CHAPTER 159 HOUSE BILL No. 2416 An Act concerning taxation; relating to amnesty from assessment or payment of penalties
and interest on certain unpaid taxes; procedures and requirements of program; definition
of doing business in state for sales and compensating tax purposes; amending K.S.A. 79-
3702 and repealing the existing section.
Be it enacted by the Legislature of the State of Kansas:

      New Section  1. (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.

      Sec.  2. K.S.A. 79-3702 is hereby amended to read as follows: 79-
3702. For the purposes of this act: (a) ``Purchase price'' means the con-
sideration paid or given or contracted to be paid or given by any person
to the seller of an article of tangible personal property for the article
purchased. The term shall include, in addition to the consideration paid
or given or contracted to be paid or given, the actual cost of transportation
from the place where the article was purchased to the person using the
same in this state. If a cash discount is allowed and taken on the sale it
shall be deducted in arriving at the purchase price.

      (b) The meaning ascribed to words and phrases in K.S.A. 79-3602,
and amendments thereto, insofar as is practicable, shall be applicable
herein unless otherwise provided. The provisions of K.S.A. 79-3601 to
79-3625, inclusive, and amendments thereto, relating to enforcement,
collection and administration, insofar as practicable, shall have full force
and effect with respect to taxes imposed under the provisions of this act.

      (c) ``Use'' means the exercise within this state by any person of any
right or power over tangible personal property incident to the ownership
of that property, except that it shall not include processing, or the sale of
the property in the regular course of business, and except storage as
hereinafter defined.

      (d) ``Storage'' means any keeping or retaining in this state for any
purpose except sale in the regular course of business or subsequent use
solely outside this state of tangible personal property purchased from a
retailer.

      (e) ``Storage'' and ``use'' do not include the keeping, retaining or ex-
ercising of any right or power over tangible personal property shipped or
brought into this state for the purpose of subsequently transporting it
outside the state for use thereafter solely outside the state, or for the
purpose of being processed, fabricated, or manufactured into, attached
to or incorporated into, other tangible personal property to be transported
outside the state and thereafter used solely outside the state.

      (f) ``Property used in processing'' means: (1) Any tangible personal
property which, when used in fabrication, compounding, manufacturing
or germination, becomes an integral part of the new article resulting from
such fabrication, compounding, manufacturing, or germination, and in-
tended to be sold ultimately at retail; (2) fuel which is consumed in cre-
ating power, heat, or steam for processing or for generating electric cur-
rent.

      (g) ``Retailer'' means every person engaged in the business of selling
tangible personal property for use within the meaning of this act, except
that, when in the opinion of the director it is necessary for the efficient
administration of this act to regard any salesperson, representatives,
truckers, peddlers or canvassers as the agents of the dealers, distributors,
supervisors, employers or persons under whom they operate or from
whom they obtain the tangible personal property sold by them, irrespec-
tive of whether they are making sales on their own behalf or on behalf of
such dealers, distributors, supervisors, employers, or persons, the director
may so regard them and may regard the dealers, distributors, supervisors,
employers, or persons as retailers for the purposes of this act.

      (h)  (1) ``Retailer doing business in this state'' or any like term, means:
(A) Any retailer: (1) having or maintaining within in this state, perma-
nently, temporarily, directly or by indirectly through a subsidiary, agent
or representative, an office, distribution house, sales house, warehouse or
other place of business, or any agent or other representative operating
within this state under the authority of the retailer or its subsidiary, ir-
respective of whether such place of business or agent is located here
permanently or temporarily, or whether such retailer or subsidiary is ad-
mitted to do business within the state; (2) engaging in regular or system-
atic solicitation of sales of tangible personal property in this state by the
distribution of catalogs, periodicals, advertising flyers, or other advertis-
ing, by means of print, radio or television media, or by mail, telegraphy,
telephone, computer data base, cable, optic, microwave or other com-
munication system for the purpose of effecting retail sales of tangible
personal property.;

      (B) any retailer having an employee, independent contractor, agent,
representative, salesperson, canvasser or solicitor operating in this state
either permanently or temporarily, under the authority of the retailer or
its subsidiary, for the purpose of selling, delivering, installing, assembling,
servicing, repairing, soliciting sales or the taking of orders for tangible
personal property;

      (C) any retailer, including a contractor, repair person or other service
provider, who enters this state to perform services that are enumerated
in K.S.A. 79-3603 and amendments thereto, and who is required to secure
a retailer's sales tax registration certificate before performing those serv-
ices;

      (D) any retailer deriving rental receipts from a lease of tangible per-
sonal property situated in this state;

      (E) any person having a franchisee or licensee operating under its
trade name if the franchisee or the licensee is required to collect the tax
under the Kansas retailers' sales tax act;

      (F) any person regularly maintaining a stock of tangible personal
property in this state for sale in the normal course of business; and

      (G) any retailer who has any other contact with this state that would
allow this state to require the retailer to collect and remit tax under the
provisions of the constitution and laws of the United States.

      (2) A retailer shall be presumed to be doing business in this state if:

      (A) Both of the following conditions exist:

      (i) The retailer holds a substantial ownership interest in, or is owned
in whole substantial part by, a retailer maintaining a sales location in
Kansas; and

      (ii) the retailer sells the same or a substantially similar line of products
as the related Kansas retailer and does so under the same or a substantially
similar business name, or the Kansas facilities or Kansas employees of the
related Kansas retailer are used to advertise, promote or facilitate sales
by the retailer to consumers.

      (B) The retailer holds a substantial ownership interest in, or is owned
in whole or in substantial part by, a business that maintains a distribution
house, sales house, warehouse or similar place of business in Kansas that
delivers property sold by the retailer to consumers.

      (C) For purposes of paragraphs (A) and (B):

      (i) ``Substantial ownership interest'' means an interest in an entity
that is not less than the degree of ownership of equity interest in an entity
that is specified by Section 78p of Title 15 of the United States Code, or
any successor to that statute, with respect to a person other than a director
or officer; and

      (ii) ``ownership'' means and includes both direct ownership, and in-
direct ownership though a parent, subsidiary or affiliate.

      (3) The processing of orders electronically, by fax, telephone, the in-
ternet or other electronic ordering process, does not relieve a retailer of
responsibility for collection of the tax from the purchaser if the retailer is
doing business in this state pursuant to this section.

      (i) ``Director'' means the director of taxation.

      New Sec.  3. When tangible personal property is delivered by an
owner or former owner thereof, or by a factor, or agent of that owner,
former owner or factor to a consumer, pursuant to a retail sale made by
a retailer who has not been issued a registration certificate pursuant to
K.S.A. 79-3608 and amendments thereto, or a permit issued pursuant to
K.S.A. 79-3705d and amendments thereto, the person making the deliv-
ery shall be deemed the retailer of that property. Such person shall in-
clude the retail selling price of the property in such person's gross re-
ceipts. As used in this section, ``factor'' means either an agent who is
employed to sell property for the principal and who is vested with pos-
session or control of the property or a person who receives and sells goods
for a commission. This section shall be part of and supplemental to the
Kansas retailers' sales tax act.

 Sec.  4. K.S.A. 79-3702 is hereby repealed.

 Sec.  5. This act shall take effect and be in force from and after its
publication in the statute book.

Approved May 23, 2003.
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