Brief (1)
SB 502, as amended, would convert from a refundable income tax credit to a property tax refund program a provision enacted in 1999 which authorizes the offsetting of 50 percent of property taxes paid on the working interest of certain low production oil leases (15 barrels per day or less) when the average price per barrel of oil has been $16 or less.
Background
Proponents included the Kansas Independent Oil and Gas Association, whose representative said that allowing operators to file for a property tax refund would be much simpler administratively than having multiple working interest owners claim income tax credits.
The Committee amendments, which were suggested by the Department of Revenue, clarify that taxpayers have appeal rights when refunds are in dispute and allow the Director of Taxation to extend the filing deadline when "good cause" exists for so doing.
A fiscal note from the Department said that since the bill would create a new stand-alone program to pay property tax refunds, FY 2001 administrative costs would be $87,968. Of this amount, $68,148 would be ongoing, and $19,820 would be one-time start up costs.
The Department of Revenue has indicated that no additional FY 2001 expenditures would be anticipated based on the price of oil recently prescribed in the Property Valuation Division's Oil and Gas Appraisal Guide. For all subsequent fiscal years in which the low-production leases would qualify for the refunds, individual income tax receipts to the State General Fund would be expected to increase by $2.75 million while appropriations for the new property tax refund program would need to be increased by a similar amount. The $2.75 million figure was used when the 1999 Legislature enacted the income tax credit.
The House Committee amended the bill to accelerate the effective date to publication in the Kansas Register.
1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/bill_search.html