in agriculture or aquaculture, as
defined in
K.S.A. 47-1901, and amendments thereto, the production of food
for hu-
man consumption, the production of animal, dairy, poultry or
aquatic
plant and animal products, fiber, fur, or the production of
offspring for
use for any such purpose or purposes.
(q) ``Isolated or occasional sale''
means the nonrecurring sale of tan-
gible personal property, or services taxable hereunder by a
person not
engaged at the time of such sale in the business of selling such
property
or services. Any religious organization which makes a
nonrecurring sale
of tangible personal property acquired for the purpose of resale
shall be
deemed to be not engaged at the time of such sale in the
business of selling
such property. Such term shall include: (1) Any sale by a bank,
savings
and loan institution, credit union or any finance company
licensed under
the provisions of the Kansas uniform consumer credit code of
tangible
personal property which has been repossessed by any such entity;
and (2)
any sale of tangible personal property made by an auctioneer or
agent on
behalf of not more than two principals or households if such
sale is non-
recurring and any such principal or household is not engaged at
the time
of such sale in the business of selling tangible personal
property.
(r) ``Lease or rental'' means any
transfer of possession or control of
tangible personal property for a fixed or indeterminate term for
consid-
eration. A lease or rental may include future options to
purchase or ex-
tend.
(1) Lease or rental does not include:
(A) A transfer of possession or
control of property under a security agreement or deferred
payment plan
that requires the transfer of title upon completion of the
required pay-
ments;
(B) a transfer or possession or
control of property under an agreement
that requires the transfer of title upon completion of required
payments
and payment of an option price does not exceed the greater of
$100 or
1% of the total required payments; or
(C) providing tangible personal
property along with an operator for
a fixed or indeterminate period of time. A condition of this
exclusion is
that the operator is necessary for the equipment to perform as
designed.
For the purpose of this subsection, an operator must do more
than main-
tain, inspect or set-up the tangible personal
property.
(2) Lease or rental does include
agreements covering motor vehicles
and trailers where the amount of consideration may be increased
or de-
creased by reference to the amount realized upon sale or
disposition of
the property as defined in 26 U.S.C. 7701(h)(1).
(3) This definition shall be used for
sales and use tax purposes re-
gardless if a transaction is characterized as a lease or rental
under gen-
erally accepted accounting principles, the internal revenue
code, the uni-
form commercial code, K.S.A. 84-101 et seq. and
amendments thereto, or
other provisions of federal, state or local law.
(4) This definition will be applied
only prospectively from the effective
date of this act and will have no retroactive impact on existing
leases or
rentals.
(s) ``Load and leave'' means delivery
to the purchaser by use of a
tangible storage media where the tangible storage media is not
physically
transferred to the purchaser.
(t) ``Member state'' means a state
that has entered in the agreement,
pursuant to provisions of article VIII of the
agreement.
(u) ``Model 1 seller'' means a seller
that has selected a CSP as its agent
to perform all the seller's sales and use tax functions, other
than the seller's
obligation to remit tax on its own purchases.
(v) ``Model 2 seller'' means a seller
that has selected a CAS to perform
part of its sales and use tax functions, but retains
responsibility for re-
mitting the tax.
(w) ``Model 3 seller'' means a seller
that has sales in at least five mem-
ber states, has total annual sales revenue of at least
$500,000,000, has a
proprietary system that calculates the amount of tax due each
jurisdiction
and has entered into a performance agreement with the member
states
that establishes a tax performance standard for the seller. As
used in this
subsection a seller includes an affiliated group of sellers
using the same
proprietary system.
(x) ``Municipal corporation'' means
any city incorporated under the
laws of Kansas.
(y) ``Nonprofit blood bank'' means any
nonprofit place, organization,
institution or establishment that is operated wholly or in part
for the
purpose of obtaining, storing, processing, preparing for
transfusing, fur-
nishing, donating or distributing human blood or parts or
fractions of
single blood units or products derived from single blood units,
whether
or not any remuneration is paid therefor, or whether such
procedures are
done for direct therapeutic use or for storage for future use of
such prod-
ucts.
(z) ``Persons'' means any individual,
firm, copartnership, joint adven-
ture, association, corporation, estate or trust, receiver or
trustee, or any
group or combination acting as a unit, and the plural as well as
the sin-
gular number; and shall specifically mean any city or other
political sub-
division of the state of Kansas engaging in a business or
providing a service
specifically taxable under the provisions of this
act.
(aa) ``Political subdivision'' means
any municipality, agency or sub-
division of the state which is, or shall hereafter be,
authorized to levy taxes
upon tangible property within the state or which certifies a
levy to a
municipality, agency or subdivision of the state which is, or
shall hereafter
be, authorized to levy taxes upon tangible property within the
state. Such
term also shall include any public building commission, housing,
airport,
port, metropolitan transit or similar authority established
pursuant to
law.
(bb) ``Prescription'' means an order,
formula or recipe issued in any
form of oral, written, electronic or other means of transmission
by a duly
licensed practitioner authorized by the laws of this
state.
(cc) ``Prewritten computer software''
means computer software, in-
cluding prewritten upgrades, which is not designed and developed
by the
author or other creator to the specifications of a specific
purchaser. The
combining of two or more prewritten computer software programs
or
prewritten portions thereof does not cause the combination to be
other
than prewritten computer software. Prewritten computer software
in-
cludes software designed and developed by the author or other
creator to
the specifications of a specific purchaser when it is sold to a
person other
than the purchaser. Where a person modifies or enhances computer
soft-
ware of which the person is not the author or creator, the
person shall be
deemed to be the author or creator only of such person's
modifications or
enhancements. Prewritten computer software or a prewritten
portion
thereof that is modified or enhanced to any degree, where such
modifi-
cation or enhancement is designed and developed to the
specifications of
a specific purchaser, remains prewritten computer software,
except that
where there is a reasonable, separately stated charge or an
invoice or
other statement of the price given to the purchaser for such
modification
or enhancement, such modification or enhancement shall not
constitute
prewritten computer software.
(dd) ``Property which is consumed''
means tangible personal property
which is essential or necessary to and which is used in the
actual process
of and consumed, depleted or dissipated within one year in (1)
the pro-
duction, manufacture, processing, mining, drilling, refining or
compound-
ing of tangible personal property, (2) the providing of
services, (3) the
irrigation of crops, for sale in the regular course of business,
or (4) the
storage or processing of grain by a public grain warehouse or
other grain
storage facility, and which is not reusable for such purpose.
The following
is a listing of tangible personal property, included by way of
illustration
but not of limitation, which qualifies as property which is
consumed:
(A) Insecticides, herbicides,
germicides, pesticides, fungicides, fumi-
gants, antibiotics, biologicals, pharmaceuticals, vitamins and
chemicals
for use in commercial or agricultural production, processing or
storage of
fruit, vegetables, feeds, seeds, grains, animals or animal
products whether
fed, injected, applied, combined with or otherwise
used;
(B) electricity, gas and water;
and
(C) petroleum products, lubricants,
chemicals, solvents, reagents and
catalysts.
(ee) ``Purchase price'' applies to the
measure subject to use tax and
has the same meaning as sales price.
(ff) ``Purchaser'' means a person to
whom a sale of personal property
is made or to whom a service is furnished.
(gg) ``Quasi-municipal corporation''
means any county, township,
school district, drainage district or any other governmental
subdivision
in the state of Kansas having authority to receive or hold
moneys or funds.
(hh) ``Registered under this
agreement'' means registration by a seller
with the member states under the central registration system
provided in
article IV of the agreement.
(ii) ``Retailer'' means a seller
regularly engaged in the business of sell-
ing, leasing or renting tangible personal property at retail or
furnishing
electrical energy, gas, water, services or entertainment, and
selling only
to the user or consumer and not for resale.
(jj) ``Retail sale'' or ``sale at
retail'' means any sale, lease or rental for
any purpose other than for resale, sublease or
subrent.
(kk) ``Sale'' or ``sales'' means the
exchange of tangible personal prop-
erty, as well as the sale thereof for money, and every
transaction, condi-
tional or otherwise, for a consideration, constituting a sale,
including the
sale or furnishing of electrical energy, gas, water, services or
entertain-
ment taxable under the terms of this act and including, except
as provided
in the following provision, the sale of the use of tangible
personal property
by way of a lease, license to use or the rental thereof
regardless of the
method by which the title, possession or right to use the
tangible personal
property is transferred. The term ``sale'' or ``sales'' shall
not mean the sale
of the use of any tangible personal property used as a dwelling
by way of
a lease or rental thereof for a term of more than 28 consecutive
days.
(11) (1) ``Sales or selling
price'' applies to the measure subject to sales
tax and means the total amount of consideration, including cash,
credit,
property and services, for which personal property or services
are sold,
leased or rented, valued in money, whether received in money or
other-
wise, without any deduction for the following:
(A) The seller's cost of the property
sold;
(B) the cost of materials used, labor
or service cost, interest, losses,
all costs of transportation to the seller, all taxes imposed on
the seller and
any other expense of the seller;
(C) charges by the seller for any
services necessary to complete the
sale, other than delivery and installation charges;
(D) delivery charges;
(E) installation charges;
and
(F) the value of exempt personal
property given to the purchaser
where taxable and exempt personal property have been bundled
together
and sold by the seller as a single product or piece of
merchandise.
(2) ``Sales or selling price'' shall
not include:
(A) Discounts, including cash, term or
coupons that are not reim-
bursed by a third party that are allowed by a seller and taken
by a pur-
chaser on a sale;
(B) interest, financing and carrying
charges from credit extended on
the sale of personal property or services, if the amount is
separately stated
on the invoice, bill of sale or similar document given to the
purchaser;
(C) any taxes legally imposed directly
on the consumer that are sep-
arately stated on the invoice, bill of sale or similar document
given to the
purchaser; and
(D) the amount equal to the allowance
given for the trade-in of prop-
erty, if separately stated on the invoice, billing or similar
document given
to the purchaser.
(mm) ``Seller'' means a person making
sales, leases or rentals of per-
sonal property or services.
(nn) ``Service'' means those services
described in and taxed under the
provisions of K.S.A. 79-3603 and amendments thereto.
(oo) ``Sourcing rules'' means the
rules set forth in sections 16 through
19, K.S.A. 12-191 and 12-191a, and amendments thereto, which
shall
apply to identify and determine the state and local taxing
jurisdiction sales
or use taxes to pay, or collect and remit on a particular retail
sale.
(pp) ``Tangible personal property''
means personal property that can
be seen, weighed, measured, felt or touched, or that is in any
other manner
perceptible to the senses. Tangible personal property includes
electricity,
water, gas, steam and prewritten computer software.
(qq) ``Taxpayer'' means any person
obligated to account to the direc-
tor for taxes collected under the terms of this act.
(rr) ``Tobacco'' means cigarettes,
cigars, chewing or pipe tobacco or
any other item that contains tobacco.
Sec. 6. On and after July 1, 2003,
K.S.A. 2002 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
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
redevelopment
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, that enables the
origination of
calls using an access number or authorization code or both,
whether man-
ually 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, except that, on and after January 1,
2006, for sales
of gas, electricity and heat delivered through mains, lines or
pipes to
residential premises for noncommercial use by the occupant of
such prem-
ises, and for agricultural use and also, for such use, all sales
of propane
gas, the state rate shall be 0%; and for all sales of propane
gas, LP gas,
coal, wood and other fuel sources for the production of heat or
lighting
for noncommercial use of an occupant of residential premises,
the state
rate shall be 0%, 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
col-
lected 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 which when such
serv-
ices are rendered is not being held for sale in the regular course
of busi-
ness, and whether or not any tangible personal property is
transferred in
connection therewith. The tax imposed by this subsection shall be
appli-
cable 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,
the sale of the service of providing computer software other
than pre-
written computer software and the sale of the services of
modifying, al-
tering, updating or maintaining computer software. As used
in this sub-
section, ``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 pro-
gram which is held or existing for general or repeated
sale, even if the
program was originally developed for a single end user as
custom com-
puter software, whether the computer software
is installed or delivered
electronically by tangible storage media physically transferred
to the pur-
chaser or by load and leave;
(t) the gross receipts received for
telephone answering services, mo-
bile telecommunication services, beeper services and other similar
serv-
ices. 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 services
taxable pur-
suant 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, 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
calling service as defined in sec-
tion 19, and amendments thereto; 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, 2003,
K.S.A. 2002 Supp. 79-3606 is
hereby amended to read as follows: 79-3606. The following shall be
ex-
empt from the tax imposed by this act:
(a) All sales of motor-vehicle fuel or
other articles upon which a sales
or excise tax has been paid, not subject to refund, under the laws
of this
state except cigarettes as defined by K.S.A. 79-3301 and
amendments
thereto, cereal malt beverages and malt products as defined by
K.S.A. 79-
3817 and amendments thereto, including wort, liquid malt, malt
syrup
and malt extract, which is not subject to taxation under the
provisions of
K.S.A. 79-41a02 and amendments thereto, motor vehicles taxed
pursuant
to K.S.A. 79-5117, and amendments thereto, tires taxed pursuant
to
K.S.A. 65-3424d, and amendments thereto, and drycleaning and
laundry
services taxed pursuant to K.S.A. 65-34,150, and amendments
thereto;
(b) all sales of tangible personal
property or service, including the
renting and leasing of tangible personal property, purchased
directly by
the state of Kansas, a political subdivision thereof, other than a
school or
educational institution, or purchased by a public or private
nonprofit hos-
pital or public hospital authority or nonprofit blood, tissue or
organ bank
and used exclusively for state, political subdivision, hospital or
public hos-
pital authority or nonprofit blood, tissue or organ bank purposes,
except
when: (1) Such state, hospital or public hospital authority is
engaged or
proposes to engage in any business specifically taxable under the
provi-
sions of this act and such items of tangible personal property or
service
are used or proposed to be used in such business, or (2) such
political
subdivision is engaged or proposes to engage in the business of
furnishing
gas, electricity or heat to others and such items of personal
property or
service are used or proposed to be used in such business;
(c) all sales of tangible personal
property or services, including the
renting and leasing of tangible personal property, purchased
directly by
a public or private elementary or secondary school or public or
private
nonprofit educational institution and used primarily by such school
or
institution for nonsectarian programs and activities provided or
sponsored
by such school or institution or in the erection, repair or
enlargement of
buildings to be used for such purposes. The exemption herein
provided
shall not apply to erection, construction, repair, enlargement or
equip-
ment of buildings used primarily for human habitation;
(d) all sales of tangible personal
property or services purchased by a
contractor for the purpose of constructing, equipping,
reconstructing,
maintaining, repairing, enlarging, furnishing or remodeling
facilities for
any public or private nonprofit hospital or public hospital
authority, public
or private elementary or secondary school or a public or private
nonprofit
educational institution, which would be exempt from taxation under
the
provisions of this act if purchased directly by such hospital or
public hos-
pital authority, school or educational institution; and all sales
of tangible
personal property or services purchased by a contractor for the
purpose
of constructing, equipping, reconstructing, maintaining, repairing,
en-
larging, furnishing or remodeling facilities for any political
subdivision of
the state or district described in subsection (s), the total cost
of which is
paid from funds of such political subdivision or district and which
would
be exempt from taxation under the provisions of this act if
purchased
directly by such political subdivision or district. Nothing in this
subsection
or in the provisions of K.S.A. 12-3418 and amendments thereto,
shall be
deemed to exempt the purchase of any construction machinery,
equip-
ment or tools used in the constructing, equipping, reconstructing,
main-
taining, repairing, enlarging, furnishing or remodeling facilities
for any
political subdivision of the state or any such district. As used in
this sub-
section, K.S.A. 12-3418 and 79-3640, and amendments thereto,
``funds
of a political subdivision'' shall mean general tax revenues, the
proceeds
of any bonds and gifts or grants-in-aid. Gifts shall not mean funds
used
for the purpose of constructing, equipping, reconstructing,
repairing, en-
larging, furnishing or remodeling facilities which are to be leased
to the
donor. When any political subdivision of the state, district
described in
subsection (s), public or private nonprofit hospital or public
hospital au-
thority, public or private elementary or secondary school or public
or
private nonprofit educational institution shall contract for the
purpose of
constructing, equipping, reconstructing, maintaining, repairing,
enlarg-
ing, furnishing or remodeling facilities, it shall obtain from the
state and
furnish to the contractor an exemption certificate for the project
involved,
and the contractor may purchase materials for incorporation in such
pro-
ject. The contractor shall furnish the number of such certificate
to all
suppliers from whom such purchases are made, and such suppliers
shall
execute invoices covering the same bearing the number of such
certifi-
cate. Upon completion of the project the contractor shall furnish
to the
political subdivision, district described in subsection (s),
hospital or public
hospital authority, school or educational institution concerned a
sworn
statement, on a form to be provided by the director of taxation,
that all
purchases so made were entitled to exemption under this subsection.
As
an alternative to the foregoing procedure, any such contracting
entity may
apply to the secretary of revenue for agent status for the sole
purpose of
issuing and furnishing project exemption certificates to
contractors pur-
suant to rules and regulations adopted by the secretary
establishing con-
ditions and standards for the granting and maintaining of such
status. All
invoices shall be held by the contractor for a period of five years
and shall
be subject to audit by the director of taxation. If any materials
purchased
under such a certificate are found not to have been incorporated in
the
building or other project or not to have been returned for credit
or the
sales or compensating tax otherwise imposed upon such materials
which
will not be so incorporated in the building or other project
reported and
paid by such contractor to the director of taxation not later than
the 20th
day of the month following the close of the month in which it shall
be
determined that such materials will not be used for the purpose for
which
such certificate was issued, the political subdivision, district
described in
subsection (s), hospital or public hospital authority, school or
educational
institution concerned shall be liable for tax on all materials
purchased for
the project, and upon payment thereof it may recover the same from
the
contractor together with reasonable attorney fees. Any contractor
or any
agent, employee or subcontractor thereof, who shall use or
otherwise
dispose of any materials purchased under such a certificate for any
pur-
pose other than that for which such a certificate is issued without
the
payment of the sales or compensating tax otherwise imposed upon
such
materials, shall be guilty of a misdemeanor and, upon conviction
therefor,
shall be subject to the penalties provided for in subsection (g) of
K.S.A.
79-3615, and amendments thereto;
(e) all sales of tangible personal
property or services purchased by a
contractor for the erection, repair or enlargement of buildings or
other
projects for the government of the United States, its agencies or
instru-
mentalities, which would be exempt from taxation if purchased
directly
by the government of the United States, its agencies or
instrumentalities.
When the government of the United States, its agencies or
instrumen-
talities shall contract for the erection, repair, or enlargement of
any build-
ing or other project, it shall obtain from the state and furnish to
the
contractor an exemption certificate for the project involved, and
the con-
tractor may purchase materials for incorporation in such project.
The
contractor shall furnish the number of such certificates to all
suppliers
from whom such purchases are made, and such suppliers shall
execute
invoices covering the same bearing the number of such certificate.
Upon
completion of the project the contractor shall furnish to the
government
of the United States, its agencies or instrumentalities concerned a
sworn
statement, on a form to be provided by the director of taxation,
that all
purchases so made were entitled to exemption under this subsection.
As
an alternative to the foregoing procedure, any such contracting
entity may
apply to the secretary of revenue for agent status for the sole
purpose of
issuing and furnishing project exemption certificates to
contractors pur-
suant to rules and regulations adopted by the secretary
establishing con-
ditions and standards for the granting and maintaining of such
status. All
invoices shall be held by the contractor for a period of five years
and shall
be subject to audit by the director of taxation. Any contractor or
any agent,
employee or subcontractor thereof, who shall use or otherwise
dispose of
any materials purchased under such a certificate for any purpose
other
than that for which such a certificate is issued without the
payment of
the sales or compensating tax otherwise imposed upon such
materials,
shall be guilty of a misdemeanor and, upon conviction therefor,
shall be
subject to the penalties provided for in subsection (g) of K.S.A.
79-3615
and amendments thereto;
(f) tangible personal property purchased
by a railroad or public utility
for consumption or movement directly and immediately in
interstate
commerce;
(g) sales of aircraft including
remanufactured and modified aircraft,
sales of aircraft repair, modification and replacement parts and
sales of
services employed in the remanufacture, modification and repair of
air-
craft sold to persons using directly or through an authorized agent
such
aircraft and aircraft repair, modification and replacement parts as
certified
or licensed carriers of persons or property in interstate or
foreign com-
merce under authority of the laws of the United States or any
foreign
government or sold to any foreign government or agency or
instrumen-
tality of such foreign government and all sales of aircraft,
aircraft parts,
replacement parts and services employed in the remanufacture,
modifi-
cation and repair of aircraft for use outside of the United
States;
(h) all rentals of nonsectarian textbooks
by public or private elemen-
tary or secondary schools;
(i) the lease or rental of all films,
records, tapes, or any type of sound
or picture transcriptions used by motion picture exhibitors;
(j) meals served without charge or food
used in the preparation of
such meals to employees of any restaurant, eating house, dining
car, hotel,
drugstore or other place where meals or drinks are regularly sold
to the
public if such employees' duties are related to the furnishing or
sale of
such meals or drinks;
(k) any motor vehicle, semitrailer or
pole trailer, as such terms are
defined by K.S.A. 8-126 and amendments thereto, or aircraft sold
and
delivered in this state to a bona fide resident of another state,
which motor
vehicle, semitrailer, pole trailer or aircraft is not to be
registered or based
in this state and which vehicle, semitrailer, pole trailer or
aircraft will not
remain in this state more than 10 days;
(l) all isolated or occasional sales of
tangible personal property, serv-
ices, substances or things, except isolated or occasional sale of
motor
vehicles specifically taxed under the provisions of subsection (o)
of K.S.A.
79-3603 and amendments thereto;
(m) all sales of tangible personal
property which become an ingre-
dient or component part of tangible personal property or services
pro-
duced, manufactured or compounded for ultimate sale at retail
within or
without the state of Kansas; and any such producer, manufacturer
or
compounder may obtain from the director of taxation and furnish to
the
supplier an exemption certificate number for tangible personal
property
for use as an ingredient or component part of the property or
services
produced, manufactured or compounded;
(n) all sales of tangible personal
property which is consumed in the
production, manufacture, processing, mining, drilling, refining or
com-
pounding of tangible personal property, the treating of by-products
or
wastes derived from any such production process, the providing of
serv-
ices or the irrigation of crops for ultimate sale at retail within
or without
the state of Kansas; and any purchaser of such property may obtain
from
the director of taxation and furnish to the supplier an exemption
certifi-
cate number for tangible personal property for consumption in such
pro-
duction, manufacture, processing, mining, drilling, refining,
compound-
ing, treating, irrigation and in providing such services;
(o) all sales of animals, fowl and
aquatic plants and animals, the pri-
mary purpose of which is use in agriculture or aquaculture, as
defined in
K.S.A. 47-1901, and amendments thereto, the production of food
for
human consumption, the production of animal, dairy, poultry or
aquatic
plant and animal products, fiber or fur, or the production of
offspring for
use for any such purpose or purposes;
(p) all sales of drugs, as
defined by K.S.A. 65-1626 and amendments
thereto, dispensed pursuant to a prescription
order, as defined by K.S.A.
65-1626 and amendments thereto, by a licensed
practitioner or a mid-
level practitioner as defined by K.S.A. 65-1626, and amendments
thereto;.
As used in this subsection, ``drug'' means a compound, substance
or prep-
aration and any component of a compound, substance or
preparation,
other than food and food ingredients, dietary supplements or
alcoholic
beverages, recognized in the official United States
pharmacopoeia, official
homeopathic pharmacopoeia of the United States or official
national for-
mulary, and supplement to any of them, intended for use in the
diagnosis,
cure, mitigation, treatment or prevention of disease or intended
to affect
the structure or any function of the body;
(q) all sales of insulin dispensed by a
person licensed by the state
board of pharmacy to a person for treatment of diabetes at the
direction
of a person licensed to practice medicine by the board of healing
arts;
(r) all sales of prosthetic
devices and orthopedic appliances
mobility
enhancing equipment prescribed in writing by a person
licensed to prac-
tice the healing arts, dentistry or optometry. For the purposes of
this
subsection, the term prosthetic and orthopedic appliances
means any ap-
paratus, instrument, device, or equipment used to replace
or substitute
for any missing part of the body; used to alleviate the
malfunction of any
part of the body; or used to assist any disabled person in
leading a normal
life by facilitating such person's mobility; such term
shall include acces-
sories attached or to be attached to motor vehicles, but
such term shall
not include motor vehicles or personal property which when
installed
becomes a fixture to real property;: (1)
``Mobility enhancing equipment''
means equipment including repair and replacement parts to same,
but
does not include durable medical equipment, which is primarily
and cus-
tomarily used to provide or increase the ability to move from
one place
to another and which is appropriate for use either in a home or
a motor
vehicle; is not generally used by persons with normal mobility;
and does
not include any motor vehicle or equipment on a motor vehicle
normally
provided by a motor vehicle manufacturer; and (2) ``prosthetic
device''
means a replacement, corrective or supportive device including
repair and
replacement parts for same worn on or in the body to
artificially replace
a missing portion of the body, prevent or correct physical
deformity or
malfunction or support a weak or deformed portion of the
body;
(s) except as provided in K.S.A. 2002
Supp. 82a-2101, and amend-
ments thereto, all sales of tangible personal property or services
pur-
chased directly or indirectly by a groundwater management district
or-
ganized or operating under the authority of K.S.A. 82a-1020 et
seq. and
amendments thereto, by a rural water district organized or
operating un-
der the authority of K.S.A. 82a-612, and amendments thereto, or by
a
water supply district organized or operating under the authority of
K.S.A.
19-3501 et seq., 19-3522 et seq. or 19-3545, and
amendments thereto,
which property or services are used in the construction activities,
opera-
tion or maintenance of the district;
(t) all sales of farm machinery and
equipment or aquaculture ma-
chinery and equipment, repair and replacement parts therefor and
serv-
ices performed in the repair and maintenance of such machinery
and
equipment. For the purposes of this subsection the term ``farm
machinery
and equipment or aquaculture machinery and equipment'' shall
include
machinery and equipment used in the operation of Christmas tree
farm-
ing but shall not include any passenger vehicle, truck, truck
tractor, trailer,
semitrailer or pole trailer, other than a farm trailer, as such
terms are
defined by K.S.A. 8-126 and amendments thereto. Each purchaser
of
farm machinery and equipment or aquaculture machinery and
equipment
exempted herein must certify in writing on the copy of the invoice
or
sales ticket to be retained by the seller that the farm machinery
and
equipment or aquaculture machinery and equipment purchased will
be
used only in farming, ranching or aquaculture production. Farming
or
ranching shall include the operation of a feedlot and farm and
ranch work
for hire and the operation of a nursery;
(u) all leases or rentals of tangible
personal property used as a dwell-
ing if such tangible personal property is leased or rented for a
period of
more than 28 consecutive days;
(v) all sales of food products to any
contractor for use in preparing
meals for delivery to homebound elderly persons over 60 years of
age and
to homebound disabled persons or to be served at a group-sitting at
a
location outside of the home to otherwise homebound elderly
persons
over 60 years of age and to otherwise homebound disabled persons,
as
all or part of any food service project funded in whole or in part
by
government or as part of a private nonprofit food service project
available
to all such elderly or disabled persons residing within an area of
service
designated by the private nonprofit organization, and all sales of
food
products for use in preparing meals for consumption by indigent or
home-
less individuals whether or not such meals are consumed at a place
des-
ignated for such purpose;
(w) all sales of natural gas,
electricity, heat and water delivered
through mains, lines or pipes: (1) To residential premises for
noncom-
mercial use by the occupant of such premises; (2) for agricultural
use and
also, for such use, all sales of propane gas; (3) for use in the
severing of
oil; and (4) to any property which is exempt from property taxation
pur-
suant to K.S.A. 79-201b Second through Sixth. As used
in this paragraph,
``severing'' shall have the meaning ascribed thereto by subsection
(k) of
K.S.A. 79-4216, and amendments thereto. For all sales of natural
gas,
electricity and heat delivered through mains, lines or pipes
pursuant to
the provisions of subsection (w)(1) and (w)(2), the provisions
of this sub-
section shall expire on December 31,2005;
(x) all sales of propane gas, LP-gas,
coal, wood and other fuel sources
for the production of heat or lighting for noncommercial use of an
oc-
cupant of residential premises occurring prior to January 1,
2006;
(y) all sales of materials and services
used in the repairing, servicing,
altering, maintaining, manufacturing, remanufacturing, or
modification of
railroad rolling stock for use in interstate or foreign commerce
under
authority of the laws of the United States;
(z) all sales of tangible personal
property and services purchased di-
rectly by a port authority or by a contractor therefor as provided
by the
provisions of K.S.A. 12-3418 and amendments thereto;
(aa) all sales of materials and services
applied to equipment which is
transported into the state from without the state for repair,
service, al-
teration, maintenance, remanufacture or modification and which is
sub-
sequently transported outside the state for use in the transmission
of
liquids or natural gas by means of pipeline in interstate or
foreign com-
merce under authority of the laws of the United States;
(bb) all sales of used mobile homes or
manufactured homes. As used
in this subsection: (1) ``Mobile homes'' and ``manufactured homes''
shall
have the meanings ascribed thereto by K.S.A. 58-4202 and
amendments
thereto; and (2) ``sales of used mobile homes or manufactured
homes''
means sales other than the original retail sale thereof;
(cc) all sales of tangible personal
property or services purchased for
the purpose of and in conjunction with constructing,
reconstructing, en-
larging or remodeling a business or retail business which meets
the
requirements established in K.S.A. 74-50,115 and amendments
thereto,
and the sale and installation of machinery and equipment purchased
for
installation at any such business or retail business. When a person
shall
contract for the construction, reconstruction, enlargement or
remodeling
of any such business or retail business, such person shall obtain
from the
state and furnish to the contractor an exemption certificate for
the project
involved, and the contractor may purchase materials, machinery
and
equipment for incorporation in such project. The contractor shall
furnish
the number of such certificates to all suppliers from whom such
purchases
are made, and such suppliers shall execute invoices covering the
same
bearing the number of such certificate. Upon completion of the
project
the contractor shall furnish to the owner of the business or retail
business
a sworn statement, on a form to be provided by the director of
taxation,
that all purchases so made were entitled to exemption under this
subsec-
tion. All invoices shall be held by the contractor for a period of
five years
and shall be subject to audit by the director of taxation. Any
contractor
or any agent, employee or subcontractor thereof, who shall use or
oth-
erwise dispose of any materials, machinery or equipment purchased
un-
der such a certificate for any purpose other than that for which
such a
certificate is issued without the payment of the sales or
compensating tax
otherwise imposed thereon, shall be guilty of a misdemeanor and,
upon
conviction therefor, shall be subject to the penalties provided for
in sub-
section (g) of K.S.A. 79-3615 and amendments thereto. As used in
this
subsection, ``business'' and ``retail business'' have the meanings
respec-
tively ascribed thereto by K.S.A. 74-50,114 and amendments
thereto;
(dd) all sales of tangible personal
property purchased with food
stamps issued by the United States department of agriculture;
(ee) all sales of lottery tickets and
shares made as part of a lottery
operated by the state of Kansas;
(ff) on and after July 1, 1988, all sales
of new mobile homes or man-
ufactured homes to the extent of 40% of the gross receipts,
determined
without regard to any trade-in allowance, received from such sale.
As used
in this subsection, ``mobile homes'' and ``manufactured homes''
shall have
the meanings ascribed thereto by K.S.A. 58-4202 and amendments
thereto;
(gg) all sales of tangible personal
property purchased in accordance
with vouchers issued pursuant to the federal special supplemental
food
program for women, infants and children;
(hh) all sales of medical supplies and
equipment, including durable
medical equipment, purchased directly by a nonprofit skilled
nursing
home or nonprofit intermediate nursing care home, as defined by
K.S.A.
39-923, and amendments thereto, for the purpose of providing
medical
services to residents thereof. This exemption shall not apply to
tangible
personal property customarily used for human habitation
purposes. As
used in this subsection, ``durable medical equipment'' means
equipment
including repair and replacement parts for such equipment, but
does not
include mobility enhancing equipment as defined in subsection
(r) which
can withstand repeated use, is primarily and customarily used to
serve a
medical purpose, generally is not useful to a person in the
absence of illness
or injury and is not worn in or on the body;
(ii) all sales of tangible personal
property purchased directly by a non-
profit organization for nonsectarian comprehensive multidiscipline
youth
development programs and activities provided or sponsored by such
or-
ganization, and all sales of tangible personal property by or on
behalf of
any such organization. This exemption shall not apply to tangible
personal
property customarily used for human habitation purposes;
(jj) all sales of tangible personal
property or services, including the
renting and leasing of tangible personal property, purchased
directly on
behalf of a community-based mental retardation facility or mental
health
center organized pursuant to K.S.A. 19-4001 et seq., and
amendments
thereto, and licensed in accordance with the provisions of K.S.A.
75-
3307b and amendments thereto. This exemption shall not apply to
tan-
gible personal property customarily used for human habitation
purposes;
(kk) (1) (A) all sales of
machinery and equipment which are used
in this state as an integral or essential part of an integrated
production
operation by a manufacturing or processing plant or facility;
(B) all sales of installation, repair and
maintenance services per-
formed on such machinery and equipment; and
(C) all sales of repair and replacement
parts and accessories pur-
chased for such machinery and equipment.
(2) For purposes of this subsection:
(A) ``Integrated production operation''
means an integrated series of
operations engaged in at a manufacturing or processing plant or
facility
to process, transform or convert tangible personal property by
physical,
chemical or other means into a different form, composition or
character
from that in which it originally existed. Integrated production
operations
shall include: (i) Production line operations, including packaging
opera-
tions; (ii) preproduction operations to handle, store and treat raw
mate-
rials; (iii) post production handling, storage, warehousing and
distribution
operations; and (iv) waste, pollution and environmental control
opera-
tions, if any;
(B) ``production line'' means the
assemblage of machinery and equip-
ment at a manufacturing or processing plant or facility where the
actual
transformation or processing of tangible personal property
occurs;
(C) ``manufacturing or processing plant
or facility'' means a single,
fixed location owned or controlled by a manufacturing or processing
busi-
ness that consists of one or more structures or buildings in a
contiguous
area where integrated production operations are conducted to
manufac-
ture or process tangible personal property to be ultimately sold at
retail.
Such term shall not include any facility primarily operated for the
purpose
of conveying or assisting in the conveyance of natural gas,
electricity, oil
or water. A business may operate one or more manufacturing or
proc-
essing plants or facilities at different locations to manufacture
or process
a single product of tangible personal property to be ultimately
sold at
retail;
(D) ``manufacturing or processing
business'' means a business that
utilizes an integrated production operation to manufacture,
process, fab-
ricate, finish, or assemble items for wholesale and retail
distribution as
part of what is commonly regarded by the general public as an
industrial
manufacturing or processing operation or an agricultural
commodity
processing operation. (i) Industrial manufacturing or processing
opera-
tions include, by way of illustration but not of limitation, the
fabrication
of automobiles, airplanes, machinery or transportation equipment,
the
fabrication of metal, plastic, wood, or paper products, electricity
power
generation, water treatment, petroleum refining, chemical
production,
wholesale bottling, newspaper printing, ready mixed concrete
production,
and the remanufacturing of used parts for wholesale or retail sale.
Such
processing operations shall include operations at an oil well, gas
well, mine
or other excavation site where the oil, gas, minerals, coal, clay,
stone, sand
or gravel that has been extracted from the earth is cleaned,
separated,
crushed, ground, milled, screened, washed, or otherwise treated or
pre-
pared before its transmission to a refinery or before any other
wholesale
or retail distribution. (ii) Agricultural commodity processing
operations
include, by way of illustration but not of limitation, meat
packing, poultry
slaughtering and dressing, processing and packaging farm and dairy
prod-
ucts in sealed containers for wholesale and retail distribution,
feed grind-
ing, grain milling, frozen food processing, and grain handling,
cleaning,
blending, fumigation, drying and aeration operations engaged in by
grain
elevators or other grain storage facilities. (iii) Manufacturing or
processing
businesses do not include, by way of illustration but not of
limitation,
nonindustrial businesses whose operations are primarily retail and
that
produce or process tangible personal property as an incidental part
of
conducting the retail business, such as retailers who bake, cook or
prepare
food products in the regular course of their retail trade, grocery
stores,
meat lockers and meat markets that butcher or dress livestock or
poultry
in the regular course of their retail trade, contractors who alter,
service,
repair or improve real property, and retail businesses that clean,
service
or refurbish and repair tangible personal property for its
owner;
(E) ``repair and replacement parts and
accessories'' means all parts
and accessories for exempt machinery and equipment, including, but
not
limited to, dies, jigs, molds, patterns and safety devices that are
attached
to exempt machinery or that are otherwise used in production, and
parts
and accessories that require periodic replacement such as belts,
drill bits,
grinding wheels, grinding balls, cutting bars, saws, refractory
brick and
other refractory items for exempt kiln equipment used in production
op-
erations;
(F) ``primary'' or ``primarily'' mean
more than 50% of the time.
(3) For purposes of this subsection,
machinery and equipment shall
be deemed to be used as an integral or essential part of an
integrated
production operation when used:
(A) To receive, transport, convey,
handle, treat or store raw materials
in preparation of its placement on the production line;
(B) to transport, convey, handle or store
the property undergoing
manufacturing or processing at any point from the beginning of the
pro-
duction line through any warehousing or distribution operation of
the
final product that occurs at the plant or facility;
(C) to act upon, effect, promote or
otherwise facilitate a physical
change to the property undergoing manufacturing or processing;
(D) to guide, control or direct the
movement of property undergoing
manufacturing or processing;
(E) to test or measure raw materials, the
property undergoing man-
ufacturing or processing or the finished product, as a necessary
part of
the manufacturer's integrated production operations;
(F) to plan, manage, control or record
the receipt and flow of inven-
tories of raw materials, consumables and component parts, the flow
of
the property undergoing manufacturing or processing and the
manage-
ment of inventories of the finished product;
(G) to produce energy for, lubricate,
control the operating of or oth-
erwise enable the functioning of other production machinery and
equip-
ment and the continuation of production operations;
(H) to package the property being
manufactured or processed in a
container or wrapping in which such property is normally sold or
trans-
ported;
(I) to transmit or transport electricity,
coke, gas, water, steam or sim-
ilar substances used in production operations from the point of
genera-
tion, if produced by the manufacturer or processor at the plant
site, to
that manufacturer's production operation; or, if purchased or
delivered
from offsite, from the point where the substance enters the site of
the
plant or facility to that manufacturer's production operations;
(J) to cool, heat, filter, refine or
otherwise treat water, steam, acid,
oil, solvents or other substances that are used in production
operations;
(K) to provide and control an environment
required to maintain cer-
tain levels of air quality, humidity or temperature in special and
limited
areas of the plant or facility, where such regulation of
temperature or
humidity is part of and essential to the production process;
(L) to treat, transport or store waste or
other byproducts of produc-
tion operations at the plant or facility; or
(M) to control pollution at the plant or
facility where the pollution is
produced by the manufacturing or processing operation.
(4) The following machinery, equipment
and materials shall be
deemed to be exempt even though it may not otherwise qualify as
ma-
chinery and equipment used as an integral or essential part of an
inte-
grated production operation: (A) Computers and related
peripheral
equipment that are utilized by a manufacturing or processing
business
for engineering of the finished product or for research and
development
or product design; (B) machinery and equipment that is utilized by
a
manufacturing or processing business to manufacture or rebuild
tangible
personal property that is used in manufacturing or processing
operations,
including tools, dies, molds, forms and other parts of qualifying
machinery
and equipment; (C) portable plants for aggregate concrete, bulk
cement
and asphalt including cement mixing drums to be attached to a
motor
vehicle; (D) industrial fixtures, devices, support facilities and
special foun-
dations necessary for manufacturing and production operations, and
ma-
terials and other tangible personal property sold for the purpose
of fab-
ricating such fixtures, devices, facilities and foundations. An
exemption
certificate for such purchases shall be signed by the manufacturer
or
processor. If the fabricator purchases such material, the
fabricator shall
also sign the exemption certificate; and (E) a manufacturing or
processing
business' laboratory equipment that is not located at the plant or
facility,
but that would otherwise qualify for exemption under subsection
(3)(E).
(5) ``Machinery and equipment used as an
integral or essential part
of an integrated production operation'' shall not include:
(A) Machinery and equipment used for
nonproduction purposes, in-
cluding, but not limited to, machinery and equipment used for plant
se-
curity, fire prevention, first aid, accounting, administration,
record keep-
ing, advertising, marketing, sales or other related activities,
plant cleaning,
plant communications, and employee work scheduling;
(B) machinery, equipment and tools used
primarily in maintaining
and repairing any type of machinery and equipment or the building
and
plant;
(C) transportation, transmission and
distribution equipment not pri-
marily used in a production, warehousing or material handling
operation
at the plant or facility, including the means of conveyance of
natural gas,
electricity, oil or water, and equipment related thereto, located
outside
the plant or facility;
(D) office machines and equipment
including computers and related
peripheral equipment not used directly and primarily to control or
mea-
sure the manufacturing process;
(E) furniture and other furnishings;
(F) buildings, other than exempt
machinery and equipment that is
permanently affixed to or becomes a physical part of the building,
and
any other part of real estate that is not otherwise exempt;
(G) building fixtures that are not
integral to the manufacturing op-
eration, such as utility systems for heating, ventilation, air
conditioning,
communications, plumbing or electrical;
(H) machinery and equipment used for
general plant heating, cooling
and lighting;
(I) motor vehicles that are registered
for operation on public high-
ways; or
(J) employee apparel, except safety and
protective apparel that is pur-
chased by an employer and furnished gratuitously to employees who
are
involved in production or research activities.
(6) Subsections (3) and (5) shall not be
construed as exclusive listings
of the machinery and equipment that qualify or do not qualify as
an
integral or essential part of an integrated production operation.
When
machinery or equipment is used as an integral or essential part of
pro-
duction operations part of the time and for nonproduction purpose
at
other times, the primary use of the machinery or equipment shall
deter-
mine whether or not such machinery or equipment qualifies for
exemp-
tion.
(7) The secretary of revenue shall adopt
rules and regulations nec-
essary to administer the provisions of this subsection;
(ll) all sales of educational materials
purchased for distribution to the
public at no charge by a nonprofit corporation organized for the
purpose
of encouraging, fostering and conducting programs for the
improvement
of public health;
(mm) all sales of seeds and tree
seedlings; fertilizers, insecticides,
herbicides, germicides, pesticides and fungicides; and services,
purchased
and used for the purpose of producing plants in order to prevent
soil
erosion on land devoted to agricultural use;
(nn) except as otherwise provided in this
act, all sales of services ren-
dered by an advertising agency or licensed broadcast station or any
mem-
ber, agent or employee thereof;
(oo) all sales of tangible personal
property purchased by a community
action group or agency for the exclusive purpose of repairing or
weath-
erizing housing occupied by low income individuals;
(pp) all sales of drill bits and
explosives actually utilized in the explo-
ration and production of oil or gas;
(qq) all sales of tangible personal
property and services purchased by
a nonprofit museum or historical society or any combination
thereof, in-
cluding a nonprofit organization which is organized for the purpose
of
stimulating public interest in the exploration of space by
providing edu-
cational information, exhibits and experiences, which is exempt
from fed-
eral income taxation pursuant to section 501(c)(3) of the federal
internal
revenue code of 1986;
(rr) all sales of tangible personal
property which will admit the pur-
chaser thereof to any annual event sponsored by a nonprofit
organization
which is exempt from federal income taxation pursuant to
section
501(c)(3) of the federal internal revenue code of 1986;
(ss) all sales of tangible personal
property and services purchased by
a public broadcasting station licensed by the federal
communications
commission as a noncommercial educational television or radio
station;
(tt) all sales of tangible personal
property and services purchased by
or on behalf of a not-for-profit corporation which is exempt from
federal
income taxation pursuant to section 501(c)(3) of the federal
internal rev-
enue code of 1986, for the sole purpose of constructing a Kansas
Korean
War memorial;
(uu) all sales of tangible personal
property and services purchased by
or on behalf of any rural volunteer fire-fighting organization for
use ex-
clusively in the performance of its duties and functions;
(vv) all sales of tangible personal
property purchased by any of the
following organizations which are exempt from federal income
taxation
pursuant to section 501 (c)(3) of the federal internal revenue code
of
1986, for the following purposes, and all sales of any such
property by or
on behalf of any such organization for any such purpose:
(1) The American Heart Association,
Kansas Affiliate, Inc. for the
purposes of providing education, training, certification in
emergency car-
diac care, research and other related services to reduce disability
and
death from cardiovascular diseases and stroke;
(2) the Kansas Alliance for the Mentally
Ill, Inc. for the purpose of
advocacy for persons with mental illness and to education, research
and
support for their families;
(3) the Kansas Mental Illness Awareness
Council for the purposes of
advocacy for persons who are mentally ill and to education,
research and
support for them and their families;
(4) the American Diabetes Association
Kansas Affiliate, Inc. for the
purpose of eliminating diabetes through medical research, public
edu-
cation focusing on disease prevention and education, patient
education
including information on coping with diabetes, and professional
education
and training;
(5) the American Lung Association of
Kansas, Inc. for the purpose of
eliminating all lung diseases through medical research, public
education
including information on coping with lung diseases, professional
educa-
tion and training related to lung disease and other related
services to
reduce the incidence of disability and death due to lung
disease;
(6) the Kansas chapters of the
Alzheimer's Disease and Related Dis-
orders Association, Inc. for the purpose of providing assistance
and sup-
port to persons in Kansas with Alzheimer's disease, and their
families and
caregivers;
(7) the Kansas chapters of the
Parkinson's disease association for the
purpose of eliminating Parkinson's disease through medical research
and
public and professional education related to such disease; and
(8) the National Kidney Foundation of
Kansas and Western Missouri
for the purpose of eliminating kidney disease through medical
research
and public and private education related to such disease;
(ww) all sales of tangible personal
property purchased by the Habitat
for Humanity for the exclusive use of being incorporated within a
housing
project constructed by such organization;
(xx) all sales of tangible personal
property and services purchased by
a nonprofit zoo which is exempt from federal income taxation
pursuant
to section 501(c)(3) of the federal internal revenue code of 1986,
or on
behalf of such zoo by an entity itself exempt from federal income
taxation
pursuant to section 501(c)(3) of the federal internal revenue code
of 1986
contracted with to operate such zoo and all sales of tangible
personal
property or services purchased by a contractor for the purpose of
con-
structing, equipping, reconstructing, maintaining, repairing,
enlarging,
furnishing or remodeling facilities for any nonprofit zoo which
would be
exempt from taxation under the provisions of this section if
purchased
directly by such nonprofit zoo or the entity operating such zoo.
Nothing
in this subsection shall be deemed to exempt the purchase of any
con-
struction machinery, equipment or tools used in the constructing,
equip-
ping, reconstructing, maintaining, repairing, enlarging, furnishing
or re-
modeling facilities for any nonprofit zoo. When any nonprofit zoo
shall
contract for the purpose of constructing, equipping,
reconstructing, main-
taining, repairing, enlarging, furnishing or remodeling facilities,
it shall
obtain from the state and furnish to the contractor an exemption
certifi-
cate for the project involved, and the contractor may purchase
materials
for incorporation in such project. The contractor shall furnish the
number
of such certificate to all suppliers from whom such purchases are
made,
and such suppliers shall execute invoices covering the same bearing
the
number of such certificate. Upon completion of the project the
contractor
shall furnish to the nonprofit zoo concerned a sworn statement, on
a form
to be provided by the director of taxation, that all purchases so
made were
entitled to exemption under this subsection. All invoices shall be
held by
the contractor for a period of five years and shall be subject to
audit by
the director of taxation. If any materials purchased under such a
certifi-
cate are found not to have been incorporated in the building or
other
project or not to have been returned for credit or the sales or
compen-
sating tax otherwise imposed upon such materials which will not be
so
incorporated in the building or other project reported and paid by
such
contractor to the director of taxation not later than the 20th day
of the
month following the close of the month in which it shall be
determined
that such materials will not be used for the purpose for which such
cer-
tificate was issued, the nonprofit zoo concerned shall be liable
for tax on
all materials purchased for the project, and upon payment thereof
it may
recover the same from the contractor together with reasonable
attorney
fees. Any contractor or any agent, employee or subcontractor
thereof,
who shall use or otherwise dispose of any materials purchased under
such
a certificate for any purpose other than that for which such a
certificate
is issued without the payment of the sales or compensating tax
otherwise
imposed upon such materials, shall be guilty of a misdemeanor and,
upon
conviction therefor, shall be subject to the penalties provided for
in sub-
section (g) of K.S.A. 79-3615, and amendments thereto;
(yy) all sales of tangible personal
property and services purchased by
a parent-teacher association or organization, and all sales of
tangible per-
sonal property by or on behalf of such association or
organization;
(zz) all sales of machinery and equipment
purchased by over-the-air,
free access radio or television station which is used directly and
primarily
for the purpose of producing a broadcast signal or is such that the
failure
of the machinery or equipment to operate would cause broadcasting
to
cease. For purposes of this subsection, machinery and equipment
shall
include, but not be limited to, that required by rules and
regulations of
the federal communications commission, and all sales of electricity
which
are essential or necessary for the purpose of producing a broadcast
signal
or is such that the failure of the electricity would cause
broadcasting to
cease;
(aaa) all sales of tangible personal
property and services purchased
by a religious organization which is exempt from federal income
taxation
pursuant to section 501(c)(3) of the federal internal revenue code,
and
used exclusively for religious purposes, and all sales of tangible
personal
property or services purchased by a contractor for the purpose of
con-
structing, equipping, reconstructing, maintaining, repairing,
enlarging,
furnishing or remodeling facilities for any such organization which
would
be exempt from taxation under the provisions of this section if
purchased
directly by such organization. Nothing in this subsection shall be
deemed
to exempt the purchase of any construction machinery, equipment
or
tools used in the constructing, equipping, reconstructing,
maintaining,
repairing, enlarging, furnishing or remodeling facilities for any
such or-
ganization. When any such organization shall contract for the
purpose of
constructing, equipping, reconstructing, maintaining, repairing,
enlarg-
ing, furnishing or remodeling facilities, it shall obtain from the
state and
furnish to the contractor an exemption certificate for the project
involved,
and the contractor may purchase materials for incorporation in such
pro-
ject. The contractor shall furnish the number of such certificate
to all
suppliers from whom such purchases are made, and such suppliers
shall
execute invoices covering the same bearing the number of such
certifi-
cate. Upon completion of the project the contractor shall furnish
to such
organization concerned a sworn statement, on a form to be provided
by
the director of taxation, that all purchases so made were entitled
to ex-
emption under this subsection. All invoices shall be held by the
contractor
for a period of five years and shall be subject to audit by the
director of
taxation. If any materials purchased under such a certificate are
found
not to have been incorporated in the building or other project or
not to
have been returned for credit or the sales or compensating tax
otherwise
imposed upon such materials which will not be so incorporated in
the
building or other project reported and paid by such contractor to
the
director of taxation not later than the 20th day of the month
following
the close of the month in which it shall be determined that such
materials
will not be used for the purpose for which such certificate was
issued,
such organization concerned shall be liable for tax on all
materials pur-
chased for the project, and upon payment thereof it may recover the
same
from the contractor together with reasonable attorney fees. Any
contrac-
tor or any agent, employee or subcontractor thereof, who shall use
or
otherwise dispose of any materials purchased under such a
certificate for
any purpose other than that for which such a certificate is issued
without
the payment of the sales or compensating tax otherwise imposed
upon
such materials, shall be guilty of a misdemeanor and, upon
conviction
therefor, shall be subject to the penalties provided for in
subsection (g)
of K.S.A. 79-3615, and amendments thereto. Sales tax paid on and
after
July 1, 1998, but prior to the effective date of this act upon the
gross
receipts received from any sale exempted by the amendatory
provisions
of this subsection shall be refunded. Each claim for a sales tax
refund
shall be verified and submitted to the director of taxation upon
forms
furnished by the director and shall be accompanied by any
additional
documentation required by the director. The director shall review
each
claim and shall refund that amount of sales tax paid as determined
under
the provisions of this subsection. All refunds shall be paid from
the sales
tax refund fund upon warrants of the director of accounts and
reports
pursuant to vouchers approved by the director or the director's
designee;
(bbb) all sales of food for human
consumption by an organization
which is exempt from federal income taxation pursuant to section
501
(c)(3) of the federal internal revenue code of 1986, pursuant to a
food
distribution program which offers such food at a price below cost
in
exchange for the performance of community service by the
purchaser
thereof;
(ccc) on and after July 1, 1999, all
sales of tangible personal property
and services purchased by a primary care clinic or health center
the pri-
mary purpose of which is to provide services to medically
underserved
individuals and families, and which is exempt from federal income
taxa-
tion pursuant to section 501 (c)(3) of the federal internal revenue
code,
and all sales of tangible personal property or services purchased
by a
contractor for the purpose of constructing, equipping,
reconstructing,
maintaining, repairing, enlarging, furnishing or remodeling
facilities for
any such clinic or center which would be exempt from taxation under
the
provisions of this section if purchased directly by such clinic or
center.
Nothing in this subsection shall be deemed to exempt the purchase
of
any construction machinery, equipment or tools used in the
constructing,
equipping, reconstructing, maintaining, repairing, enlarging,
furnishing
or remodeling facilities for any such clinic or center. When any
such clinic
or center shall contract for the purpose of constructing,
equipping, re-
constructing, maintaining, repairing, enlarging, furnishing or
remodeling
facilities, it shall obtain from the state and furnish to the
contractor an
exemption certificate for the project involved, and the contractor
may
purchase materials for incorporation in such project. The
contractor shall
furnish the number of such certificate to all suppliers from whom
such
purchases are made, and such suppliers shall execute invoices
covering
the same bearing the number of such certificate. Upon completion of
the
project the contractor shall furnish to such clinic or center
concerned a
sworn statement, on a form to be provided by the director of
taxation,
that all purchases so made were entitled to exemption under this
subsec-
tion. All invoices shall be held by the contractor for a period of
five years
and shall be subject to audit by the director of taxation. If any
materials
purchased under such a certificate are found not to have been
incorpo-
rated in the building or other project or not to have been returned
for
credit or the sales or compensating tax otherwise imposed upon
such
materials which will not be so incorporated in the building or
other pro-
ject reported and paid by such contractor to the director of
taxation not
later than the 20th day of the month following the close of the
month in
which it shall be determined that such materials will not be used
for the
purpose for which such certificate was issued, such clinic or
center con-
cerned shall be liable for tax on all materials purchased for the
project,
and upon payment thereof it may recover the same from the
contractor
together with reasonable attorney fees. Any contractor or any
agent, em-
ployee or subcontractor thereof, who shall use or otherwise dispose
of
any materials purchased under such a certificate for any purpose
other
than that for which such a certificate is issued without the
payment of
the sales or compensating tax otherwise imposed upon such
materials,
shall be guilty of a misdemeanor and, upon conviction therefor,
shall be
subject to the penalties provided for in subsection (g) of K.S.A.
79-3615,
and amendments thereto;
(ddd) on and after January 1, 1999, and
before January 1, 2000, all
sales of materials and services purchased by any class II or III
railroad as
classified by the federal surface transportation board for the
construction,
renovation, repair or replacement of class II or III railroad track
and
facilities used directly in interstate commerce. In the event any
such track
or facility for which materials and services were purchased sales
tax ex-
empt is not operational for five years succeeding the allowance of
such
exemption, the total amount of sales tax which would have been
payable
except for the operation of this subsection shall be recouped in
accord-
ance with rules and regulations adopted for such purpose by the
secretary
of revenue;
(eee) on and after January 1, 1999, and
before January 1, 2001, all
sales of materials and services purchased for the original
construction,
reconstruction, repair or replacement of grain storage facilities,
including
railroad sidings providing access thereto;
(fff) all sales of material handling
equipment, racking systems and
other related machinery and equipment that is used for the
handling,
movement or storage of tangible personal property in a warehouse
or
distribution facility in this state; all sales of installation,
repair and main-
tenance services performed on such machinery and equipment; and
all
sales of repair and replacement parts for such machinery and
equipment.
For purposes of this subsection, a warehouse or distribution
facility means
a single, fixed location that consists of buildings or structures
in a contig-
uous area where storage or distribution operations are conducted
that are
separate and apart from the business' retail operations, if any,
and which
do not otherwise qualify for exemption as occurring at a
manufacturing
or processing plant or facility. Material handling and storage
equipment
shall include aeration, dust control, cleaning, handling and other
such
equipment that is used in a public grain warehouse or other
commercial
grain storage facility, whether used for grain handling, grain
storage, grain
refining or processing, or other grain treatment operation; and
(ggg) all sales of tangible personal
property and services purchased
by or on behalf of the Kansas Academy of Science which is exempt
from
federal income taxation pursuant to section 501(c)(3) of the
federal in-
ternal revenue code of 1986, and used solely by such academy for
the
preparation, publication and dissemination of education
materials.
Sec. 8. On and after July 1, 2003,
K.S.A. 79-3607 is hereby amended
to read as follows: 79-3607. (a) Retailers shall make
returns to the director
at the times prescribed by this section upon forms prescribed and
fur-
nished by the director stating: (1) The name and address of the
retailer;
(2) the total amount of gross sales of all tangible personal
property and
taxable services rendered by the retailer during the period for
which the
return is made; (3) the total amount received during the period for
which
the return is made on charge and time sales of tangible personal
property
made and taxable services rendered prior to the period for which
the
return is made; (4) deductions allowed by law from such total
amount of
gross sales and from total amount received during the period for
which
the return is made on such charge and time sales; (5) receipts
during the
period for which the return is made from the total amount of sales
of
tangible personal property and taxable services rendered during
such pe-
riod in the course of such business, after deductions allowed by
law have
been made; (6) receipts during the period for which the return is
made
from charge and time sales of tangible personal property made and
tax-
able services rendered prior to such period in the course of such
business,
after deductions allowed by law have been made; (7) gross receipts
during
the period for which the return is made from sales of tangible
personal
property and taxable services rendered in the course of such
business
upon the basis of which the tax is imposed. The return shall
include such
other pertinent information as the director may require. In making
such
return, the retailer shall determine the market value of any
consideration,
other than money, received in connection with the sale of any
tangible
personal property in the course of the business and shall include
such
value in the return. Such value shall be subject to review and
revision by
the director as hereinafter provided. Refunds made by the retailer
during
the period for which the return is made on account of tangible
personal
property returned to the retailer shall be allowed as a deduction
under
subdivision (4) of this section in case the retailer has
theretofore included
the receipts from such sale in a return made by such retailer and
paid
taxes therein imposed by this act. The retailer shall, at the time
of making
such return, pay to the director the amount of tax herein imposed,
except
as otherwise provided in this section. The director may extend the
time
for making returns and paying the tax required by this act for any
period
not to exceed 60 days under such rules and regulations as the
secretary
of revenue may prescribe. When the total tax for which any retailer
is
liable under this act, does not exceed the sum of $80 in any
calendar year,
the retailer shall file an annual return on or before January 25 of
the
following year. When the total tax liability does not exceed $1,600
in any
calendar year, the retailer shall file returns quarterly on or
before the
25th day of the month following the end of each calendar quarter.
When
the total tax liability exceeds $1,600 in any calendar year, the
retailer shall
file a return for each month on or before the 25th day of the
following
month. When the total tax liability exceeds $32,000 in any calendar
year,
the retailer shall be required to pay the sales tax liability for
the first 15
days of each month to the director on or before the 25th day of
that
month. Any such payment shall accompany the return filed for the
pre-
ceding month. A retailer will be considered to have complied with
the
requirements to pay the first 15 days' liability for any month if,
on or
before the 25th day of that month, the retailer paid 90% of the
liability
for that fifteen-day period, or 50% of such retailer's liability in
the im-
mediate preceding calendar year for the same month as the month
in
which the fifteen-day period occurs computed at the rate applicable
in
the month in which the fifteen-day period occurs, and, in either
case, paid
any underpayment with the payment required on or before the 25th
day
of the following month. Such retailers shall pay their sales tax
liabilities
for the remainder of each such month at the time of filing the
return for
such month. Determinations of amounts of liability in a calendar
year for
purposes of determining filing requirements shall be made by the
director
upon the basis of amounts of liability by those retailers during
the pre-
ceding calendar year or by estimates in cases of retailers having
no pre-
vious sales tax histories. The director is hereby authorized to
modify the
filing schedule for any retailer when it is apparent that the
original de-
termination was inaccurate.
(b) All model 1, model 2 and model 3
sellers are required to file re-
turns electronically. Any model 1, model 2 or model 3 seller may
submit
its sales and use tax returns in a simplified format approved by
the di-
rector. Any seller that is registered under the agreement, which
does not
have a legal requirement to register in this state, and is not a
model 1,
model 2 or model 3 seller, may submit its sales and use tax
returns as
follows: (1) Upon registration, the director shall provide to
the seller the
returns required;
(2) seller shall file a return anytime
within one year of the month of
initial registration, and future returns are required on an
annual basis in
succeeding years; and
(3) in addition to the returns
required in subsection (b)(2), sellers are
required to submit returns in the month following any month in
which
they have accumulated state and local sales tax funds for this
state in the
amount of $1,600 or more.
Sec. 9. On and after July 1, 2003,
K.S.A. 79-3608 is hereby amended
to read as follows: 79-3608. (a) Except as otherwise
provided, it shall be
unlawful for any person to engage in the business of selling
tangible per-
sonal property at retail or furnishing taxable services in this
state without
a registration certificate from the director of taxation.
Application for such
certificate shall be made to the director upon forms furnished by
the
director, and shall state the name of the applicant, the address or
ad-
dresses at which the applicant proposes to engage in such business,
and
the character of such business. Utilities taxable under this act
shall not
be required to register but shall comply with all other provisions
of this
act. The taxpayer may be registered by an agent. Such
appointment of
the agent by the taxpayer shall be in writing and submitted to
the director.
The taxpayer shall be issued a registration certificate to engage
in the
business for which application is made unless the applicant at the
time of
making such application owes any sales tax, penalty or interest,
and in
such case, before a registration certificate is issued, the
director of taxa-
tion shall require the applicant to pay the amount owed.
(b) A separate registration
certificate shall be issued for each place of
business, and shall be conspicuously displayed therein.
(c) A seller registering under the
agreement is considered registered
in this state and shall not be required to pay any registration
fees or other
charges to register in this state if the seller has no legal
requirement to
register. A written signature from the seller registering under
the agree-
ment is not required. An agent may register a seller under
uniform pro-
cedures determined by the secretary. A seller may cancel its
registration
under the system at any time under uniform procedures determined
by
the secretary. Cancellation does not relieve the seller of its
liability for
remitting to this state any taxes collected.
Sec. 10. On and after July 1, 2003,
K.S.A. 2002 Supp. 79-3650 is
hereby amended to read as follows: 79-3650. (a) A refund request
may
be filed directly by a consumer or purchaser if the consumer or
purchaser:
(1) Paid the tax directly to the department; (2) provides evidence
that the
retailer refused or was unavailable to refund the tax; (3) provides
evidence
that the retailer did not act upon its refund request in a timely
manner
as provided in subsection (b), or; (4) provides a notarized
statement to
the department from the retailer that the retailer: (A) Will not
claim a
refund of the same tax included in the purchaser's or consumer's
refund
request; (B) agrees to provide to the consumer or purchaser any
infor-
mation or documentation in the retailer's possession needed for
submis-
sion to the department to support or prove the refund claim; (C)
has
remitted to the state the tax sought to be refunded; and (D) has
not taken
or will not take a credit for such tax. A retailer providing false
information
in any such statement shall be subject to penalties prescribed by
K.S.A.
2002 Supp. 79-3615(h), and amendments thereto.
(b) A cause of action against the
seller for the over-collected sales or
use taxes does not accrue until a purchaser has provided written
notice
to a seller and the seller has had 60 days to respond. Such
notice to the
seller must contain the information necessary to determine the
validity of
the request. In connection with a purchaser's request from a
seller for
over-collected sales or use taxes, a seller shall be presumed to
have a
reasonable business practice, if in the collection of such sales
or use taxes,
the seller uses either a provider or a system, including a
proprietary sys-
tem, that is certified by the state and has remitted to the
state all taxes
collected less any deductions, credits or collection
allowances. If the di-
rector of taxation finds upon proper showing that a consumer or
purchaser
submitted a refund request to a retailer that was not acted upon by
the
retailer in a timely manner, the director shall extend the time for
filing
the request with the department beyond the three year limitation
period
that is otherwise provided by the time attributed to the delay
caused by
the retailer.
Sec. 11. On and after July 1, 2003,
K.S.A. 79-3651 is hereby
amended to read as follows: 79-3651. (a) For the purpose of the
proper
administration of the Kansas retailers' sales tax act and to
prevent evasion
of the tax imposed thereunder, it shall be presumed that all gross
receipts
from the sale of tangible personal property or enumerated services
are
subject to tax until the contrary is established. The burden of
proving that
a sale is not subject to tax is upon the vendor
seller unless the vendor
seller takes from the purchaser an exemption certificate to
the effect that
the property or service purchased is not subject to tax.
(b) An exemption certificate shall
relieve the vendor seller from col-
lecting and remitting tax when taken in good faith. A
vendor shall be
presumed to have accepted an exemption certificate in good
faith in the
absence of evidence to the contrary. A vendor shall be
deemed to have
accepted an exemption certificate in good faith if the
vendor: (1) Main-
tains a completed exemption certificate; (2) has
ascertained the identity
of the person or entity who presented the exemption
certificate; and (3)
has not been shown by a preponderance of the evidence to
have had
knowledge that the presentation of the certificate was
improper if the
seller has obtained the required identifying information as
determined by
the director, from the purchaser and the reason for claiming the
exemption
at the time of purchase and has maintained proper records of
exempt
transactions pursuant to subsection (a) of K.S.A. 79-3609, and
amend-
ments thereto and provided them to the director when requested,
except
that a seller who fraudulently fails to collect the tax or
solicits purchasers
to participate in the unlawful claim of an exemption shall not
be relieved
from such liability. The seller shall obtain the same
information for proof
of a claimed exemption regardless of the medium in which the
transaction
occurred. The purchaser improperly claiming an exemption shall
remain
liable for the nonpayment of tax.
(c) The exemption certificate shall be
substantially in such form as
the director may prescribe. The seller shall use the standard
form for
claiming an exemption electronically as adopted by the
director. A vendor
seller may require a purchaser to provide a copy of the
purchaser's sales
tax registration certificate with a resale certificate as a
condition for hon-
oring the purchaser's resale exemption claim. A purchaser is not
required
to provide a signature to claim an exemption from tax unless a
paper
exemption certificate is used.
(d) To lawfully present a resale
exemption certificate the purchaser
must be engaged in the business of selling property or services of
the
same kind that is purchased, hold a registration certificate, and
at the
time of purchase, either intend to resell the property in the
regular course
of business or be unable to ascertain whether the property will be
resold
or used for some other purpose.
(e) Any person who issues a resale
certificate or other exemption
certificate in order to unlawfully avoid payment of tax for
business or
personal gain shall be guilty of a misdemeanor and upon conviction
shall
be punished by a fine of not more than $1,000 or imprisonment for
not
more than one year, or by both. In addition, if the director
determines
that a person issued a resale certificate in order to unlawfully
avoid pay-
ment of tax for business or personal gain, the director shall
increase any
penalty that is due from the person under K.S.A. 79-3615, and
amend-
ments thereto, by $250 or 10 times the tax due, whichever is
greater, on
each transaction where the misuse of a resale certificate
occurred.
(f) Exemption certificates issued by a
nonprofit entity claiming a spe-
cific exemption under K.S.A. 79-3606, and amendments thereto,
shall
bear the name and address of the entity and indicate the subsection
under
which the exemption is being claimed. Such certificate shall be
signed by
an officer, office manager or other administrator of the nonprofit
entity,
if in paper form, and contain the driver's license number of
the signer.
The certificate shall be substantially in such form as the director
may
prescribe. Payments made on an exempt entity's check, warrant,
voucher
or is charged to the entity's account shall relieve the
vendor seller from
collecting and remitting the tax if it is taken in good faith.
(g) It shall be the duty of every person
who purchases tangible per-
sonal property or services that are taxable under this act to pay
the full
amount of tax that is lawfully due to the retailer making the sale.
Any
person who willfully and intentionally refuses to pay such tax to
the re-
tailer shall be guilty of a misdemeanor and upon conviction shall
be pun-
ished and fined as provided by subsection (g) of K.S.A. 79-3615,
and
amendments thereto.
New Sec. 12. State sales tax rate
changes must take effect on the first
day of a calendar quarter. The secretary shall make a reasonable
effort to
provide sellers with as much advance notice as practicable of any
rate
changes, legislative change in the tax base and amendments to sales
and
use tax rules and regulations. Failure of a seller to receive such
notice or
failure of the secretary to provide such notice to a seller or
limit the
effective date of a rate change shall not relieve the seller of its
obligation
to collect sales or use tax or otherwise comply with any such
legislative,
rule or regulatory changes.
New Sec. 13. On and after the
databases are developed pursuant to
subsections (a), (b) and (c) of section 14 and amendments thereto
and
after the state has joined and become a member of the agreement,
sellers
and certified service providers (CSPs) are relieved from liability
for state
and local sales and use tax for having charged and collected the
incorrect
amount of sales tax resulting from the seller or certified service
provider
relying on erroneous data provided by the secretary on tax rates,
bound-
aries or taxing jurisdiction assignments. If the secretary provides
an ad-
dress-based system for assigning taxing jurisdictions that meets
the
requirements developed pursuant to the federal mobile
telecommuni-
cations sourcing act, no liability relief is provided to sellers or
certified
service providers for errors resulting from reliance on the
information
provided under the provisions of subsection (c) of section 14 and
amend-
ments thereto.
New Sec. 14. (a) The secretary
shall provide and maintain a database
that describes boundary changes for all taxing jurisdictions. This
database
shall include a description of the change and the effective date of
the
change for sales and use tax purposes.
(b) The secretary shall provide and
maintain a database of all sales
and use tax rates for all taxing jurisdictions. For the
identification of coun-
ties and cities, codes corresponding to the rates must be provided
ac-
cording to federal information processing standards (FIPS) as
developed
by the national institute of standards and technology. For the
identifica-
tion of all other jurisdictions, codes corresponding to the rates
must be
in the format determined by the secretary.
(c) The secretary must provide and
maintain a database that assigns
each five- and nine-digit zip code to the proper rates and taxing
jurisdic-
tions. The lowest combined tax rate imposed in the zip code area
shall
apply if the area includes more than one tax rate in any level of
taxing
jurisdiction. If a nine-digit zip code designation is not available
for a street
address, or if a seller is unable to determine the nine-digit zip
code des-
ignation of a purchaser after exercising due diligence to determine
the
designation, the seller may apply the rate for the five-digit zip
code area.
For purposes of this section, there is a rebuttable presumption
that a
seller has exercised due diligence if the seller has attempted to
determine
the nine-digit zip code designation by utilizing software approved
by the
secretary that makes this designation from the street address and
the five-
digit zip code of the purchaser.
(d) The secretary shall participate with
other member states in the
development of an address-based system for assigning taxing
jurisdictions.
The system must meet the requirements developed pursuant to the
fed-
eral mobile telecommunications sourcing act (4 U.S.C. §
119).
(e) The electronic databases provided for
in subsections (a), (b), (c)
and (d) shall be in downloadable format as determined by the
secretary.
The provisions of subsections (c) and (d) do not apply when the
purchased
product is received by the purchaser at the business location of
the seller.
New Sec. 15. (a) The retail sale of
a product shall be sourced in
accordance with section 16 and amendments thereto. The provisions
of
section 16 and amendments thereto apply regardless of the
characteri-
zation of a product as tangible personal property, a digital good
or a
service. The provisions of section 16 and amendments thereto only
apply
to determine a seller's obligation to pay or collect and remit a
sales or
use tax with respect to the seller's retail sale of a product.
These provisions
do not affect the obligation of a purchaser or lessee to remit tax
on the
use of the product to the taxing jurisdictions of that use.
(b) Section 16 and amendments thereto
does not apply to sales or
use taxes levied on the following: (1) The retail sale or transfer
of water
craft, modular homes, manufactured homes or mobile homes. The
retail
sale of these items shall be sourced according to K.S.A. 12-191
and
amendments thereto;
(2) the retail sales, excluding lease or
rental, of motor vehicles, trail-
ers, semi-trailers or aircraft that do not qualify as
transportation equip-
ment, as defined in subsection (d) of section 16 and amendments
thereto.
The retail sale of these items shall be sourced according to K.S.A.
12-191
and amendments thereto and the lease or rental of these items must
be
sourced according to subsection (c) of section 16 and
amendments
thereto; and
(3) telecommunications services, as set
out in section 19 and amend-
ments thereto, shall be sourced in accordance with section 19 and
amend-
ments thereto.
New Sec. 16. (a) The retail sale,
excluding lease or rental, of a prod-
uct shall be sourced as follows: (1) When the product is received
by the
purchaser at a business location of the seller, the sale is sourced
to that
business location;
(2) when the product is not received by
the purchaser at a business
location of the seller, the sale is sourced to the location where
receipt by
the purchaser, or the purchaser's donee, designated as such by the
pur-
chaser, occurs, including the location indicated by instructions
for delivery
to the purchaser or donee, known to the seller;
(3) when subsection (a)(1) and (a)(2) do
not apply, the sale is sourced
to the location indicated by an address for the purchaser that is
available
from the business records of the seller that are maintained in the
ordinary
course of the seller's business when use of this address does not
constitute
bad faith;
(4) when subsections (a)(1), (a)(2) and
(a)(3) do not apply, the sale is
sourced to the location indicated by an address for the purchaser
obtained
during the consummation of the sale, including the address of a
pur-
chaser's payment instrument, if no other address is available, when
use
of this address does not constitute bad faith;
(5) when none of the previous rules of
subsection (a)(1), (a)(2), (a)(3)
or (a)(4) apply, including the circumstance in which the seller is
without
sufficient information to apply the previous rules, then the
location will
be determined by the address from which tangible personal property
was
shipped, from which the digital good or the computer software
delivered
electronically was first available for transmission by the seller,
or from
which the service was provided, disregarding for these purposes any
lo-
cation that merely provided the digital transfer of the product
sold.
(b) The lease or rental of tangible
personal property, other than prop-
erty identified in subsection (c) or (d), shall be sourced as
follows: (1) For
a lease or rental that requires recurring periodic payments, the
first pe-
riodic payment is sourced the same as a retail sale in accordance
with the
provisions of subsection (a). Periodic payments made subsequent to
the
first payment are sourced to the primary property location for each
period
covered by the payment. The primary property location shall be as
indi-
cated by an address for the property provided by the lessee that is
avail-
able to the lessor from its records maintained in the ordinary
course of
business, when use of this address does not constitute bad faith.
The
property location shall not be altered by intermittent use at
different
locations, such as use of business property that accompanies
employees
on business trips and service calls;
(2) for a lease or rental that does not
require recurring periodic pay-
ments, the payment is sourced the same as a retail sale in
accordance
with the provisions of subsection (a); and
(3) this subsection does not affect the
imposition or computation of
sales or use tax on leases or rentals based on a lump sum or
accelerated
basis, or on the acquisition of property for lease.
(c) The lease or rental of motor
vehicles, trailers, semi-trailers or air-
craft that do not qualify as transportation equipment, as defined
in sub-
section (d), shall be sourced as follows: (1) For a lease or rental
that
requires recurring periodic payments, each periodic payment is
sourced
to the primary property location. The primary property location
shall be
as indicated by an address for the property provided by the lessee
that is
available to the lessor from its records maintained in the ordinary
course
of business, when use of this address does not constitute bad
faith. This
location shall not be altered by intermittent use at different
locations;
(2) for a lease or rental that does not
require recurring periodic pay-
ments, the payment is sourced the same as a retail sale in
accordance
with the provisions of subsection (a); and
(3) this subsection does not affect the
imposition or computation of
sales or use tax on leases or rentals based on a lump sum or
accelerated
basis or on the acquisition of property for lease.
(d) The retail sale, including lease or
rental, of transportation equip-
ment shall be sourced the same as a retail sale in accordance with
the
provisions of subsection (a), notwithstanding the exclusion of
lease or
rental in subsection (a). ``Transportation equipment'' means any of
the
following: (1) Locomotives and railcars that are utilized for the
carriage
of persons or property in interstate commerce;
(2) trucks and truck-tractors with a
gross vehicle weight rating
(GVWR) of 10,001 pounds or greater, trailers, semi-trailers or
passenger
buses that are: (A) Registered through the international
registration plan;
and
(B) operated under authority of a carrier
authorized and certificated
by the United States department of transportation or another
federal or
a foreign authority to engage in the carriage of persons or
property in
interstate or foreign commerce;
(3) aircraft that are operated by air
carriers authorized and certifi-
cated by the United States department of transportation or another
fed-
eral or a foreign authority to engage in the carriage of persons or
property
in interstate or foreign commerce; and
(4) containers designed for use on and
component parts attached or
secured on the items set forth in subsection (d)(1), (d)(2) and
(d)(3).
(e) As used in this section, the terms
``receive'' and ``receipt'' mean:
(1) Taking possession of tangible
personal property;
(2) making first use of services; or
(3) taking possession or making first use
of digital goods, whichever
comes first. The terms receive and receipt do not include
possession by
a shipping company on behalf of the purchaser.
New Sec. 17. (a) Notwithstanding
the provisions of section 16 and
amendments thereto, a business purchaser that is not a holder of a
direct
pay permit that knows at the time of its purchase of a digital
good, com-
puter software delivered electronically or a service that the
digital good,
computer software delivered electronically or service will be
concurrently
available for use in more than one jurisdiction shall deliver to
the seller
in conjunction with its purchase a multiple points of use or MPU
exemp-
tion form disclosing this fact.
(b) Upon receipt of the MPU exemption
form, the seller is relieved
of all obligation to collect, pay or remit the applicable tax and
the pur-
chaser shall be obligated to collect, pay or remit the applicable
tax on a
direct pay basis.
(c) A purchaser delivering the MPU
exemption form may use any
reasonable, but consistent and uniform, method of apportionment
that is
supported by the purchaser's business records as they exist at the
time of
the consummation of the sale.
(d) The MPU exemption form will remain in
effect for all future sales
by the seller to the purchaser, except as to the subsequent sale's
specific
apportionment that is governed by the principle of subsection (c)
and the
facts existing at the time of the sale, until it is revoked in
writing.
(e) A holder of a direct pay permit shall
not be required to deliver
the MPU exemption form to the seller. A direct pay permit holder
shall
follow the provisions of subsection (c) in apportioning the tax due
on a
digital good or a service that will be concurrently available for
use in more
than one jurisdiction.
New Sec. 18. (a) (1)
Notwithstanding the provisions of section 16
and amendments thereto, a purchaser of direct mail that is not a
holder
of a direct pay permit shall provide to the seller in conjunction
with the
purchase either a direct mail form or information to show the
jurisdictions
to which the direct mail is delivered to recipients.
(2) Upon receipt of the direct mail form,
the seller is relieved of all
obligations to collect, pay or remit the applicable tax and the
purchaser
is obligated to pay or remit the applicable tax on a direct pay
basis. A
direct mail form shall remain in effect for all future sales of
direct mail
by the seller to the purchaser until it is revoked in writing.
(3) Upon receipt of information from the
purchaser showing the ju-
risdictions to which the direct mail is delivered to recipients,
the seller
shall collect the tax according to the delivery information
provided by the
purchaser. In the absence of bad faith, the seller is relieved of
any further
obligation to collect tax on any transaction where the seller has
collected
tax pursuant to the delivery information provided by the
purchaser.
(b) If the purchaser of direct mail does
not have a direct pay permit
and does not provide the seller with either a direct mail form or
delivery
information, as required by subsection (a), the seller shall
collect the tax
according to subsection (a)(5) of section 16 and amendments
thereto.
Nothing in this subsection shall limit a purchaser's obligation for
sales or
use tax to any state to which the direct mail is delivered.
(c) If a purchaser of direct mail
provides the seller with documen-
tation of direct pay authority, the purchaser shall not be required
to pro-
vide a direct mail form or delivery information to the seller.
New Sec. 19. (a) Except for the
defined telecommunication services
in subsection (c), the sale of telecommunication service sold on a
call-by-
call basis shall be sourced to each level of taxing jurisdiction
where the
call originates and terminates in that jurisdiction or each level
of taxing
jurisdiction where the call either originates or terminates and in
which
the service address is also located.
(b) Except for the defined
telecommunication services in subsection
(c), a sale of telecommunications services sold on a basis other
than a call-
by-call basis, is sourced to the customer's place of primary
use.
(c) The sale of the following
telecommunication services shall be
sourced to each level of taxing jurisdiction as follows: (1) A sale
of mobile
communications services other than air-to-ground radiotelephone
service
and prepaid calling service, is sourced to the customer's place of
primary
use as required by the mobile telecommunications sourcing act;
(2) a sale of post-paid calling service
is sourced to the origination
point of the telecommunications signal as first identified by
either the
seller's telecommunications system, or information received by the
seller
from its service provider, where the system used to transport such
signals
is not that of the seller; and
(3) a sale of prepaid calling service is
sourced in accordance with
section 16 and amendments thereto, except that in the case of a
sale of
mobile telecommunications service that is a prepaid
telecommunications
service, the rule provided in subsection (a)(5) of section 16 and
amend-
ments thereto shall include as an option the location associate
with the
mobile telephone number.
(d) A sale of a private communication
service is sourced as follows:
(1) Service for a separate charge related to a customer channel
termina-
tion point is sourced to each level of jurisdiction in which such
customer
channel termination point is located;
(2) service where all customer
termination points are located entirely
within one jurisdiction or levels of jurisdiction is sourced in
such juris-
diction in which the customer channel termination points are
located;
(3) service for segments of a channel
between two customer channel
termination points located in different jurisdictions and which
segment
of channel are separately charged is sourced 50% in each level of
juris-
diction in which the customer channel termination points are
located; and
(4) service for segments of a channel
located in more than one juris-
diction or levels of jurisdiction and which segments are not
separately
billed is sourced in each jurisdiction based on the percentage
determined
by dividing the number of customer channel termination points in
such
jurisdiction by the total number of customer channel termination
points.
(e) As used in this section: (1)
``Air-to-ground radiotelephone service''
means a radio service, as that term is defined in 47 CFR 22.99, in
which
common carriers are authorized to offer and provide radio
telecommu-
nications service for hire to subscribers in aircraft;
(2) ``call-by-call basis'' means any
method of charging for telecom-
munications services where the price is measured by individual
calls;
(3) ``communications channel'' means a
physical or virtual path of
communications over which signals are transmitted between or
among
customer channel termination points;
(4) ``customer'' means the person or
entity that contracts with the
seller of telecommunications services. If the end user of
telecommuni-
cations services is not the contracting party, the end user of the
telecom-
munications service is the customer of the telecommunication
service,
but this sentence only applies for the purpose of sourcing sales of
tele-
communications services under this section. Customer does not
include
a reseller of telecommunications service or for mobile
telecommunica-
tions service of a serving carrier under an agreement to serve the
cus-
tomer outside the home service provider's licensed service
area;
(5) ``customer channel termination
point'' means the location where
the customer either inputs or receives the communication;
(6) ``end user'' means the person who
utilizes the telecommunication
service. In the case of an entity, end user means the individual
who utilizes
the services on behalf of the entity;
(7) ``home service provider'' means the
same as that term in defined
in section 124(5) of Public Law 106-252 (mobile
telecommunications
sourcing act);
(8) ``mobile telecommunications service''
means the same as that
term is defined in section 124(5) of Public Law 106-252 (mobile
telecom-
munications sourcing act);
(9) ``place of primary use'' means the
street address representative of
where the customer's use of the telecommunications service
primarily
occurs, which must be the residential street address or the primary
busi-
ness street address of the customer. In the case of mobile
telecommu-
nications services, place of primary use must be within the
licensed serv-
ice area of the home service provider;
(10) ``post-paid calling service'' means
the telecommunications serv-
ice obtained by making a payment on a call-by-call basis either
through
the use of a credit card or payment mechanism such as a bank card,
travel
card, credit card or debit card, or by charge made to which a
telephone
number which is not associated with the origination or termination
of the
telecommunications service. A post-paid calling service includes a
tele-
communications service that would be a prepaid calling service
except it
is not exclusively a telecommunication service;
(11) ``prepaid calling service'' means
the right to access exclusively
telecommunications services, which must be paid for in advance
and
which enables the origination of calls using an access number or
author-
ization code, whether manually or electronically dialed, and that
is sold
in predetermined units or dollars of which the number declines with
use
in a known amount;
(12) ``private communication service''
means a telecommunication
service that entitles the customer to exclusive or priority use of
a com-
munications channel or group of channels between or among
termination
points, regardless of the manner in which such channel or channels
are
connected, and includes switching capacity, extension lines,
stations and
any other associated services that are provided in connection with
the use
of such channel or channels; and
(13) ``service address'' means: (A) The
location of the telecommuni-
cations equipment to which a customer's call is charged and from
which
the call originates or terminates, regardless of where the call is
billed or
paid;
(B) if the location in subsection (13)(A)
is not known, service address
means the origination point of the signal of the telecommunications
serv-
ices first identified by either the seller's telecommunications
system or in
information received by the seller from its service provider, where
the
system used to transport such signals is not that of the seller;
and
(C) if the location in subsections
(13)(A) and (13)(B) are not known,
the service address means the location of the customer's place of
primary
use.
New Sec. 20. (a) A seller is
allowed a deduction from taxable sales
for bad debts attributable to taxable sales of such seller that
have become
uncollectable. Any deduction taken that is attributed to bad debts
shall
not include interest.
(b) The amount of the bad debt deduction
shall be calculated pur-
suant to 26 U.S.C. § 166(b), except that such amount shall be
adjusted
to exclude financing charges or interest, sales or use taxes
charged on the
purchase price, uncollectable amounts on property that remain in
the
possession of the seller until the full purchase price is paid and
expenses
incurred in attempting to collect any debt and repossessed
property.
(c) Bad debts may be deducted on the
return for the period during
which the bad debt is written off as uncollectable in the seller's
books
and records and is eligible to be deducted for federal income tax
purposes.
For purposes of this subsection, a seller who is not required to
file federal
income tax returns may deduct a bad debt on a return filed for the
period
in which the bad debt is written off as uncollectable in the
seller's books
and records and would be eligible for a bad debt deduction for
federal
income tax purposes if the seller was required to file a federal
income tax
return.
(d) If a deduction is taken for a bad
debt and the debt is subsequently
collected in whole or in part, the tax on the amount so collected
must be
paid and reported on the return filed for the period in which the
collec-
tion is made.
(e) When the amount of bad debt exceeds
the amount of taxable sales
for the period during which the bad debt is written off, a refund
claim
may be filed by the seller within the applicable statute of
limitations for
refund claim pursuant to subsection (b) of K.S.A. 79-3609 and
amend-
ments thereto; however, the statute of limitations shall be
measured from
the due date of the return on which the bad debt could first be
claimed.
(f) Where filing responsibilities have
been assumed by a certified
service provider, the service provider may claim, on behalf of the
seller,
any bad debt allowance provided by this section. The certified
service
provider must credit or refund the full amount of any bad debt
allowance
or refund received to the seller.
(g) For the purposes of reporting a
payment received on a previously
claimed bad debt, any payments made on a debt or account must first
be
applied proportionally to the taxable price of the property or
service and
the sales tax thereon, and secondly to interest, service charges
and any
other charges.
(h) In situations where the books and
records of the seller, or certified
service provider on behalf of the seller, claiming the bad debt
allowance
support an allocation of the bad debts among the member states,
such
an allocation is permitted.
New Sec. 21. (a) The purpose of
this section is to set forth this state's
policy for the protection of the confidentiality rights of all
participants in
the system and of the privacy interests of consumers who deal with
model
1 sellers.
(b) As used in this section: (1)
``Confidential taxpayer information''
means all information that is protected under this state's laws,
rules and
regulations and privileges;
(2) ``personally identifiable
information'' means information that
identifies a person; and
(3) ``anonymous data'' means information
that does not identify a per-
son.
(c) A fundamental precept in model 1 is
to preserve the privacy of
consumers by protecting their anonymity. With very limited
exceptions,
a certified service provider (CSP) shall perform its tax
calculation, remit-
tance and reporting functions without retaining the personally
identifiable
information of consumers.
(d) The secretary shall provide public
notification to consumers, in-
cluding their exempt purchasers, of the department's practices
relating
to the collection, use and retention of personally identifiable
information.
(e) When any personally identifiable
information that has been col-
lected and retained is no longer required to ensure the validity of
ex-
emptions from taxation that are claimed by reason of a consumer's
status
or the intended use of the goods or services purchased, such
information
shall no longer be retained by the department.
(f) When personally identifiable
information regarding an individual
is retained by or on behalf of the department, the secretary shall
provide
reasonable access by such individual to such individual's own
information
in the department's possession and a right to correct any
inaccurately
recorded information.
(g) If anyone other than this state, or a
person authorized by this
state's law or the agreement, seeks to discover personally
identifiable
information, the secretary shall make a reasonable and timely
effort to
notify the individual of such request.
(h) This privacy policy is subject to
enforcement by the attorney gen-
eral.
New Sec. 22. (a) When the seller is
computing the amount of tax
owed by the purchaser and remitted to the state: (1) Tax
computation
must be carried to the third decimal place; and
(2) the tax must be rounded to a whole
cent using a method that
rounds up to the next cent whenever the third decimal place is
greater
than four.
(b) Sellers may elect to compute the tax
due on a transaction on an
item or an invoice basis. The rounding rule may be applied to the
aggre-
gated state and local taxes.
New Sec. 23. (a) The secretary
shall complete a taxability matrix.
This state's entries in the matrix shall be provided and maintained
by the
secretary in a database that is in a downloadable format.
(b) The secretary shall provide
reasonable notice of changes in the
taxability of the products or services listed in the taxability
matrix.
(c) Sellers and certified service
providers are relieved from liability
to this state or any local taxing jurisdiction for having charged
and col-
lected the incorrect amount of state or local sales or use tax
resulting from
the seller or certified service providers relying on erroneous data
provided
by the secretary in the taxability matrix.
New Sec. 24. The effective date of
state or local sales or use tax rate
changes for services covering a period starting before and ending
after
the statutory effective date shall be as follows: (a) For a rate
increase, the
new rate shall apply to the first billing period starting on or
after the
effective date; and
(b) for a rate decrease, the new rate
shall apply to bills rendered on
or after the effective date.
New Sec. 25. (a) The secretary
shall participate in an online regis-
tration system that will allow sellers to register in this state
and other
member states.
(b) By registering, the seller agrees to
collect and remit sales and use
taxes for all taxable sales into this state as well as the other
member states,
including member states joining after the seller's registration.
Withdrawal
or revocation of this state from the agreement shall not relieve a
seller of
its responsibility to remit taxes previously or subsequently
collected on
behalf of this state.
(c) If the seller has a requirement to
register prior to registering un-
der the agreement, the seller must register pursuant to K.S.A.
79-3608
and amendments thereto.
(d) Registration with the central
registration system and the collec-
tion of sales and use taxes in this state shall not be used as a
factor in
determining whether the seller has nexus with this state for any
tax at any
time.
New Sec. 26. (a) Subject to the
limitations in this section: (1) Am-
nesty is granted for uncollected or unpaid sales or use tax to a
seller who
registers to pay or to collect and remit applicable sales or use
tax on sales
made to purchasers in this state in accordance with the terms of
the
agreement, provided that the seller was not so registered in this
state in
the twelve-month period preceding the effective date of this
state's par-
ticipation in the agreement;
(2) the amnesty will preclude assessment
for uncollected or unpaid
sales or use tax together with penalty or interest for sales made
during
the period the seller was not registered in this state, provided
registration
occurs within 12 months of the effective date of this state's
participation
in the agreement; and
(3) amnesty similarly shall be provided
if this state joins the agree-
ment after the seller has registered.
(b) The amnesty is not available to a
seller with respect to any matter
or matters for which the seller received notice of the commencement
of
an audit and which audit is not yet finally resolved including any
related
administrative and judicial processes.
(c) The amnesty is not available for
sales or use taxes already paid or
remitted to this state or to taxes collected by the seller.
(d) The amnesty is fully effective,
absent the seller's fraud or inten-
tional misrepresentation of a material fact, as long as the seller
continues
registration and continues payment or collection and remittance of
ap-
plicable sales or use taxes for a period of at least thirty-six
months. The
statute of limitations applicable to asserting a tax liability
during this
thirty-six month period is tolled.
(e) The amnesty is applicable only to
sales or use taxes due from a
seller in its capacity as a seller and not to sales or use taxes
due from a
seller in its capacity as a buyer.
(f) This provision shall become effective
as of the date that this state
joins and becomes a member state of the agreement.
New Sec. 27. When registering under
the agreement, the seller may
select one of the following methods of remittances or other method
al-
lowed by K.S.A. 79-3607 and amendments thereto to remit the
taxes
collected: (a) Model 1, wherein a seller selects a certified
service provider
as an agent to perform all the seller's sales or use tax functions,
other than
the seller's obligation to remit tax on its own purchases;
(b) model 2, wherein a seller selects a
certified automated system to
use which calculates the amount of tax due on a transaction; or
(c) model 3, wherein a seller utilizes
its own proprietary automated
sales tax system that has been certified as a certified automated
system.
New Sec. 28. (a) The provisions of
sections 12 through 28 and
amendments thereto shall be known and may be cited as the
streamlined
sales and use tax agreement conformity act.
(b) The provisions of sections 12 through
28 shall be effective on and
after July 1, 2003.
Sec. 29. On and after July 1, 2003,
K.S.A. 12-189a is hereby amended
to read as follows: 12-189a. The following sales shall be subject
to the
taxes levied and collected by all cities and counties under the
provisions
of K.S.A. 12-187 et seq. and amendments thereto:
(a) All sales of natural gas,
electricity, heat and water delivered
through mains, lines or pipes to residential premises for
noncommercial
use by the occupant of such premises and all sales of natural gas,
elec-
tricity, heat and water delivered through mains, lines or pipes for
agri-
cultural use, except that effective January 1, 2006, the
provisions of this
subsection shall expire for sales of water pursuant to this
subsection;
(b) all sales of propane gas, LP-gas,
coal, wood and other fuel sources
for the production of heat or lighting for noncommercial use of an
oc-
cupant of residential premises; and
(c) all sales of intrastate telephone and
telegraph services for non-
commercial use.
Sec. 30. On and after July 1, 2003,
K.S.A. 2002 Supp. 79-32,206 is
hereby amended to read as follows: 79-32,206. For all taxable years
com-
mencing after December 31, 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
meas-
ured 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 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 thereafter, 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 Kansas constitution in subclass (5) or (6) of class 2,
machinery
and equipment 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 railroad
machinery
and equipment classified 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
develop-
ment shall conduct a study of the economic impact of the foregoing
pro-
vision. 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,
part-
ners or members account for their proportionate shares of the
income or
loss of the corporation, partnership or limited liability
company.
Sec. 31. On and after July 1, 2003,
K.S.A. 12-188 is hereby amended
to read as follows: 12-188. The following classes of cities are
hereby es-
tablished for the purpose of imposing limitations and prohibitions
upon
the levying of sales and excise taxes or taxes in the nature of an
excise
upon sales or transfers of personal or real property or the use
thereof, or
the rendering or furnishing of services by cities as authorized and
pro-
vided by article 12, section 5, of the constitution of the state of
Kansas:
Class A cities. All cities in the state of
Kansas which have the authority
to levy and collect excise taxes or taxes in the nature of an
excise upon
the sales or transfers of personal or real property or the use
thereof, or
the rendering or furnishing of services by cities.
Class B cities. All cities in the state of
Kansas which have the authority
to levy and collect excise taxes or taxes in the nature of an
excise upon
the sales or transfers of personal or real property or the use
thereof, or
the rendering or furnishing of services for the purpose of
financing the
provision of health care services.
Class C cities. All cities in the state of
Kansas having a population of
more than 290,000 located in a county having a population of more
than
350,000 which has the authority to levy and collect excise taxes or
taxes
in the nature of an excise upon the sales or transfers of personal
or real
property or the use thereof, or the rendering or furnishing of
services.
Class D cities. All cities in the state of
Kansas located in Cowley, Ellis,
Ellsworth, Finney, Harper, Johnson, Labette, Lyon, Montgomery,
Osage,
Reno or, Woodson or Wyandotte county
or in both Riley and
Pottawatomie counties which have the authority to levy and collect
excise
taxes or taxes in the nature of an excise upon the sales or
transfers of
personal or real property or the use thereof, or the rendering or
furnishing
of services.
Sec. 32. On and after July 1, 2003,
K.S.A. 2002 Supp. 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, Chase, Cowley, Cherokee, Crawford, Ford,
Jefferson, Lyon,
Montgomery, Neosho, Osage, Ottawa, Riley, Saline, Seward,
Sumner,
Wabaunsee, Wilson and Wyandotte counties may submit the question
of
imposing a countywide retailers' sales tax and pledging the revenue
re-
ceived therefrom for the purpose of financing the construction or
re-
modeling of a courthouse, jail, law enforcement center facility or
other
county administrative 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 sec-
retary of revenue. Nothing in this paragraph shall be construed to
allow
the rate of tax imposed by Butler, Chase, Cowley, Lyon,
Montgomery,
Neosho, Riley, Sumner 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
pur-
poses of preservation, access and management of open space, and
for
industrial and business park related economic development.
(12) The board of county commissioners
of Shawnee county may sub-
mit the question of imposing a countywide retailers' sales tax
at the rate
of .25% and pledging the revenue received therefrom to the city
of Topeka
for the purpose of financing the costs of rebuilding the Topeka
boulevard
bridge and other public infrastructure improvements associated
with such
project to the electors at an election called and held thereon.
The tax
imposed pursuant to this paragraph shall expire upon payment of
all costs
authorized in financing such project.
(13) The board of county commissioners
of Jackson county may sub-
mit the question of imposing a countywide retailers' sales tax
at a rate of
.4% and pledging the revenue received therefrom as follows: 50%
of such
revenues for the purpose of financing for economic development
initia-
tives; and 50% of such revenues for the purpose of financing
public in-
frastructure projects to the electors at an election called and
held thereon.
The tax imposed pursuant to this paragraph shall expire after
seven years
from the date such tax is first collected.
(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. 33. On and after July 1, 2003,
K.S.A. 2002 Supp. 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
amend-
ments 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
deter-
mined 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%;
(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
purposes of paragraph (11) of subsection (b) of K.S.A. 12-187,
and
amendments thereto, may fix such rate at
1.25%.; or
(j) the board of county commissioners
of Jackson county, for the pur-
poses of subsection (b)(13) of K.S.A. 12-187 and amendments
thereto, may
fix such rate at 1.4%.
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.
74-8927, and amendments thereto, all local retailers' sales tax
revenue
collected within any county or city pursuant to this act shall be
appor-
tioned 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.
Sec. 34. On and after July 1, 2003,
K.S.A. 72-6431 is hereby
amended to read as follows: 72-6431. (a) The board of each district
shall
levy an ad valorem tax upon the taxable tangible property of the
district
in the school years specified in subsection (b) for the purpose
of:
(1) Financing that portion of the
district's general fund budget which
is not financed from any other source provided by law;
(2) paying a portion of the costs of
operating and maintaining public
schools in partial fulfillment of the constitutional obligation of
the legis-
lature to finance the educational interests of the state; and
(3) with respect to any redevelopment
district established prior to
July 1, 1997, pursuant to K.S.A. 12-1771, and amendments thereto,
pay-
ing a portion of the principal and interest on bonds issued by
cities under
authority of K.S.A. 12-1774, and amendments thereto, for the
financing
of redevelopment projects upon property located within the
district.
(b) The tax required under subsection (a)
shall be levied at a rate of
20 mills in the 2001-02 school year and in the 2002-03
school year 2003-
04 and 2004-05 school years.
(c) The proceeds from the tax levied by a
district under authority of
this section, except the proceeds of such tax levied for the
purpose of
paying a portion of the principal and interest on bonds issued by
cities
under authority of K.S.A. 12-1774, and amendments thereto, for the
fi-
nancing of redevelopment projects upon property located within the
dis-
trict, shall be deposited in the general fund of the district.
(d) On June 1 of each year, the amount,
if any, by which a district's
local effort exceeds the amount of the district's state financial
aid, as
determined by the state board, shall be remitted to the state
treasurer.
Upon receipt of any such remittance, the state treasurer shall
deposit the
same in the state treasury to the credit of the state school
district finance
fund.
(e) No district shall proceed under
K.S.A. 79-1964, 79-1964a or 79-
1964b, and amendments thereto.
Sec. 35. K.S.A. 74-2433 is hereby
amended to read as follows: 74-
2433. (a) There is hereby created a state board of tax appeals,
referred
to in this act as the board. The board shall be composed of
five three
members who shall be appointed by the governor, subject to
confirmation
by the senate as provided in K.S.A. 75-4315b, and amendments
thereto.
After January 15, 1999, three the effective
date of this act, one of such
members shall: (1) have been regularly admitted to
practice law in the
state of Kansas; and (2) for a
period of at least five years, have engaged
in the active practice of law as a lawyer, judge of a court of
record or any
other court in this state, or; and one of such
members shall have engaged
in active practice as a certified public accountant
who has maintained
registration as an active attorney with the Kansas supreme
court, or any
combination thereof for a period of at least
five years. No successor shall
be appointed for the two members of the board whose terms of
office
expired on January 15, 2003, and if any such appointment is made
prior
to the effective date of this act, any such member's term of
office shall
expire on the effective date of this act. Except as provided
by K.S.A. 46-
2601, no person appointed to the board shall exercise any power,
duty or
function as a member of the board until confirmed by the senate.
Not
more than three two members of the board
shall be of the same political
party. Members of the board shall be residents of the state.
Subject to
the provisions of K.S.A. 75-4315c, and amendments thereto, no
more than
one shall be appointed from each any one of
the congressional districts
of Kansas and the remainder from the state at
large. The members of the
board shall be selected with special reference to training and
experience
for duties imposed by this act and shall be individuals with legal,
account-
ing or appraisal training and experience. Members shall be subject
to the
supreme court rules of judicial conduct applicable to all judges of
the
district court. The board shall be bound by the doctrine of
stare decisis
limited to published decisions of an appellate court other than a
district
court. Members shall hold office for terms of four years and until
their
successors are appointed and confirmed. Except as otherwise
provided,
such terms of office shall expire on January 15 of the last year of
such
term. If a vacancy occurs on the board, the governor shall appoint
a
successor to fill the vacancy for the unexpired term. The governor
shall
select one of its members to serve as chairperson. The votes of
three two
members shall be required for any action to be taken by the board.
Meet-
ings may be called by the chairperson and shall be called on
request of a
majority of the members of the board and when otherwise prescribed
by
statute.
(b) Any member of the state board of tax
appeals may be removed
by the governor for cause, after public hearing conducted in
accordance
with the provisions of the Kansas administrative procedure act.
(c) The state board of tax appeals shall
appoint, subject to approval
by the governor, an executive director of the board, to serve at
the plea-
sure of the board. The executive director shall: (1) Be in the
unclassified
service under the Kansas civil service act; (2) devote full time to
the
executive director's assigned duties; (3) receive such compensation
as
determined by the board, subject to the limitations of
appropriations
thereof; and (4) have familiarity with the tax appeals process
sufficient to
fulfill the duties of the office of executive director. The
executive director
shall perform such duties as directed by the board.
(d) Appeals decided by the state board of
tax appeals which are
deemed of sufficient importance to be published shall be published
by
the board.
(e) After appointment, members of the
state board of tax appeals shall
complete the following course requirements: (1) A tested appraisal
course
of not less than 30 clock hours of instruction consisting of the
fundamen-
tals of real property appraisal with an emphasis on the cost and
sales
approaches to value; (2) a tested appraisal course of not less than
30 clock
hours of instruction consisting of the fundamentals of real
property ap-
praisal with an emphasis on the income approach to value; (3) a
tested
appraisal course of not less than 30 clock hours of instruction
with an
emphasis on mass appraisal; (4) an appraisal course with an
emphasis on
Kansas property tax laws and; (5) an appraisal course on the
techniques
and procedures for the valuation of state assessed properties with
an em-
phasis on unit valuation; and (6) a tested appraisal course on the
tech-
niques and procedures for the valuation of land devoted to
agricultural
use pursuant to K.S.A. 79-1476, and amendments thereto. The
executive
director shall adopt rules and regulations prescribing a timetable
for the
completion of the course requirements and prescribing continued
edu-
cation requirements for members of the board.
(f) The state board of tax appeals shall
have no capacity or power to
sue or be sued.
Sec. 36. On and after July 1, 2003,
K.S.A. 2002 Supp. 79-201x is
hereby amended to read as follows: 79-201x. For taxable years
2001 and
2002 2003 and 2004, the following described
property, to the extent
herein specified, shall be and is hereby exempt from the property
tax
levied pursuant to the provisions of K.S.A. 72-6431, and
amendments
thereto: Property used for residential purposes to the extent of
$20,000
of its appraised valuation.
Sec. 37. On and after July 1, 2003,
K.S.A. 2002 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, territory, 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
federal 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 ``nonresident'' means an
individual domiciled outside of
this state and an entity whose commercial domicile is outside of
this state.
For corporations, commercial domicile is as defined in K.S.A.
79-3271
and amendments thereto.
(f) The term ``payee'' means any
person or organization who receives
a payment other than wages, or a payment of a pension, annuity
or de-
ferred income, which is subject to withholding of income tax
pursuant to
this act.
(g) The term ``payer'' means any
person or organization, other than
an employer, who makes a payment other than wages, or a payment
of a
pension, annuity or deferred income, which is subject to
withholding of
income tax pursuant to this act.
(f) (h) 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;
or
(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 of a management or consulting
fee paid in the ordinary
course of a trade, business or other for profit venture.
(g) The term ``payor'' means any
person or organization, other than
an employer, who makes payments, other than wages or
distributions,
which are subject to withholding of income tax pursuant to
this act.
(h) (i) The term
``pension, annuity or other deferred income'' means
a payment that is taxable under the Kansas income tax act, and
that is a
payment:
(1) Of periodic payments of pensions,
annuities and other deferred
income;
(2) of nonperiodic distributions of
pensions, annuities and other de-
ferred income; or
(3) of eligible rollover distributions
of pensions, annuities and other
deferred income.
(j) 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. 38. On and after July 1, 2003,
K.S.A. 2002 Supp. 79-3298 is
hereby amended to read as follows: 79-3298. (a) Every employer
and
payor, payer, person or organization deducting
and withholding tax shall
remit the taxes and file returns in accordance with the following
provi-
sions.:
(1) Whenever the total amount withheld
exceeds $100,000 in any
calendar year, the employer or payor, payer,
person or organization de-
ducting and withholding tax shall remit the taxes withheld
in accordance
with the following schedule: Each calendar month shall be divided
into
four remittance periods that end on the 7th, 15th, 21st and the
last day
of such month. If at the end of any one or all of such remittance
periods
the total undeposited taxes equal or exceed $667, the taxes shall
be re-
mitted within three banking days. Saturdays, Sundays and legal
holidays
shall not be treated as banking days.
(2) Whenever the total amount withheld
exceeds $8,000 but does not
exceed $100,000 in any calendar year, the employer or
payor, payer, per-
son or organization deducting and withholding tax shall
remit the taxes
withheld for wages paid during the first 15 days of any month on or
before
the 25th day of the month. The employer or
payor, payer, person or
organization deducting and withholding tax shall remit the
taxes withheld
for wages paid during the remainder of that month on or before the
10th
day of the following month.
(3) Whenever the total amount withheld
exceeds $1,200 but does not
exceed $8,000 in any calendar year, the employer or
payor, payer, person
or organization deducting and withholding tax shall remit
the taxes with-
held during any month on or before the 15th day of the following
month.
(4) Whenever the total amount withheld
exceeds $200 but does not
exceed $1,200 in any calendar year, the employer or
payor, payer, person
or organization deducting and withholding tax shall remit
the taxes with-
held in any calendar quarter on or before the 25th day of the first
month
following the end of that calendar quarter.
(5) Whenever the total amount withheld
does not exceed $200 in any
calendar year, the employer or payor, payer,
person or organization de-
ducting and withholding tax shall remit the taxes withheld
during that
year on or before January 25 of the following year.
(b) Each remittance required under the
provisions of subsection (a)
shall be accompanied by a Kansas withholding tax remittance form
pre-
scribed and furnished by the director.
(c) Every employer or
payor, payer, person or organization deducting
and withholding tax and making remittances pursuant to
subsection (a)
shall file a return on a form prescribed and furnished by the
director for
each calendar year on or before the last day of February of the
following
year.
(d) The excess of any remittance over the
actual taxes withheld in any
withholding period shall be credited against the liability for
following
withholding periods until exhausted. A refund shall be allowed in
accord-
ance with K.S.A. 79-32,105, and amendments thereto, where an
over-
payment cannot be adjusted by an offset against the liability for a
sub-
sequent withholding period.
(e) For purposes of determining filing
requirements, determinations
of amounts withheld during a calendar year by employers or
payors for
purposes of determining filing requirements,
payers, persons or organi-
zations deducting and withholding tax shall be made by the
director upon
the basis of amounts withheld by those employers or
payors, payers, per-
sons or organizations during the preceding calendar year or
by estimates
in cases of employers or payors, payers,
persons or organizations having
no previous withholding histories. The director is hereby
authorized to
modify the filing schedule for any employer or
payor, payer, person or
organization deducting and withholding tax when it is
apparent that the
original determination was inaccurate.
(f) Whenever the director has cause to
believe that money withheld
by an employer or payor, payer, person or
organization deducting and
withholding tax pursuant to this act may be converted,
diverted, lost, or
otherwise not timely paid in accordance with this section, the
director
shall have the power to require returns and payment from any such
em-
ployer or payor, payer, person or
organization at any time at more fre-
quent intervals than prescribed by this section in order to secure
full
payment to the state of all amounts withheld by such employer
or payor,
payer, person or organization in accordance with this
act.
Sec. 39. On and after July 1, 2003,
K.S.A. 2002 Supp. 79-3299 is
hereby amended to read as follows: 79-3299. (a) Every employer
or payor
shall, payer, person or organization deducting
and withholding tax, on or
before January 31 of each year, shall prepare a statement
for each em-
ployee or payee on a form prescribed by the director stating the
amount
of wages or payments other than wages subject to Kansas income tax
paid
during the preceding year, the total amount of tax withheld, if
any, from
such wages or payments other than wages by the employer or
payor,
payer, person or organization pursuant to this act and such
other infor-
mation as may be prescribed by the director. One copy of such
statement
shall be filed by the employer or payor, payer,
person or organization
with the division of taxation on or before the last day of February
of each
year. Two copies of such statement shall be given to the employee
or
payee concerned, one of which will be filed by the employee or
payee
with the tax return required by this chapter.
(b) In the case of an employee whose
employment is terminated be-
fore the end of a calendar year, the statement required by
subsection (a)
may be mailed at the time provided in that subsection to the last
known
address of the employee, or issued at the time of the last payment
to the
employee, at the employer's option.
(c) Any employer or
payor, payer, person or organization deducting
and withholding tax who willfully
intentionally fails to furnish a statement
to an employee or payee as required under the provisions of
subsections
(a) and (b) of this section shall be guilty of a
nonperson misdemeanor and
upon conviction thereof shall be punished by a fine not exceeding
$100
for each such offense.
(d) The annual statement of wages and
salaries paid and amount with-
held required by this section shall be in lieu of the annual
information
return required under K.S.A. 79-3222 and amendments
thereto.
Sec. 40. On and after July 1, 2003,
K.S.A. 2002 Supp. 79-32,100 is
hereby amended to read as follows: 79-32,100. (a) The tax deducted
and
withheld under this act shall not be allowed as a deduction
either to the
employer or payor, payer, person or
organization deducting and with-
holding tax or to the employee or payee in computing taxable
income
under the ``Kansas income tax act.''
(b) The full amount of wages and salaries
or payments other than
wages from which an amount was withheld in accordance with this
act
shall be included in the gross income of the employee or payee
unless
such wages and salaries or payments other than wages or a portion
thereof
are otherwise excludable under the provisions of the ``Kansas
income tax
act.''
(c) The amount deducted and withheld
under this act during any
calendar year from the wages or payments other than wages of an
indi-
vidual taxpayer shall be allowed as a credit against the income tax
oth-
erwise imposed on such taxpayer by the ``Kansas income tax act,''
whether
or not such amount was remitted to the division of taxation by the
em-
ployer or payor, payer, person or organization
deducting and withholding
tax in accordance with the terms of this act.
(d) If the amount withheld under this act
during any calendar year
exceeds the individual income tax liability of the
employee-payee-taxpayer
any excess shall be applied to any other income tax owed the state
of
Kansas by such individual (,including
fines, penalties and interest, if any),
and the balance of such excess, if any, refunded to the taxpayer as
pro-
vided in subsection (c) of K.S.A. 79-32,105, and amendments
thereto.
Sec. 41. On and after July 1, 2003,
K.S.A. 2002 Supp. 79-32,100a is
hereby amended to read as follows: 79-32,100a. (a) Every
payor payer
who is required under federal law to withhold upon payments other
than
wages pursuant to the federal internal revenue
code as defined by K.S.A.
79-3295 and amendments thereto, shall withhold
and deduct and with-
hold 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 payer from withholding responsibility
with respect to payments
other than wages to a payee shall also apply for Kansas income tax
with-
holding purposes. Whenever a payor payer is
required to reinstate with-
holding for federal 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 de-
duct 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. Every
payer who is required
under federal law to withhold upon payments of a pension,
annuity or
other deferred income, as defined by K.S.A. 79-3295 and
amendments
thereto, shall deduct and withhold an amount to be determined in
ac-
cordance with K.S.A. 79-32,100d and amendments thereto, whenever
the
payee is a resident of the state of Kansas.
(d) Every payer who makes a payment of
a management fee or a
consulting fee to a nonresident shall deduct and withhold an
amount to
be determined in accordance with K.S.A. 2002 Supp. 79-32,100d
and
amendments thereto.
New Sec. 42. (a) Corporations for
which an election as an S corpo-
ration under subchapter S of the federal internal revenue code is
in effect
are required to deduct and withhold tax at a rate equal to the
maximum
rate imposed on individuals pursuant to subsection (a) of K.S.A.
79-32,110
and amendments thereto, from a nonresident shareholder's share of
Kan-
sas taxable income of the corporation, whether distributed or
undistri-
buted, and pay the withheld amount to the department in the
manner
prescribed by the department. For a taxable year beginning after
2002,
the corporation shall make a return and pay over the withhold funds
on
or before the due date of the S corporation's income tax return,
including
extensions. Taxes withheld in the name of the nonresident
shareholder
must be used as credit against taxes due at the time the
nonresident files
a return of income or other applicable information return for the
taxable
year.
(b) An S corporation required to withhold
taxes on distributed or
undistributed income shall file a return with each payment of tax
to the
department, on forms prescribed by the secretary, disclosing such
infor-
mation as required by the secretary pursuant to subsection (i). The
S
corporation shall furnish to each nonresident shareholder a written
state-
ment as required by K.S.A. 79-3299 and amendments thereto as proof
of
the amount of the nonresident shareholder's share of distributed or
un-
distributed income and of the amount that has been withheld.
(c) Partnerships are required to withhold
tax at a rate equal to the
maximum rate imposed on individuals pursuant to subsection (a) of
K.S.A.
79-32,110 and amendments thereto, from a nonresident partner's
share
of Kansas taxable income of the partnership, whether distributed or
un-
distributed, and pay the withheld amount to the department in the
man-
ner prescribed by the department. For a taxable year beginning
after
2002, the partnership shall make a return and pay over the withheld
funds
on or before the due date of the partnership's income tax return,
including
extensions. Taxes withheld in the name of the nonresident partner
must
be used as credit against taxes due at the time the nonresident
files a
return of tax or other applicable information return for the
taxable year.
(d) A partnership required to withhold
taxes on distributed or undis-
tributed income shall file a return with each payment of tax to the
de-
partment, on forms prescribed by the secretary, disclosing such
infor-
mation as required by the secretary pursuant to subsection (i).
The
partnership shall furnish to each nonresident shareholder a written
state-
ment as required by K.S.A. 79-3299 and amendments thereto, as
proof
of the amount of the nonresident shareholder's share of distributed
or
undistributed income that has been withheld.
(e) Limited liability companies are
required to withhold tax at a rate
equal to the maximum rate imposed on individuals pursuant to
subsection
(a) of K.S.A. 79-32,110 and amendments thereto, from a
nonresident
member's share of Kansas taxable income of the limited liability
company,
whether distributed or undistributed, and pay the withheld amount
to the
department in the manner prescribed by the department. For a
taxable
year beginning after 2002, the limited liability company shall make
a re-
turn and pay over the withheld funds on or before the due date of
the
limited liabilities income tax return, including extensions. Taxes
withheld
in the name of the nonresident member must be used as credit
against
taxes due at the time the nonresident files a return of tax or
other appli-
cable information return for the taxable year.
(f) A limited liability company required
to withhold taxes on distrib-
uted or undistributed income shall file a return with each payment
of tax
to the department, on forms prescribed by the secretary, disclosing
such
information as required by the secretary pursuant to subsection
(i). The
limited liability company shall furnish to each nonresident member
a writ-
ten statement as required by K.S.A. 79-3299 and amendments
thereto,
as proof of the amount of the nonresident member's share of
distributed
or undistributed income that has been withheld.
(g) If a nonresident shareholder, partner
or member provides the S
corporation, partnership or limited liability company with a
statement that
the shareholder or partner is an organization exempt from income
taxes
under section 501(a) of the federal internal revenue code, then the
S
corporation, partnership or limited liability company is not
required to
withhold with regard to that shareholder, partner or member. The
state-
ment must contain the shareholder's, partner's or member's name,
fed-
eral identification number, internal revenue code section exemption
num-
ber, and a copy of the internal revenue service exemption
letter.
(h) (1) For purposes of computing
the penalty under K.S.A. 79-
32,107 and amendments thereto, the amount withheld is deemed a
pay-
ment of estimated tax, and an equal part of the amount is deemed
paid
on each estimated tax due date for the previous taxable year.
(2) If a nonresident shareholder, partner
or member files an affidavit
with the department in a form acceptable to the department by
which
such nonresident shareholder, partner or member agrees to be
subject
to the personal jurisdiction of the department in courts of this
state for
the purpose of determining and collecting any Kansas taxes,
including
estimated taxes, together with any related interest and penalties,
then the
S corporation, partnership or limited liability company is not
required to
withhold with regard to that shareholder, partner or member. The
de-
partment may revoke an exemption granted by this subsection at any
time
it determines that the nonresident shareholder, partner or member
is not
abiding by its terms.
(i) The department is authorized to
require such returns and other
information as it considers appropriate to administer the
provisions of this
section, and to issue rulings and promulgate regulations as
necessary or
appropriate to implement this section.
(j) The director of taxation may allow a
nonresident individual share-
holder, partner or member to not file a Kansas income tax return if
the
nonresident individual shareholder's, partner's or member's only
source
of Kansas income was such nonresident shareholder's, partner's or
mem-
ber's share of the S corporation's, partnership's or limited
liability com-
pany's income which was derived from or attributable to sources
within
this state, and the S corporation, partnership or limited liability
company
has remitted the amount required by subsections (a), (c) or (e) on
behalf
of such nonresident shareholder, partner or member. The amount
re-
mitted shall be retained in satisfaction of the Kansas income tax
liability
of the nonresident individual shareholder, partner or member.
(k) The provisions of this section shall
be part of and supplemental
to the Kansas withholding and declaration of estimated tax act.
(l) The provisions of this section shall
be effective on and after July
1, 2003.
Sec. 43. On and after July 1, 2003,
K.S.A. 2002 Supp. 79-32,100b is
hereby amended to read as follows: 79-32,100b. (a) Every employer
or
payor, payer, person or organization
required to deduct and withhold tax
from wages of an employee or, payments
other than wages of a payee or
from a distribution, under this act shall be liable for the
payment of such
tax whether or not it is collected from the employee
or, payee or distri-
butee by the employer or payor, payer,
person or organization. For pur-
poses of assessment and collection, any amount required to be
withheld
and paid over to the department of revenue, and any additions to
tax,
penalties and interest with respect thereto, shall be considered
the tax of
the employer.
(b) Any amount of tax withheld shall
constitute a special fund in trust
for the department of revenue.
(c) No employee
or, payee or distributee shall have
any right of action
against their employer or payor, payer, person
or organization deducting
and withholding tax in respect to any moneys deducted and
withheld
from wages or, payments other than wages
or distributions and paid over
to the department of revenue in compliance or in intended
compliance
with this act.
Sec. 44. On and after July 1, 2003,
K.S.A. 2002 Supp. 79-32,100c is
hereby amended to read as follows: 79-32,100c. (a) If an employer
or
payor, payer, person or organization deducting
and withholding tax fails
to deduct and withhold the tax as required under this act, and
thereafter,
the income tax against which the tax may be credited is paid, the
tax
required to be deducted and withheld shall not be collected from
the
employer or payor, payer, person or
organization. The payment of such
tax does not, however, operate to relieve the employer, payer,
person or
organization from liability for penalties, interest or
additions to the tax
applicable with respect to such failure to deduct and withhold. The
em-
ployer or payor will, payer, person or
organization shall not be relieved
under this provision from liability for payment of the tax required
to be
withheld unless it can be shown that the income tax against which
the tax
required to be withheld under this act may be credited has been
paid.
(b) Every agent or other person having
control, receipt, custody or
disposal of, or paying the wages of an employee or group of
employees
employed by one or more employers, is for the purpose of this act
des-
ignated to be an employer. In the case of the corporation, the
officers
and board of directors are likewise considered employers. Employers
of
classes named in this section shall be subject to all the
provisions of law
including penalties as is their principal. Any employer who
willfully fails
to collect the tax imposed by the Kansas withholding tax act or
truthfully
account for any pay over such tax, or willfully attempts in any
manner to
evade or defeat any tax or the payment thereof, shall be subject to
a
penalty equal to the total amount of the tax evaded, or not
collected, or
not accounted for and paid over in addition to other penalties
provided
by law.
Sec. 45. K.S.A. 2002 Supp.
79-15,101 is hereby amended to read as
follows: 79-15,101. As used in this act unless the context
otherwise re-
quires:
(a) Any term used in this act shall have
the same meaning as when
used in a comparable context in the internal revenue code. Any
reference
in this act to ``federal law'' or the ``internal revenue
code'' shall mean the
provisions of the United States internal revenue code of 1986, as
such
code exists on December 31, 1997. Any reference in this act to a
specific
provision of the internal revenue code shall be to such provision
as it
exists on December 31, 1997. However, for estates of decedents
dying on
or after January 1, 2007, any determination made under K.S.A.
79-15,102
and amendments thereto regarding whether the estate is required
by fed-
eral law to file a return for federal estate taxes shall be made
by referring
to the provisions of the United States internal revenue code of
1986, as
such code exists on December 31, 2001.
(b) ``Decedent'' includes the
testator, intestate, grantor, bargainer,
vender or donor.
(b) (c) ``Deemed
executor'' includes any person in actual or construc-
tive possession of any property of the decedent.
(c)
(d) ``Director'' means the director of taxation.
(e) ``Distributee'' means a
beneficiary, legatee, devisee, heir, next of
kin, grantee, donee, vendee, joint tenant or successor.
(d)
(f) ``Domicile'' refers to that place where a person
resides, has an
intention to remain and to which they intend to return following
any
absence.
(e)
(g) ``Estate'' and ``property'' shall mean the real,
personal and
mixed property or interest therein of the testator, intestate,
grantor, bar-
gainor, vendor or donor which shall pass or be transferred to
legatees,
devisees, heirs, next of kin, grantees, donees, vendees, or
successors and
shall include all personal property within or without the
state.
(f)
(h) ``Executor'' and ``administrator'' mean the duly
appointed,
qualified and acting executor or administrator of the decedent in
this
state.
(g)
(i) ``Nonresident decedent'' means a decedent who was
not a res-
ident decedent at the time of death.
(h)
(j) ``Personal representative'' means the executor,
administrator
or deemed executor of the decedent.
(i)
(k) ``Resident decedent'' means a decedent who was
domiciled in
this state at the time of death. A person who spent in the
aggregate more
than six months of the calendar year immediately preceding such
person's
death within this state shall be presumed to have been a
resident for
purposes of this act, in the absence of proof to the
contrary.
(j)
(l) ``Secretary'' means the secretary of revenue, or
the secretary's
designee.
(k) (m) ``Tax''
includes tax, penalty and interest, unless the context of
a particular section otherwise requires.
(n) ``Tax situs'' relates to location
of property for the purpose of im-
posing tax. Real estate or tangible personal property reflected
in the Kan-
sas gross estate shall be considered to have a tax situs within
Kansas if,
at the time of the decedent's death, the property was physically
located
within the state of Kansas. Oil and gas leases on lands in this
state and
all interests created thereby, or arising therefrom, shall be
considered as
tangible personal property having an actual situs in this state.
Intangible
property reflected in the Kansas gross estate, including moneys
on deposit
with financial institutions, shall be presumed to have a tax
situs within
Kansas if the decedent was a resident decedent at the time of
death.
(l)
(o) ``Transfer'' shall include the passing of property
or any interest
therein in possession or enjoyment, present or future, by
inheritance,
descent, devise, succession, bequest, grant, deed, bargain, sale,
gift or
appointment in the manner herein prescribed.
Sec. 46. K.S.A. 2002 Supp.
79-15,102 is hereby amended to read as
follows: 79-15,102. (a) A tax is hereby imposed on the estate of
every
resident decedent, and every nonresident decedent who died holding
an
interest in property with a Kansas tax situs, whose estate is
required by
federal law to file a return for federal estate taxes. For
estates of decedents
dying on or after January 1, 2007, the determination of whether
the estate
is required by federal law to file a return for federal estate
taxes shall be
made by referring to the provisions of the United States
internal revenue
code of 1986, as such code exists on December 31, 2001. The
amount of
such tax shall be equal to the amount of the maximum credit
allowable
by section 2011 of the internal revenue code against the tax
imposed on
the transfer of the estate of the decedent by section 2001 of the
internal
revenue code.
(b) When the estate of a resident
decedent consists of property within
and without the state, or in the case of the estate of a
nonresident de-
cedent who died holding an interest in property with a
Kansas tax situs,
the tax imposed under subsection (a) shall be the
percentage thereof that
the gross estate for federal estate tax purposes less the
value of all property
included therein having a tax situs which is not within the
jurisdiction of
the state of Kansas, bears to the total gross estate for
federal estate tax
purposes shall consist of property with a tax
situs in Kansas and property
with a tax situs outside Kansas, the tax imposed by subsection
(a) shall be
multiplied by the percentage determined by dividing the value of
all prop-
erty included in the gross estate which is within the
jurisdiction of the
state of Kansas by the value of all property included in the
gross estate.
Sec. 47. K.S.A. 2002 Supp.
79-15,103 is hereby amended to read as
follows: 79-15,103. (a) Except as otherwise provided, the
personal rep-
resentative of every estate subject to the tax imposed by K.S.A.
2002
Supp. 79-15,102 and amendments thereto who is required by federal
law
to file a return for federal estate taxes shall make and
file in the office of
the director a return on forms prepared and furnished by the
secretary
together with a copy of the federal estate tax return on or
before the date
the federal estate tax return is required to be
filed. The personal repre-
sentative of any decedent whose estate is not taxable under
the provisions
of this act, may obtain a determination of the director
that no tax liability
exists on such estate by filing a return on forms prepared
and furnished
by the secretary stating that such estate is not
taxable.
(b) The taxes imposed under the
provisions of this act shall be paid
by the personal representative to the director at the
expiration of nine
months after the death of the decedent.
(c) If the taxes contemplated by
this act are not paid when due, in-
terest at the rate prescribed by subsection (b) of K.S.A.
79-2968, and
amendments thereto, shall be charged and collected
commencing at the
time the same become payable.
(b) In those estates in which no
executor or administrator has been
appointed, the deemed executor shall make and file such return.
In the
event there is more than one deemed executor, all deemed
executors shall
be jointly responsible for completing and filing one return
reporting all of
the assets of the estate except as hereinafter
provided.
(c) If, after exercising due
diligence, the personal representative mak-
ing and filing such return is unable to make a complete return
as to any
part of the gross estate of the decedent, the personal
representative shall
make and file a return reporting all information as to the
estate assets,
including a description thereof and the name of any person
holding a legal
or beneficial interest in the assets, to the best of such
personal represen-
tative's knowledge.
Sec. 48. K.S.A. 2002 Supp.
79-15,109 is hereby amended to read as
follows: 79-15,109. (a) As soon as practicable after the
return is filed and
the taxes paid, the director shall issue a closing letter. Such
closing letter
shall be issued to the personal representative upon the director
being
satisfied that there has been a final determination of all taxes
due and
that all such taxes have been paid.
(b) The closing letter shall be
applicable only to assets reported in the
return filed with the director. To the extent the gross assets
of the decedent
were reported, the issuance of a closing letter shall be
conclusive evidence
that all taxes have been determined and paid and shall release
any lien
which attached to the decedent's property, or the property of
any personal
representative or distributee, unless notice of such lien has
been filed un-
der section 61, and amendments thereto.
New Sec. 49. Any tax liability for
tax imposed pursuant to K.S.A.
2002 Supp. 79-15,127 which may have accrued prior to the effective
date
of this act is hereby abolished. Any such tax paid shall be
refunded to the
taxpayer pursuant to the procedure prescribed by this section. Each
claim
for a tax refund shall be verified and submitted to the director of
taxation
upon forms furnished by the director and shall be accompanied by
any
additional documentation required by the director. The director
shall
review each claim and shall refund that amount of tax paid. All
refunds
shall be paid from the inheritance or succession tax refund fund,
which
is hereby created, upon warrants of the director of accounts and
reports
pursuant to vouchers approved by the director or the director's
designee.
New Sec. 50. Returns made in
accordance with the provisions of this
act shall be filed on or before the date the federal estate tax
return is
required to be filed.
New Sec. 51. (a) Upon a showing of
good cause the director may
grant a reasonable extension of time for filing a return.
(b) A request for an extension of time to
file shall be made in the
manner and form prescribed by the secretary. No such extension
shall be
for more than six months, except in the event of litigation
directly involv-
ing the estate.
(c) Notwithstanding a grant of an
extension of time to file, the taxes
shall be due and payable at the same time and in the same manner as
if
no such extension had been granted.
New Sec. 52. All returns,
statements or other documents required
to be filed under any provision of this act shall be filed with the
office of
the director of taxation, or at such other place as the secretary
may by
rule or regulation prescribe.
New Sec. 53. (a) Any return,
statement or other document required
to be made under any provision of this act shall be signed in
accordance
with forms or regulations prescribed by the secretary.
(b) The fact that an individual's name is
signed to a return, statement
or other document shall be prima facie evidence for all purposes
that the
return, statement or other document was actually signed by the
individual.
(c) Except as otherwise provided by the
secretary, any return, dec-
laration, statement or other document required to be made under
any
provision of this act shall contain or be verified by a written
declaration
that it is made under penalties of perjury.
New Sec. 54. If any person fails to
make a return required by this
act or by regulations prescribed thereunder, but consents to
disclose all
information necessary for the preparation thereof, the director may
pre-
pare such return. After such return is signed by the person, such
return
may be received by the director as the return of the person.
New Sec. 55. (a) The director is
authorized to provide with respect
to any amount required to be shown on a return, statement or any
other
document, that if the amount of such item is other than a
whole-dollar
amount either:
(1) The fractional part of a dollar shall
be disregarded; or
(2) the fractional part of a dollar shall
be disregarded unless it
amounts to $.50 or more, in which case the amount, to be
determined
without regard to the fractional part of a dollar, shall be
increased by $1.
(b) Any person making a return, statement
or other document shall
be allowed, under regulations prescribed by the secretary, to make
such
return, statement or other document without regard to subsection
(a).
(c) The provisions of subsections (a) and
(b) shall not be applicable
to items which must be taken into account in making the
computations
necessary to determine the amount required to be shown on a form,
but
shall be applicable only to such final amount.
New Sec. 56. (a) The tax imposed
under the provisions of this act
shall be paid by the personal representative.
(b) The personal representative, or each
personal representative if
there is more than one, shall be personally liable for the tax to
the extent
of the property in the personal representative's actual or
constructive
possession which has a Kansas tax situs, less any amounts the
personal
representative is required to pay to third parties who have a
legally en-
forceable claim to the property that has priority under state or
federal
law over the tax imposed by this act.
New Sec. 57. (a) The tax imposed
under the provisions of this act
shall be paid at the expiration of nine months after the death of
the
decedent.
(b) The person required to make the
return, without assessment or
notice and demand from the director, shall pay such tax to the
office of
the director of taxation, or at such other place as the secretary
may by
rule or regulation prescribe.
New Sec. 58. (a) If any personal
representative fails to file a return
or pay the tax if one is due, at the time required by or under the
provisions
of this act, there shall be added to the tax an additional amount
equal to
1% of the unpaid balance of the tax due for each month or fraction
thereof
during which such failure continues, not exceeding 24% in the
aggregate,
plus interest at the rate prescribed by subsection (a) of K.S.A.
79-2968,
and amendments thereto, from the date the tax was due until
paid.
(b) If after review of a return the
director determines that the un-
derpayment of tax was due to the failure of the personal
representative
to make a reasonable attempt to comply with the provisions of this
act, a
penalty shall be imposed in the amount of 25% of the unpaid balance
of
tax due.
(c) If any personal representative has
failed to file a return or has
filed an incorrect or insufficient return, and after notice from
the director
refuses or neglects within 20 days to file a proper return, the
director
shall determine the value of the taxable estate according to the
best avail-
able information and assess the tax together with a penalty of 50%
of the
unpaid balance of tax due plus interest at the rate prescribed by
subsec-
tion (a) of K.S.A. 79-2968, and amendments thereto, from the date
the
tax was originally due to the date of payment.
(d) Any personal representative who, with
fraudulent intent, fails to
pay any tax or to make, render or sign any return, or to supply any
infor-
mation, within the time required by or under the provisions of this
act,
shall be assessed a penalty equal to the amount of the unpaid
balance of
tax due plus interest at the rate prescribed by subsection (a) of
K.S.A. 79-
2968, and amendments thereto, from the date the tax was originally
due
to the date of payment. Such person shall also be guilty of a
misdemeanor
and, upon conviction, shall be fined not more than $1,000 or be
impris-
oned in the county jail not less than 30 days nor more than one
year, or
both such fine and imprisonment.
(e) Any personal representative who
intentionally signs a fraudulent
return shall be guilty of a felony, and upon conviction shall be
punished
by imprisonment for a term not exceeding five years.
(f) (1) Whenever the director
determines that the failure of the per-
sonal representative to comply with the provisions of subsection
(a), (b)
or (c) was due to reasonable causes, the director may waive or
reduce any
of the penalties upon making a record of the reasons therefor.
(2) No penalty shall be assessed
hereunder with respect to any un-
derpayment of estate tax liability reported on any amended return
filed
by any personal representative who at the time of filing pays such
un-
derpayment and where the return is not being examined at the time
of
filing.
(3) No penalty assessed hereunder shall
be collected if the personal
representative has had the tax abated on appeal, and any penalty
collected
upon such tax shall be refunded.
New Sec. 59. Whenever the director
has reason to believe that a
personal representative may be unwilling or unable to fulfill the
filing
requirements of K.S.A. 79-15,103, and amendments thereto, relating
to
the filing of a return, or of section 56, and amendments thereto,
relating
to the payment of the tax, or that a distributee receiving property
liable
for the payment of tax is about to depart from the state or to
remove any
property which is subject to tax, including proceeds from the sale
or
disposal of such property, or to conceal themselves or such
property, or
to transfer, commingle, disburse or otherwise manipulate such
property
in order to frustrate or preclude the calculation of tax due
thereon or
collection of tax due therefrom, or to do any other act tending to
preju-
dice, jeopardize or render wholly or partially ineffective the
determination
or collection of tax unless proceedings are brought without delay,
the
director shall immediately make an assessment for all such taxes
due,
noting such finding on the assessment. Thereupon notices of lien
may be
filed in accordance with section 61, and amendments thereto, or, in
the
director's discretion, a warrant may be issued for the collection
of tax as
provided in section 62, and amendments thereto. Any person liable
for
tax, within 30 days from the date of filing of such notice of lien
or warrant,
may request review in the manner prescribed by K.S.A. 79-3226,
and
amendments thereto, on the correctness of the jeopardy assessment.
If
the director finds that in certain cases collection of the tax may
be jeop-
ardized by delay, the director, in the exercise of discretion,
immediately
may issue notice and demand for payment of tax found to be due. In
such
cases, collection may be stayed by the giving of such security as
the di-
rector may consider adequate.
New Sec. 60. (a) The property of
the estate of every decedent whose
estate is required to file an estate tax return pursuant to K.S.A.
79-15,103,
and amendments thereto, in whatever form of investment it may
happen
to be, shall be charged with a lien for all taxes, penalties and
interest
thereon which are or may become due on such property.
(b) Unless the estate tax imposed by this
act is sooner paid in full, it
shall be a lien upon the gross estate of the decedent for 10 years
from
the date of death, except that such part of the gross estate as is
used for
the payment of charges against the estate and expenses of its
administra-
tion, allowed by any court having jurisdiction therefor, shall be
divested
of such lien.
(c) Except as otherwise provided, if the
taxes imposed under this act
are not paid when due, the spouse, transferee, trustee, surviving
tenant,
person in possession of the property by reason of the exercise,
nonexercise
or release of a power of appointment or beneficiary, who receives,
or has
on the date of the decedent's death, property included in the gross
estate,
to the extent of the value of such property at the time of the
decedent's
death, shall be personally liable for such tax. The provisions of
this sub-
section shall not apply to the trustee of an employee's trust which
meets
the requirements of section 401(a) of the federal internal revenue
code.
Any part of such property transferred by, or transferred by a
transferee
of such spouse, transferee, trustee, surviving tenant, person in
possession
or beneficiary to a purchaser or holder of a security interest
shall be
divested of the lien provided for in subsection (a) and a similar
lien shall
then attach to all the property of such spouse, transferee,
trustee, surviv-
ing tenant, person in possession or beneficiary or transferee of
any such
person, except any part transferred to a purchaser or a holder of a
security
interest.
New Sec. 61. (a) Whenever the
director has reason to believe that
any property which is subject to tax, including proceeds from the
sale or
disposal of such property, may be transferred, commingled,
disbursed,
concealed within or removed from the state, or otherwise
manipulated in
order to frustrate or preclude the collection of tax from such
property,
the director may file against such property written notice of the
lien im-
posed by section 60, and amendments thereto.
(b) A notice of lien shall be filed with
the register of deeds in any
county where any property subject to tax is located, upon forms
pre-
scribed by the secretary. In the event an exact tax liability has
been de-
termined, the notice may recite the amount of such liability.
(c) Upon satisfaction of the lien, or
upon its release or divestiture in
accordance with section 64, and amendments thereto, the director
shall
issue notice of the release of such lien, on forms prescribed by
the
director.
New Sec. 62. (a) If the personal
representative fails to timely pay the
taxes imposed by this act, the director may enforce the director's
lien by
the issuance of a warrant under the director's hand and official
seal, di-
rected to the sheriff of any county of the state, commanding such
sheriff
to levy upon and sell the real and personal property of the
distributee
found within the sheriff's county for the payment of the amount
thereof,
with the added penalty, interest and the cost of executing the
warrant,
and to return such warrant to the director and pay to the director
the
money collected by virtue thereof not more than 60 days from the
date
of the warrant. The sheriff, within five days after the receipt of
the war-
rant, shall file with the clerk of the district court of the
sheriff's county a
copy thereof, and thereupon the clerk shall enter in the
appearance
docket in appropriate columns, the name of the distributee named in
the
warrant, the amount of the tax or portion thereof and interest for
which
the warrant is issued and the date such copy is filed. The amount
of such
warrant docketed shall thereupon become a lien upon the title to,
and
interest in, the real property of the distributee against whom it
is issued
in the same manner, as a judgment duly docketed in the office of
such
clerk. The sheriff shall proceed in the same manner and with like
effect
as prescribed by law with respect to executions issued against
property
upon judgments of a court of record and shall be entitled to the
same
fees for the sheriff's services to be collected in the same
manner.
(b) The court in which the warrant is
docketed shall have jurisdiction
over all subsequent proceedings as fully as though a judgment had
been
rendered in the court. In the discretion of the director, a warrant
of like
terms, force and effect may be issued and directed to any officer
or em-
ployee of the director, and in the execution thereof such officer
or em-
ployee shall have all the powers conferred by laws upon sheriffs,
and the
subsequent proceedings thereunder shall be the same as provided
where
the warrant is issued directly to the sheriff. The distributee
shall have the
right to redeem the real estate within a period of 18 months from
the
date of such sale. If a warrant is returned, unsatisfied in full,
the director
shall have the same remedies to enforce the claim for taxes as if
the state
of Kansas had recovered judgment against the distributee for the
amount
of the tax. No law exempting any goods and chattels, land and
tenements
from forced sale under execution shall apply to a levy and sale
under any
such warrants or upon any execution issued upon any judgment
rendered
in any action for estate taxes. The director shall have the right
at any time
after the warrant has been returned unsatisfied or satisfied only
in part,
to issue alias warrants until the full amount of the tax is
collected.
New Sec. 63. In cases where the tax
is due and payable, the director
of taxation may bring an action for collection. All actions shall
be prose-
cuted by the attorney for the director in the name of the state,
and such
actions may be brought in the same courts as other actions for
money.
New Sec. 64. The lien imposed by
section 60, and amendments
thereto, shall be divested or released only in accordance with the
follow-
ing provisions:
(a) The lien shall be divested upon the
payment of all taxes, penalty
and interest due;
(b) the lien shall be divested after 10
years from the date of the de-
cedent's death;
(c) that portion of the decedent's
property which is used for the pay-
ment of charges against the estate and expenses of its
administration,
allowed by any court having jurisdiction thereof, shall be divested
of such
lien;
(d) the lien shall not affect any
property after it has been sold or
disposed of for value by the executors or administrators in
accordance
with K.S.A. 59-1410 and 59-1413, and amendments thereto, or
otherwise
in accordance with law, but in all such cases a lien shall attach
to the
proceeds realized from any such sale or other disposition for all
taxes and
interest thereon which are or may be due on such property. Tax due
or
payable from the proceeds of such sale or disposal of such property
shall
be collected by the personal representative in accordance with the
pro-
visions of section 56, and amendments thereto, or by the director
in ac-
cordance with the provisions of section 62 or 63, and
amendments
thereto; and
(e) that portion of the decedent's
property which must be sold, trans-
ferred or disposed of for the payment of taxes against the estate
shall be
divested of the lien, but only to the extent a specific release of
has been
granted by the director.
New Sec. 65. (a) Whenever the lien
imposed by section 60, and
amendments thereto, has been released in accordance with the
provisions
of section 64, and amendments thereto, and the personal
representative
makes written request for proof of such release, the director shall
furnish
such personal representative with notice of release. Any such
notice of
release shall be in such form as prescribed by the director and may
in-
clude use of or reference to the closing letter issued by the
director or
may be included as part of that closing letter.
(b) When the notice of release applies to
real property, such notice
may be filed in the office of the register of deeds in any county
where
any such real property included in the gross estate is located or,
when
the estate is involved in proceedings before the district court,
with the
court. At the discretion of the director, such notice of release
may be
filed by the director or may be provided to the personal
representative
for filing.
New Sec. 66. The provisions of
sections 50 through 66 and amend-
ments thereto shall be part of and supplemental to the Kansas
estate tax
act.
New Sec. 67. (a) The executive
director of the state board of tax
appeals shall charge and collect a filing fee, established by rules
and reg-
ulations adopted by the state board of tax appeals, for any appeal
in any
proceeding under the tax protest, tax grievance or tax exemption
statutes
or in any other original proceeding for such board to recover all
or part
of the costs of processing such actions incurred by the state board
of tax
appeals. No filing fee shall be imposed on applications by
taxpayers for
refunds of protested taxes under the provisions of K.S.A. 79-2005,
and
amendments thereto, or for appeals from decisions rendered pursuant
to
K.S.A. 79-1448, and amendments thereto, with regard to
single-family
residential property. Not-for-profit organizations shall not be
charged a
filing fee exceeding $10 for any appeal if the valuation of the
property
that is the subject of the controversy does not exceed
$100,000.
(b) There is hereby created in the state
treasury the BOTA filing fee
fund.
(c) The executive director of the board
of tax appeals shall remit to
the state treasurer at least monthly all tax appeal filing fees
received by
the state board of tax appeals. Upon receipt of any such
remittance, the
state treasurer shall deposit the amount in the state treasury to
the credit
of the BOTA filing fee fund.
(d) All expenditures from the BOTA filing
fee fund shall be made in
accordance with appropriation acts upon warrants of the director of
ac-
counts and reports issued pursuant to vouchers approved by the
executive
director of the state board of tax appeals or a person or persons
designated
by such executive director.
New Sec. 68. (a) (1)
Notwithstanding the provisions of any other law
to the contrary, with respect to the following taxes administered
by the
department of revenue, an amnesty from the assessment or payment
of
all penalties and interest with respect to unpaid taxes or taxes
due and
owing shall apply upon compliance with the provisions of this
section and
if such tax liability is paid in full within the amnesty period,
from October
1, 2003, to November 30, 2003: (A) Privilege tax under K.S.A.
79-1106
et seq. and amendments thereto; (B) taxes under the Kansas
estate tax
act, K.S.A. 2002 Supp. 79-15,100 et seq. and amendments
thereto; (C)
taxes under the Kansas income tax act, K.S.A. 79-3201 et
seq. and amend-
ments thereto; (D) taxes under the Kansas withholding and
declaration
of estimated tax act, K.S.A. 79-3294 et seq. and amendments
thereto; (E)
taxes under the Kansas cigarette and tobacco products act, K.S.A.
79-
3301 et seq. and amendments thereto; (F) taxes under the
Kansas retail-
ers' sales tax act, K.S.A. 79-3601 et seq. and amendments
thereto and the
Kansas compensating tax act, K.S.A. 79-3701 et seq. and
amendments
thereto; (G) local sales and use taxes under K.S.A. 12-187 et
seq. and
amendments thereto; (H) liquor enforcement tax under K.S.A.
79-4101
et seq. and amendments thereto; (I) liquor drink tax under
K.S.A. 79-
41a01 et seq. and amendments thereto; and (J) mineral
severance tax
under K.S.A. 79-4216 et seq. and amendments thereto.
(2) Except for the Kansas privilege tax
and individual and corporate
income tax, amnesty shall apply only to tax liabilities due and
unpaid for
tax periods ending on or before December 31, 2002. For the
Kansas
privilege tax and individual and corporate income tax, amnesty
shall apply
only to tax liabilities due and unpaid for tax periods ending on or
before
December 31, 2001. For the eligible taxes and tax periods, amnesty
shall
apply to the under-reporting of such tax liabilities, the
nonpayment of
such taxes and the nonreporting of such tax liabilities.
(3) Amnesty shall not apply to any matter
or matters for which, on or
after February 6, 2003, any one of the following circumstances
exist: (A)
The taxpayer has received notice of the commencement of an audit;
(B)
an audit is in progress; (C) the taxpayer has received notice of an
assess-
ment pursuant to K.S.A. 79-2971 or 79-3643 and amendments
thereto;
(D) as a result of an audit, the taxpayer has received notice of a
proposed
or estimated assessment or notice of an assessment; (E) the time to
ad-
ministratively appeal an issued assessment has not yet expired; or
(F) an
assessment resulting from an audit, or any portion of such
assessment, is
pending in the administrative appeals process before the secretary
or
secretary's designee pursuant to K.S.A. 79-3226 or 79-3610 and
amend-
ments thereto or the board of tax appeals, or is pending in the
judicial
review process before any state or federal district or appellate
court. Am-
nesty shall not apply to any matter that is the subject of an
assessment,
or any portion of an assessment, which has been affirmed by a
reviewing
state or federal district or appellate court. Amnesty shall not
apply to any
party to any criminal investigation or to any civil or criminal
litigation that
is pending in any court of the United States or this state for
nonpayment,
delinquency or fraud in relation to any tax imposed by the state of
Kansas.
(b) Upon written application by the
taxpayer, on forms prescribed by
the secretary of revenue, and upon compliance with the provisions
of this
section, the department of revenue shall not seek to collect any
penalty
or interest which may be applicable with respect to taxes eligible
for
amnesty.
(c) Amnesty for penalties and interest
shall be granted only to those
eligible taxpayers who, within the amnesty period of October 1,
2003, to
November 30, 2003, and in accordance with rules and regulations
estab-
lished by the secretary of revenue, have properly filed a tax
return for
each taxable period for which amnesty is requested, paid the entire
bal-
ance of tax due and obtained approval of such amnesty by the
department
of revenue.
(d) If a taxpayer elects to participate
in the amnesty program estab-
lished pursuant to this section as evidenced by full payment of the
tax
due as established by the secretary of revenue, that election shall
consti-
tute an express and absolute relinquishment of all administrative
and ju-
dicial rights of appeal with respect to such tax liability. No tax
payment
received pursuant to this section shall be eligible for refund or
credit. No
payment of penalties or interest made prior to October 1, 2003,
shall be
eligible for amnesty.
(e) For tax returns for which amnesty has
been requested, nothing
in this section shall be interpreted to prohibit the department
from ad-
justing such tax return as a result of a federal, department or
other state
agency audit.
(f) Fraud or intentional
misrepresentation of a material fact in con-
nection with an application for amnesty shall void such application
and
any waiver of penalties and interest from amnesty.
(g) Discovery of fraud relating to the
underlying tax liability shall void
the abatement of any liability as a result of any amnesty.
(h) The department may promulgate such
rules and regulations or
issue administrative guidelines as are necessary to administer the
provi-
sions of this section.
(i) The provisions of this section shall
be effective on and after July
1, 2003.
Sec. 69. K.S.A. 74-2433 and K.S.A.
2002 Supp. 79-15,101, 79-
15,102, 79-15,103, 79-15,106, 79-15,107, 79-15,108, 79-15,109,
79-
15,114, 79-15,115 and 79-15,127 are hereby repealed.
Sec. 70. On and after July 1, 2003, K.S.A. 12-188,
12-189a, 12-191,
12-191a, 12-192, 12-198, 72-6431, 75-5151, 79-3607, 79-3608 and
79-
3651 and K.S.A. 2002 Supp. 12-187, 12-189, 79-201x, 79-3295,
79-3298,
79-3299, 79-32,100, 79-32,100a, 79-32,100b, 79-32,100c, 79-32,206,
79-
3602, 79-3603, 79-3606 and 79-3650 are hereby repealed.
Sec. 71. This act shall take effect and be in
force from and after its
publication in the Kansas register.
Approved May 19, 2003.
Published in the Kansas Register May 22, 2003.
__________