Session Law

Identifying Information:L. 2003 ch. 150
Other Identifying Information:2003 Senate Bill 265
Tax Type:Kansas Compensating Tax; Kansas Retailers' Sales Tax
Brief Description:An Act concerning taxation; relating to collection and remittance of sales and compensating tax; amending K.S.A. 2002 Supp. 79-3603, 79-3620, 79-3703 and 79-3710 and repealing the existing sections.
Keywords:


Body:

CHAPTER 150

SENATE BILL No. 265


An Act concerning taxation; relating to collection and remittance of sales and compensating

tax; amending K.S.A. 2002 Supp. 79-3603, 79-3620, 79-3703 and 79-3710 and repealing


the existing sections.


Be it enacted by the Legislature of the State of Kansas:

Section 1. 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 2006, and 5% on and after July 1, 2005 2006, 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 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

collected 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,

and the sale of the services of modifying, altering, updating or maintaining

computer software. As used in this subsection, ``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 program which is held or existing for

general or repeated sale, even if the program was originally developed

for a single end user as custom computer software;

(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; 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. 2. K.S.A. 2002 Supp. 79-3620 is hereby amended to read as

follows: 79-3620. (a) All revenue collected or received by the director of

taxation from the taxes imposed by this act shall be remitted to the state

treasurer in accordance with the provisions of K.S.A. 75-4215, and

amendments thereto. Upon receipt of each such remittance, the state

treasurer shall deposit the entire amount in the state treasury, less

amounts withheld as provided in subsection (b) and amounts credited as

provided in subsection (c) and (d), to the credit of the state general fund.

(b) A refund fund, designated as ``sales tax refund fund'' not to exceed

$100,000 shall be set apart and maintained by the director from sales tax

collections and estimated tax collections and held by the state treasurer

for prompt payment of all sales tax refunds including refunds authorized

under the provisions of K.S.A. 79-3635, and amendments thereto. Such

fund shall be in such amount, within the limit set by this section, as the

director shall determine is necessary to meet current refunding require-

ments under this act. In the event such fund as established by this section

is, at any time, insufficient to provide for the payment of refunds due

claimants thereof, the director shall certify the amount of additional funds

required to the director of accounts and reports who shall promptly trans-

fer the required amount from the state general fund to the sales tax refund

fund, and notify the state treasurer, who shall make proper entry in the

records.

(c) (1) The state treasurer shall credit 5/98 of the revenue collected

or received from the tax imposed by K.S.A. 79-3603, and amendments

thereto, at the rate of 4.9%, and deposited as provided in subsection (a),

exclusive of amounts credited pursuant to subsection (d), in the state

highway fund.

(2) The state treasurer shall credit 5/104 of the revenue collected or

received from the tax imposed by K.S.A. 79-3603, and amendments

thereto, at the rate of 5.2%, and deposited as provided in subsection (a),

exclusive of amounts credited pursuant to subsection (d), in the state

highway fund.

(3) The state treasurer shall credit 5/106 of the revenue collected or

received from the tax imposed by K.S.A. 79-3603, and amendments

thereto, at the rate of 5.3%, and deposited as provided in subsection (a),

exclusive of amounts credited pursuant to subsection (d), in the state

highway fund.

(4) (3) The state treasurer shall credit 1/20 of the revenue collected

and received from the tax imposed by K.S.A. 79-3603, and amendments

thereto, at the rate of 5%, and deposited as provided by subsection (a),

exclusive of amounts credited pursuant to subsection (d), in the state

highway fund.

(d) The state treasurer shall credit all revenue collected or received

from the tax imposed by K.S.A. 79-3603, and amendments thereto, as

certified by the director, from taxpayers doing business within that por-

tion of a redevelopment district occupied by a redevelopment project that

was determined by the secretary of commerce and housing to be of state-

wide as well as local importance or will create a major tourism area for

the state as defined in K.S.A. 12-1770a, and amendments thereto, to the

city bond finance fund, which fund is hereby created. The provisions of

this subsection shall expire when the total of all amounts credited here-

under and under subsection (d) of K.S.A. 79-3710, and amendments

thereto, is sufficient to retire the special obligation bonds issued for the

purpose of financing all or a portion of the costs of such redevelopment

project.

Sec. 3. K.S.A. 2002 Supp. 79-3703 is hereby amended to read as

follows: 79-3703. There is hereby levied and there shall be collected from

every person in this state a tax or excise for the privilege of using, storing,

or consuming within this state any article of tangible personal property.

Such tax shall be levied and collected in an amount equal to the consid-

eration paid by the taxpayer multiplied by 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 2006, and 5% on and after July 1, 2005 2006. 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 of 2% until the earlier of: (1) The date the

bonds issued to finance or refinance the redevelopment project under-

taken in the district have been paid in full; or (2) the final scheduled

maturity of the first series of bonds issued to finance the redevelopment

project. All property purchased or leased within or without this state and

subsequently used, stored or consumed in this state shall be subject to

the compensating tax if the same property or transaction would have been

subject to the Kansas retailers' sales tax had the transaction been wholly

within this state.

Sec. 4. K.S.A. 2002 Supp. 79-3710 is hereby amended to read as

follows: 79-3710. (a) All revenue collected or received by the director

under the provisions of this act shall be remitted to the state treasurer in

accordance with the provisions of K.S.A. 75-4215, and amendments

thereto. Upon receipt of each such remittance, the state treasurer shall

deposit the entire amount in the state treasury, less amounts set apart as

provided in subsection (b) and amounts credited as provided in subsection

(c) and (d), to the credit of the state general fund.

(b) A revolving fund, designated as ``compensating tax refund fund''

not to exceed $10,000 shall be set apart and maintained by the director

from compensating tax collections and estimated tax collections and held

by the state treasurer for prompt payment of all compensating tax refunds.

Such fund shall be in such amount, within the limit set by this section,

as the director shall determine is necessary to meet current refunding

requirements under this act.

(c) (1) The state treasurer shall credit 5/98 of the revenue collected

or received from the tax imposed by K.S.A. 79-3703, and amendments

thereto, at the rate of 4.9%, and deposited as provided in subsection (a),

exclusive of amounts credited pursuant to subsection (d), in the state

highway fund.

(2) The state treasurer shall credit 5/104 of the revenue collected or

received from the tax imposed by K.S.A. 79-3703, and amendments

thereto, at the rate of 5.2%, and deposited as provided in subsection (a),

exclusive of amounts credited pursuant to subsection (d), in the state

highway fund.

(3) The state treasurer shall credit 5/106 of the revenue collected or

received from the tax imposed by K.S.A. 79-3703, and amendments

thereto, at the rate of 5.3%, and deposited as provided in subsection (a),

exclusive of amounts credited pursuant to subsection (d), in the state

highway fund.

(4) (3) The state treasurer shall credit 1/20 of the revenue collected or

received from the tax imposed by K.S.A. 79-3703, and amendments

thereto, at the rate of 5%, and deposited as provided by subsection (a),

exclusive of amounts credited pursuant to subsection (d), in the state

highway fund.

(d) The state treasurer shall credit all revenue collected or received

from the tax imposed by K.S.A. 79-3703, and amendments thereto, as

certified by the director, from taxpayers doing business within that por-

tion of a redevelopment district occupied by a redevelopment project that

was determined by the secretary of commerce and housing to be of state-

wide as well as local importance or will create a major tourism area for

the state as defined in K.S.A. 12-1770a, and amendments thereto, to the

city bond finance fund created by subsection (d) of K.S.A. 79-3620, and

amendments thereto. The provisions of this subsection shall expire when

the total of all amounts credited hereunder and under subsection (d) of

K.S.A. 79-3620, and amendments thereto, is sufficient to retire the special

obligation bonds issued for the purpose of financing all or a portion of

the costs of such redevelopment project.

Sec. 5. K.S.A. 2002 Supp. 79-3603, 79-3620, 79-3703 and 79-3710

are hereby repealed.

Sec. 6. This act shall take effect and be in force from and after its

publication in the statute book.

Approved May 19, 2002.


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Date Composed: 10/29/2003 Date Modified: 10/29/2003