Kansas Compensating Tax; Kansas Retailers' Sales Tax
Application of Senate Substitute for House Bill 2365 - Statute of Limitations for Sales and Use Tax Refunds Involving HPIP Certification
KANSAS DEPARTMENT OF REVENUE
OFFICE OF THE SECRETARY
Revenue Ruling 19-2009-03
July 20, 2009
Application of Senate Substitute for House Bill 2365 Statute of Limitations for Sales and Use Tax Refunds Involving HPIP Certification
This Revenue Ruling provides guidance concerning how the Department of Revenue will implement Section 9 of Senate Substitute for House Bill 2365 for certain sales tax refund claims based on K.S.A. 2008 Supp. 79-3606(cc) when the claimant’s investment project qualifies for the High Performance Incentive Program (HPIP), pursuant to K.S.A. 2008 Supp. 79-32,160a(e). Section 9 shortened from three years to one year the statute of limitations on the filing of claims for sales and compensating (use) tax refunds and credits.
A taxpayer claiming the sales tax exemption under K.S.A. 2008 Supp. 79-3606(cc) for an investment project certified by the Department of Commerce as HPIP-qualified, can apply to the Department of Revenue for a project exemption certificate. K.S.A. 74-50,115(e). A project exemption certificate will be issued once the HPIP certification has been submitted to the Department of Revenue. The taxpayer then furnishes the project exemption certificate to suppliers and contractors, so sales tax is not charged on the purchases or labor costs of construction projects as well as the purchase and installation of tangible personal property being installed as part of the HPIP-qualified investment project.
A taxpayer must satisfy certain statutory criteria in order to become HPIP-qualified, including payment of higher than annual average wages, pursuant to K.S.A. 74-50,131. When the HPIP-qualified investment project involves the taxpayer starting up a new worksite staffed with a workforce new to the company, the taxpayer may not have sufficient employment history for that worksite to establish an annual average wage at the time the taxpayer applies for HPIP certification. The Department of Commerce must then wait until the taxpayer has established an annual average wage for the new worksite before determining qualification and issuing the HPIP certification. This may not occur until after the investment project is already in progress or completed and the purchases of tangible personal property and labor for the investment project have already been made. In that situation, the taxpayer would need to apply for a sales tax refund on purchases qualifying for the K.S.A. 2008 Supp. 79-3606(cc) sales tax exemption after receiving the HPIP certification on the project from Department of Commerce. If the taxpayer has not received the HPIP certification on the investment project before 1 year after project completion, the new one-year statute of limitations on refunds may have already expired.
In order the accommodate this situation, pursuant to K.S.A. 2008 Supp. 79-3609(c), when the HPIP-qualified investment project includes starting up a new worksite staffed by a new workforce with insufficient employment history at the time of application to Department of Commerce for HPIP certification to establish an average annual wage for the new worksite, then the Department of Revenue agrees to extend the statute of limitations for a sales tax refund claim on purchases qualifying for the K.S.A. 2008 Supp. 79-3606(cc) sales tax exemption submitted after receipt of HPIP certification from one year to three years from the due date of the return for the reporting period as provided by K.S.A. 79-3607, and amendments thereto.
This revenue ruling replaces and supersedes all prior advice, revenue rulings and rulings that have been issued regarding the statute of limitations concerning sales and use tax refunds under K.S.A. 2008 Supp. 79-3606(cc) based on receiving certification from Department of Commerce that the investment project is HPIP-qualified.
Secretary of Revenue
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