Brief ⁽¹⁾

HB 2292 would provide two types of tax exemptions related to certain transfers of motor vehicles. Specifically, the bill would provide for the following:

Sales Tax Exemption for Motor Vehicle Transfers to a Limited Liability Company (LLC). The bill would extend the current sales tax treatment of corporations to include LLCs relative to a transfer of motor vehicles and trailers in a transfer of assets. Under the bill, the transfer of motor vehicles or trailers by a person to an LLC, solely in exchange for stock securities or membership interest in an LLC, as well as the transfer of motor vehicles or trailers by one LLC to another when all of the assets of the LLC are transferred to the other LCC, would be exempt from sales taxation.

Cancellation of Delinquent Motor Vehicle Property Tax for Charitable Donations of Motor Vehicles. The bill would provide for the cancellation of any delinquent motor vehicle property taxes which are more than one year past due along with any related penalty and interest when the motor vehicle is donated to a nonprofit charitable organization which is exempt from payment of federal income taxes.

Background

The House Committee held a hearing on HB 2292, at which time representatives of the Kansas Bar Association and a Topeka law firm testified in favor of the bill. In its original form, HB 2292 only addressed the sales tax exemption for motor vehicle transfers to an LLC. The House Committee amended the bill to include the provision for cancellation of delinquent motor vehicle property taxes for charitable donations of motor vehicles which was originally contained in HB 2090.

The Division of the Budget reports that passage of the sales tax exemption contained in HB 2292 would result in a negligible reduction in State General Fund revenues. A fiscal note for the cancellation of delinquent motor vehicle property taxes component was not available upon publication of this Supplemental Note.

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/fulltext.cgi