Session Law

Identifying Information:L. 2002 ch. 185
Other Identifying Information:2002 Senate Bill 39
Tax Type:Cigarette and Tobacco Products; Corporate Income Tax; Estate Tax; Individual Income Tax; Kansas Retailers' Sales Tax; Privilege; Property Tax
Brief Description:(Amends Chapter 89)An Act relating to taxation; amending K.S.A. 12-187, 12-189, 17-4634, 17-7507, 79-2401a, 79-2803a, 79-3226, 79-3271, 79-3279, 79-3310 and 79-3312 and K.S.A. 2001 Supp. 17- 2036, 17-7503, 17-7504, 17-7505, 17-76,139, 56-1a606, 56-1a607, 56a-1201, 56a-1202, 56a-1203, 79-201w, 79-1476, 79-3295, 79-32,100a, 79-32,205, 79-32,206, 79-32,211, 79- 3311, 79-3603, 79-3620, 79-3635, 79-3703 and 79-3710 and repealing the existing sections; also repealing K.S.A. 12-189e and K.S.A. 2001 Supp. 79-3603, as amended by section 1 of 2002 Senate Bill No. 372.
Keywords:


Body:

CHAPTER 185

SENATE BILL No. 39

(Amends Chapter 89)


An Act relating to taxation; amending K.S.A. 12-187, 12-189, 17-4634, 17-7507, 79-2401a,

79-2803a, 79-3226, 79-3271, 79-3279, 79-3310 and 79-3312 and K.S.A. 2001 Supp. 17-

2036, 17-7503, 17-7504, 17-7505, 17-76,139, 56-1a606, 56-1a607, 56a-1201, 56a-1202,

56a-1203, 79-201w, 79-1476, 79-3295, 79-32,100a, 79-32,205, 79-32,206, 79-32,211, 79-

3311, 79-3603, 79-3620, 79-3635, 79-3703 and 79-3710 and repealing the existing sec-

tions; also repealing K.S.A. 12-189e and K.S.A. 2001 Supp. 79-3603, as amended by


section 1 of 2002 Senate Bill No. 372.


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

Section. 1. On and after July 1, 2002, K.S.A. 79-3310 is hereby

amended to read as follows: 79-3310. There is imposed a tax upon all

cigarettes sold, distributed or given away within the state of Kansas. On

and after July 1, 2002, and before January 1, 2003, the rate of such tax

shall be $.24 $.70 on each 20 cigarettes or fractional part thereof or $.30

$.875 on each 25 cigarettes, as the case requires. On and after January

1, 2003, the rate of such tax shall be $.79 on each 20 cigarettes or fractional

part thereof or $.99 on each 25 cigarettes, as the case requires. Such tax

shall be collected and paid to the director as provided in this act. Such

tax shall be paid only once and shall be paid by the wholesale dealer first

receiving the cigarettes as herein provided.

The taxes imposed by this act are hereby levied upon all sales of ciga-

rettes made to any department, institution or agency of the state of Kan-

sas, and to the political subdivisions thereof and their departments, insti-

tutions and agencies.

New Sec. 2. (1) On or before July 30, 2002, each wholesale dealer,

retail dealer and vending machine operator shall file a report with the

director in such form as the director may prescribe showing cigarettes,

cigarette stamps and meter imprints on hand at 12:01 a.m. on July 1,

2002. A tax of $.46 on each 20 cigarettes or fractional part thereof or

$.575 on each 25 cigarettes, as the case requires and $.46 or $.575, as the

case requires upon all tax stamps and all meter imprints purchased from

the director and not affixed to cigarettes prior to July 1, 2002, is hereby

imposed and shall be due and payable in equal installments on or before

July 30, 2002, on or before September 30, 2002, and on or before De-

cember 30, 2002. The tax imposed upon such cigarettes, tax stamps and

meter imprints shall be imposed only once under this act. The director

shall remit all moneys collected pursuant to this section to the state trea-

surer who shall credit the entire amount thereof to the state general fund.

(2) On or before January 30, 2003, each wholesale dealer, retail

dealer and vending machine operator shall file a report with the director

in such form as the director may prescribe showing cigarettes, cigarette

stamps and meter imprints on hand at 12:01 a.m. on January 1, 2003. A

tax of $.09 on each 20 cigarettes or fractional part thereof or $.115 on

each 25 cigarettes, as the case requires and $.09 or $.115, as the case

requires upon all tax stamps and all meter imprints purchased from the

director and not affixed to cigarettes prior to January 1, 2003, is hereby

imposed and shall be due and payable in equal installments on or before

January 30, 2003, on or before March 30, 2003, and on or before June

30, 2003. The tax imposed upon such cigarettes, tax stamps and meter

imprints shall be imposed only once under this act. The director shall

remit all moneys collected pursuant to this section to the state treasurer

who shall credit the entire amount thereof to the state general fund.

Sec. 3. On and after July 1, 2002, K.S.A. 2001 Supp. 79-3311 is

hereby amended to read as follows: 79-3311. The director shall design

and designate indicia of tax payment to be affixed to each package of

cigarettes as provided by this act. The director shall sell water applied

stamps only to licensed wholesale dealers in the amounts of 1,000 or

multiples thereof. Stamps applied by the heat process shall be sold only

in amounts of 30,000 or multiples thereof, except that such stamps which

are suitable for packages containing 25 cigarettes each shall be sold in

amounts prescribed by the director. Meter imprints shall be sold only in

amounts of 10,000 or multiples thereof. Water applied stamps in amounts

of 10,000 or multiples thereof and stamps applied by the heat process

and meter imprints shall be supplied to wholesale dealers at a discount

of 2.65% .90% on and after July 1, 2002, and before January 1, 2003, and

.80% thereafter from the face value thereof, and shall be deducted at the

time of purchase or from the remittance therefor as hereinafter provided.

Any wholesale cigarette dealer who shall file with the director a bond, of

acceptable form, payable to the state of Kansas with a corporate surety

authorized to do business in Kansas, shall be permitted to purchase

stamps, and remit therefor to the director within 30 days after each such

purchase, up to a maximum outstanding at any one time of 85% of the

amount of the bond. Failure on the part of any wholesale dealer to remit

as herein specified shall be cause for forfeiture of such dealer's bond. All

revenue received from the sale of such stamps or meter imprints 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.

The state treasurer shall first credit such amount as the director shall

order to the cigarette tax refund fund and shall credit the remaining

balance to the state general fund. A refund fund designated the cigarette

tax refund fund not to exceed $10,000 at any time shall be set apart and

maintained by the director from taxes collected under this act and held

by the state treasurer for prompt payment of all refunds authorized by

this act. Such cigarette tax refund fund shall be in such amount as the

director shall determine is necessary to meet current refunding require-

ments under this act.

The wholesale cigarette dealer shall affix to each package of cigarettes

stamps or tax meter imprints required by this act prior to the sale of

cigarettes to any person, by such dealer or such dealer's agent or agents,

within the state of Kansas. The director is empowered to authorize whole-

sale dealers to affix revenue tax meter imprints upon original packages of

cigarettes and is charged with the duty of regulating the use of tax meters

to secure payment of the proper taxes. No wholesale dealer shall affix

revenue tax meter imprints to original packages of cigarettes without first

having obtained permission from the director to employ this method of

affixation. If the director approves the wholesale dealer's application for

permission to affix revenue tax meter imprints to original packages of

cigarettes, the director shall require such dealer to file a suitable bond

payable to the state of Kansas executed by a corporate surety authorized

to do business in Kansas. The director may, to assure the proper collection

of taxes imposed by the act, revoke or suspend the privilege of imprinting

tax meter imprints upon original packages of cigarettes. All meters shall

be under the direct control of the director, and all transfer assignments

or anything pertaining thereto must first be authorized by the director.

All inks used in the stamping of cigarettes must be of a special type

devised for use in connection with the machine employed and approved

by the director. All repairs to the meter are strictly prohibited except by

a duly authorized representative of the director. Requests for service shall

be directed to the director. Meter machine ink imprints on all packages

shall be clear and legible. If a wholesale dealer continuously issues illeg-

ible cigarette tax meter imprints, it shall be considered sufficient cause

for revocation of such dealer's permit to use a cigarette tax meter.

A licensed wholesale dealer may, for the purpose of sale in another

state, transport cigarettes not bearing Kansas indicia of tax payment

through the state of Kansas provided such cigarettes are contained in

sealed and original cartons.

Sec. 4. On and after July 1, 2002, K.S.A. 79-3312 is hereby amended

to read as follows: 79-3312. The director shall redeem any unused stamps

or meter imprints that any wholesale dealer presents for redemption

within six months after the purchase thereof, at the face value less 2.65%

.90% on and after July 1, 2002, and before January 1, 2003, and .80%

thereafter thereof if such stamps or meter imprints have been purchased

from the director. The director shall prepare a voucher showing the net

amount of such refund due, and the director of accounts and reports shall

draw a warrant on the state treasurer for the same. Wholesale dealers

shall be entitled to a refund of the tax paid on cigarettes which have

become unfit for sale upon proof thereof less 2.65% .90% on and after

July 1, 2002, and before January 1, 2003, and .80% thereafter of such tax.

New Sec. 5. (a) In addition to the tax imposed by the Kansas estate

tax act, a tax is hereby imposed on the privilege of succeeding to the

ownership of any property, corporeal or incorporeal, and any interest

therein within the jurisdiction of this state by any relative, or stranger in

the blood, of a decedent other than the spouse, brothers and sisters, lineal

ancestors, lineal descendants, step-parents, step-children, adopted chil-

dren, lineal descendants of any adopted child or step-child, the spouse or

surviving spouse of a son or daughter, or the spouse or surviving spouse

of an adopted child or step-child of the decedent. In the case of an

adopted child or step-child, a spouse or surviving spouse of an adopted

child or step-child or the lineal descendant of an adopted child or step-

child of the decedent, such person shall file with the department of rev-

enue an affidavit setting forth the relationship of such person to the de-

cedent. Such affidavit shall be sufficient proof of the adoptive or

step-child relationship in question, and the department, or any officer or

employee thereof, shall not require any additional proof of such relation-

ship. As used in this paragraph, ``step-child'' means a child of a spouse or

former spouse of the decedent or the brothers and sisters of the decedent.

(b) The tax shall be charged upon the value of the property succeeded

to and shall be in an amount equal to a percentage of such value as follows:

On any amount up to $100,000, 10%; or any amount in excess of $100,000

and up to $200,000, 12%; on all sums in excess of $200,000, 15%.

(c) All moneys collected pursuant to the provisions of this section

shall be remitted to the state treasurer who shall credit the entire amount

thereof to the state general fund.

(d) The provisions of this section shall be deemed supplemental to

the Kansas estate tax act.

Sec. 6. On and after July 1, 2002, K.S.A. 2001 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

4.9% 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, and 5% on and after July

1, 2005, 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 re-

development 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, with the prepaid value meas-

ured in minutes or other time units, that enables the origination of calls

using an access number or authorization code or both, whether manually

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, except computer soft-

ware described in subsection (s), which when such services are rendered

is not being held for sale in the regular course of business, and whether

or not any tangible personal property is transferred in connection there-

with. The tax imposed by this subsection shall be applicable 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. The sale of computer

software or services does not include: (1) The initial sale of any custom

computer program which is originally developed for the exclusive use of

a single end user; or (2) those services rendered in the modification of

computer software when the modification is developed exclusively for a

single end user only to the extent of the modification and only to the

extent that the actual amount charged for the modification is separately

stated on invoices, statements and other billing documents provided to

the end user. The services of modification, alteration, updating and main-

tenance of computer software shall only include the modification, alter-

ation, updating and maintenance of computer software taxable under this

subsection whether or not the services are actually provided;

(t) the gross receipts received for telephone answering services, in-

cluding mobile phone mobile telecommunication services, beeper services

and other similar services. 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 serv-

ices taxable pursuant 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, with the prepaid value measured in minutes or other time

units, 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. 7. On and after July 1, 2002, K.S.A. 2001 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 high-

way 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 high-

way fund.

(4) 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 high-

way 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. 8. On and after July 1, 2002, K.S.A. 2001 Supp. 79-3635 is

hereby amended to read as follows: 79-3635. (a) (1) A claimant shall be

entitled to a refund of retailers' sales taxes paid upon food during the

calendar year 1998 and each year thereafter in the amount hereinafter

provided. There shall be allowed for each member of a household of a

claimant having income of $12,500 or less, an amount equal to $60 $72.

There shall be allowed for each member of a household of a claimant

having income of more than $12,500 but not more than $25,000, an

amount equal to $30 $36. There shall be allowed for a claimant who

qualifies for an additional personal exemption amount pursuant to K.S.A.

79-32,121, and amendments thereto, an additional amount of $30 or $60

$36 or $72, as the case requires. All such claims shall be paid from the

sales tax refund fund upon warrants of the director of accounts and re-

ports pursuant to vouchers approved by the director of taxation or by a

person or persons designated by the director.

(2) As an alternative to the procedure described by paragraph 1, for

all taxable years commencing after December 31, 1997 2001, there shall

be allowed as a credit against the tax liability of a resident individual

imposed under the Kansas income tax act an amount equal to $60 or $30

$36 or $72, as the case requires, for each member of a household. There

shall be allowed for a claimant who qualifies for an additional personal

exemption amount pursuant to K.S.A. 79-32,121, and amendments

thereto, an additional amount of $30 or $60 $36 or $72, as the case re-

quires. If the amount of such tax credit exceeds the claimant's income tax

liability for such taxable year, such excess amount shall be refunded to

the claimant.

(b) A head of household shall make application for refunds for all

members of the same household upon a common form provided for the

making of joint claims. All claims paid to members of the same household

shall be paid as a joint claim by means of a single warrant.

(c) No claim for a refund of taxes under the provisions of K.S.A. 79-

3632 et seq. shall be paid or allowed unless such claim is actually filed

with and in the possession of the department of revenue on or before

April 15 of the year next succeeding the year in which such taxes were

paid. The director of taxation may: (1) Extend the time for filing any claim

under the provisions of this act when good cause exists therefor; or (2)

accept a claim filed after the deadline for filing in the case of sickness,

absence or disability of the claimant if such claim has been filed within

four years of such deadline.

(d) In the case of all tax years commencing after December 31, 2001,

the threshold income amounts prescribed in this section and subsection

(c) of K.S.A. 79-3633, and amendments thereto, shall be increased by an

amount equal to such threshold amount multiplied by the cost-of-living

adjustment determined under section 1 (f)(3) of the federal internal rev-

enue code for the calendar year in which the taxable year commences.

Sec. 9. On and after July 1, 2002, K.S.A. 2001 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 consideration paid by the taxpayer multiplied by the

rate of 4.9% 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, and 5% on and

after July 1, 2005. Within a redevelopment district established pursuant

to K.S.A. 2001 Supp. 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 undertaken 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. 10. On and after July 1, 2002, K.S.A. 2001 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 high-

way 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 high-

way fund.

(4) 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 high-

way 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. 11. K.S.A. 2001 Supp. 79-32,206 is hereby amended to read as

follows: 79-32,206. For all taxable years commencing after December 31,

1997 2001, there shall be allowed as a credit against the tax liability of a

taxpayer imposed under the Kansas income tax act, the premiums tax

upon insurance companies imposed pursuant to K.S.A. 40-252, and

amendments thereto, and the privilege tax as measured by net income of

financial institutions imposed pursuant to article 11 of chapter 79 of the

Kansas Statutes Annotated, an amount equal to 15% of the property tax

levied for property tax year 1998 years 2002, 2003 and 2004, 20% of the

property tax levied for property tax years 2005 and 2006, and 25% of the

property tax levied for property tax year 2007, and all such years there-

after, actually and timely paid during an income or privilege taxable year

upon commercial and industrial machinery and equipment classified for

property taxation purposes pursuant to section 1 of article 11 of the Kan-

sas constitution in subclass (5) or (6) of class 2 and, machinery and equip-

ment classified for such purposes in subclass (2) of class 2. For all taxable

years commencing after December 31, 2004, there shall be allowed as a

credit against the tax liability of a taxpayer imposed under the Kansas

income tax act an amount equal to 20% of the property tax levied for

property tax years 2005 and 2006, and 25% of the property tax levied for

property tax year 2007 and all such years thereafter, actually and timely

paid during an income taxable year upon machinery and equipment clas-

sified for property tax purposes pursuant to section 1 of article 11 of the

Kansas constitution in subclass (3) of class 2. Prior to the 2004 legislative

session, the joint committee on economic development shall conduct a

study of the economic impact of the foregoing provision. If the amount

of such tax credit exceeds the taxpayer's income tax liability for the taxable

year, the amount thereof which exceeds such tax liability shall be refunded

to the taxpayer. If the taxpayer is a corporation having an election in effect

under subchapter S of the federal internal revenue code, a partnership

or a limited liability company, the credit provided by this section shall be

claimed by the shareholders of such corporation, the partners of such

partnership or the members of such limited liability company in the same

manner as such shareholders, partners or members account for their pro-

portionate shares of the income or loss of the corporation, partnership or

limited liability company.

Sec. 12. K.S.A. 79-3271 is hereby amended to read as follows: 79-

3271. As used in this act, unless the context otherwise requires: (a) ``Busi-

ness income'' means income arising from transactions and activity in the

regular course of the taxpayer's trade or business and includes income

from tangible and intangible property if the acquisition, management, and

disposition of the property constitute integral parts of the taxpayer's reg-

ular trade or business operations, except that for taxable years commenc-

ing after December 31, 1995, a taxpayer may elect that all income derived

from the acquisition, management, use or disposition of tangible or in-

tangible property constitutes business income. The election shall be ef-

fective and irrevocable for the taxable year of the election and the follow-

ing nine taxable years. The election shall be binding on all members of a

unitary group of corporations.

(b) ``Commercial domicile'' means the principal place from which the

trade or business of the taxpayer is directed or managed.

(c) ``Compensation'' means wages, salaries, commissions and any

other form of remuneration paid to employees for personal services.

(d) ``Financial organization'' means any bank, trust company, savings

bank, industrial bank, land bank, safe deposit company, private banker,

savings and loan association, credit union, cooperative bank, investment

company, or any type of insurance company, but such term shall not be

deemed to include any business entity, other than those hereinbefore

enumerated, whose primary business activity is making consumer loans

or purchasing retail installment contracts from one or more sellers.

(e) ``Nonbusiness income'' means all income other than business in-

come.

(f) ``Public utility'' means any business entity which owns or operates

for public use any plant, equipment, property, franchise, or license for

the transmission of communications, transportation of goods or persons,

or the production, storage, transmission, sale, delivery, or furnishing of

electricity, water, steam, oil, oil products or gas.

(g) ``Original return'' means the first return filed to report the income

of a taxpayer for a taxable year or period, irrespective of whether such

return is filed on a single entity basis or a combined basis.

(g) (h) ``Sales'' means all gross receipts of the taxpayer not allocated

under K.S.A. 79-3274 through 79-3278, and amendments thereto.

(h) (i) ``State'' means any state of the United States, the District of

Columbia, the Commonwealth of Puerto Rico, any territory or possession

of the United States, and any foreign country or political subdivision

thereof.

(i) (j) ``Telecommunications company'' means any business entity or

unitary group of entities whose primary business activity is the transmis-

sion of communications in the form of voice, data, signals or facsimile

communications by wire or fiber optic cable.

(j) (k) ``Distressed area taxpayer'' means a corporation which: (1) Is

located in a county which has a population of not more than 45,000 per-

sons and which, as certified by the department of commerce and housing,

has sustained an adverse economic impact due to the closure of a state

hospital in such county pursuant to the recommendations of the hospital

closure commission; and (2) which has a total annual payroll of

$20,000,000 or more for employees employed within such county.

(l) For the purposes of this subsection and subsection (b)(5) of K.S.A.

79-3279, and amendments thereto, the following terms are defined:

(1) ``Administration services'' include clerical, fund or shareholder ac-

counting, participant record keeping, transfer agency, bookkeeping, data

processing, custodial, internal auditing, legal and tax services performed

for an investment company;

(2) ``distribution services'' include the services of advertising, servic-

ing, marketing, underwriting or selling shares of an investment company,

but, in the case of advertising, servicing or marketing shares, only where

such service is performed by a person who is, or in the case of a closed

end company, was, either engaged in the services of underwriting or sell-

ing investment company shares or affiliated with a person who is engaged

in the service of underwriting or selling investment company shares. In

the case of an open end company, such service of underwriting or selling

shares must be performed pursuant to a contract entered into pursuant

to 15 U.S.C.§ 80a-15(b), as in effect on the effective date this act;

(3) ``investment company'', means any person registered under the

federal Investment Company Act of 1940, as in effect on the effective date

of this act, or a company which would be required to register as an in-

vestment company under such act except that such person is exempt to

such registration pursuant to § 80a-3(c)(1) of such act;

(4) ``investment funds service corporation'' includes any corporation

or S corporation headquartered in and doing business in this state which

derives more than 50% of its gross income from the provision of manage-

ment, distribution or administration services to or on behalf of an invest-

ment company or from trustees, sponsors and participants of employee

benefit plans which have accounts in an investment company;

(5) ``management services'' include the rendering of investment advice

to an investment company making determinations as to when sales and

purchases of securities are to be made on behalf of the investment com-

pany, or the selling or purchasing of securities constituting assets of an

investment company, and related activities, but only where such activity

or activities are performed:

(A) Pursuant to a contract with the investment company entered into

pursuant to 15 U.S.C. § 80a-15(a), in effect on the effective date of this

act; or

(B) for a person that has entered into such contract with the invest-

ment company;

(6) ``qualifying business income'' is business income derived from the

provision of management, distribution or administration services to or on

behalf of an investment company or from trustees, sponsors and partici-

pants of employee benefit plans which have accounts in an investment

company; and

(7) ``residence'' is the fund shareholder's primary residence address.

Sec. 13. K.S.A. 79-3279 is hereby amended to read as follows: 79-

3279. (a) All business income of railroads and interstate motor carriers of

persons or property for-hire shall be apportioned to this state by multi-

plying the business income by a fraction, in the case of railroads, the

numerator of which is the freight car miles in this state and the denom-

inator of which is the freight car miles everywhere, and, in the case of

interstate motor carriers, the numerator of which is the total number of

miles operated in this state and the denominator of which is the total

number of miles operated everywhere.

(b) All business income of any other taxpayer shall be apportioned to

this state by one of the following methods:

(1) By multiplying the business income by a fraction, the numerator

of which is the property factor plus the payroll factor plus the sales factor,

and the denominator of which is three; or

(2) at the election of a qualifying taxpayer, by multiplying the business

income by a fraction, the numerator of which is the property factor plus

the sales factor, and the denominator of which is two.

(A) For purposes of this subsection (b)(2), a qualifying taxpayer is any

taxpayer whose payroll factor for a taxable year exceeds 200% of the

average of the property factor and the sales factor. Whenever two or more

corporations are engaged in a unitary business and required to file a com-

bined report, the percentage fraction comparison provided by this sub-

section (b)(2) shall be calculated by using the payroll factor, property

factor and sales factor of the combined group of unitary corporations.

(B) An election under this subsection (b)(2) shall be made by includ-

ing a statement with the original tax return indicating that the taxpayer

elects to apply the apportionment method under this subsection (b)(2).

The election shall be effective and irrevocable for the taxable year of the

election and the following nine taxable years. The election shall be bind-

ing on all members of a unitary group of corporations. Notwithstanding

the above, the secretary of revenue may upon the request of the taxpayer,

grant permission to terminate the election under this subsection (b)(2)

prior to expiration of the ten-year period.

(3) At the election of a qualifying telecommunications company, by

multiplying the business income by a fraction, the numerator of which is

the information carrying capacity of wire and fiber optic cable available

for use in this state, and the denominator of which is the information

carrying capacity of wire and fiber optic cable available for use everywhere

during the tax year.

(A) For purposes of this subsection (b)(3), a qualifying telecommu-

nications company is a telecommunications company that is a qualifying

taxpayer under paragraph (A) of subsection (b)(2).

(B) A qualifying telecommunications company shall make the elec-

tion under this subsection (b)(3) in the same manner as provided under

paragraph (B) of subsection (b)(2).

(4) At the election of a distressed area taxpayer, by multiplying the

business income by the sales factor. The election shall be made by in-

cluding a statement with the original tax return indicating that the tax-

payer elects to apply this apportionment method. The election may be

made only once, it must be made on or before December 31, 1999 and

it shall be effective for the taxable year of the election and the following

nine taxable years for so long as the taxpayer maintains the payroll amount

prescribed by subsection (j) of K.S.A. 79-3271.

(5) At the election of the taxpayer made at the time of filing of the

original return, the qualifying business income of any investment funds

service corporation organized as a corporation or S corporation which

maintains its primary headquarters and operations or is a branch facility

that employs at least 100 individuals on a full-time equivalent basis in this

state and has any investment company fund shareholders residenced in

this state shall be apportioned to this state as provided in this subsection,

as follows:

(A) By multiplying the investment funds service corporation's quali-

fying business income from administration, distribution and management

services provided to each investment company by a fraction, the numer-

ator of which shall be the average of the number of shares owned by the

investment company's fund shareholders residenced in this state at the

beginning of and at the end of the investment company's taxable year that

ends with or within the investment funds service corporation's taxable

year, and the denominator of which shall be the average of the number

of shares owned by the investment company's fund shareholders every-

where at the beginning of and at the end of the investment company's

taxable year that ends with or within the investment funds service cor-

poration's taxable year.

(B) A separate computation shall be made to determine the qualifying

business income from each fund of each investment company. The qual-

ifying business income from each investment company shall be multiplied

by the fraction calculated pursuant to paragraph (A) for each fund of such

investment company.

(C) The qualifying portion of total business income of an investment

funds service corporation shall be determined by multiplying such total

business income by a fraction, the numerator of which is the gross receipts

from the provision of management, distribution and administration serv-

ices to or on behalf of an investment company, and the denominator of

which is the gross receipts of the investment funds service company. To

the extent an investment funds service corporation has business income

that is not qualifying business income, such business income shall be ap-

portioned to this state pursuant to subsection (b)(1).

(D) For tax year 2002, the tax liability of an investment funds service

corporation that has elected to apportion its business income pursuant to

paragraph (5) shall be increased by an amount equal to 50% of the dif-

ference of the amount of such tax liability if determined pursuant to sub-

section (b)(1) less the amount of such tax liability determined with regard

to paragraph (5).

(E) When an investment funds service corporation is part of a unitary

group, the business income of the unitary group attributable to the in-

vestment funds service corporation shall be determined by multiplying

the business income of the unitary group by a fraction, the numerator of

which is the property factor plus the payroll factor plus the sales factor,

and the denominator of which is three. The property factor is a fraction,

the numerator of which is the average value of the investment funds serv-

ice corporation's real and tangible personal property owned or rented and

used during the tax period and the denominator of which is the average

value of the unitary group's real and tangible personal property owned

or rented and used during the tax period. The payroll factor is a fraction,

the numerator of which is the total amount paid during the tax period by

the investment funds service corporation for compensation, and the de-

nominator of which is the total compensation paid by the unitary group

during the tax period. The sales factor is a fraction, the numerator of

which is the total sales of the investment funds service corporation during

the tax period, and the denominator of which is the total sales of the

unitary group during the tax period.

(F) A taxpayer seeking to make the election available pursuant to

subsection (b)(5) of K.S.A. 79-3279, and amendments thereto, shall only

be eligible to continue to make such election if the taxpayer maintains at

least 95% of the Kansas employees in existence at the time the taxpayer

first makes such an election.

New Sec. 14. The provisions of sections 12 and 13 of this act shall

be applicable to all taxable years commencing after December 31, 2001.

New Sec. 15. As used in sections 15 through 18 of this act:

(a) ``Establishment'' means a business that:

(1) Has at least $100,000,000 in existing annual gross compensation

paid to jobs located in Kansas, according to reports filed with the secretary

of human resources, for the previous three years;

(2) has an average annual gross compensation of at least $40,000 paid

per existing employee;

(3) currently has at least $200,000,000 total investment in Kansas;

(4) intends to add investment, in the state as defined in subsection

(d), for modernization and retooling of at least $50,000,000 within five

years from the effective date of this act or within five years of contracting

with the department of commerce and housing; and

(5) is described by north American industrial classification code num-

ber 326211, tire manufacturing.

(b) ``Gross compensation'' means wages and benefits paid to or on

behalf of employees receiving wages.

(c) ``Secretary'' means the secretary of commerce and housing.

(d) ``Invest'' or ``investment'' for the purpose of determining the eli-

gibility of an establishment for the incentive payments created pursuant

to this act, means an amount greater than the average amount invested

by the establishment over the five years prior to the effective date of this

act or for investments made after July 1, 2003, over the five years prior

to entering into a contract with the secretary. If an establishment has

been engaged in commercial operations for less than five years, the

amount invested shall be greater than the annual average amount invested

by the establishment for the entire period of commercial operation.

New Sec. 16. The Kansas development finance authority is hereby

authorized to issue obligations in a principal amount not to exceed

$10,000,000 upon certification by the department of commerce and hous-

ing that an establishment has entered into a contract with the secretary

pursuant to this act. The authority shall issue such obligations in an

amount of $1 for every $5 the establishment shall invest as required pur-

suant to section 15, and amendments thereto. The maximum maturity of

bonds issued pursuant to this act shall be 15 years. Such obligations shall

be issued within 60 days of the date by which the secretary receives the

signed contract required pursuant to section 17, and amendments

thereto. The proceeds of such issuance shall be used by the authority for

acquiring or improving real property or acquiring or replacing personal

property for modernizing and retooling of an establishment in the state.

Subject to appropriation, the debt service on such obligations shall be

paid by the transfer of an amount not to exceed 75% of the revenue

realized from payments by employees of the establishment pursuant to

K.S.A. 79-3294, et seq., and amendments thereto, but no such transfer

shall commence prior to July 1, 2003.

New Sec. 17. An establishment shall enter into a contract with the

secretary in which in return for incentive payments authorized pursuant

to section 16, and amendments thereto, the establishment agrees that, in

the event that insufficient revenue is realized by the payments made pur-

suant to section 16, and amendments thereto, the establishment shall be

responsible for the debt services on obligations issued pursuant to this

act. The contract shall include a specified amount which the establish-

ment agrees to invest in the state and shall be the basis for determining

the amount of obligations issued pursuant to section 16, and amendments

thereto. In the event the establishment invests a lesser amount the es-

tablishment shall repay any amount received at a ratio of $1 for each $5

of the difference between the amount pledged and the amount actually

invested. The contract shall further specify that, in the event the rate of

taxation set forth in the Kansas income tax act is abolished and insufficient

revenue is realized to meet the debt service on the obligations issued

pursuant to this act, the establishment shall not be responsible for any

amount of shortfall attributable to such reduction in rates. The contract

may specify such additional terms and conditions as may be necessary to

administer this act. The secretary may include provisions in the contract

to reduce the amount of eligible tax credits or other benefits on the in-

vestment to support such bond repayment.

New Sec. 18. The establishment shall not be allowed credits pursu-

ant to K.S.A. 79-32,160a, and amendments thereto, for any amount of

investment related to or computed on the basis of any investment of the

proceeds of obligations issued pursuant to this act.

Sec. 19. K.S.A. 2001 Supp. 79-201w is hereby amended to read as

follows: 79-201w. The following described property, to the extent speci-

fied by this section, shall be exempt from all property or ad valorem taxes

levied under the laws of the state of Kansas:

(a) Any item of machinery, equipment, materials and supplies which,

except for the operation of the provisions of this section, would be re-

quired to be listed for the purpose of taxation pursuant to K.S.A. 79-306,

and amendments thereto, and which is used or to be used in the conduct

of the owner's business, or in the conduct of activities by an entity not

subject to Kansas income taxation pursuant to K.S.A. 79-32,113, and

amendments thereto, whose original retail cost when new is $250 or less

for tax year 2002, and $400 or less for tax year 2003, and all tax years

thereafter.

(b) The provisions of this section shall apply to all taxable years com-

mencing after December 31, 1995.

Sec. 20. K.S.A. 79-2803a is hereby amended to read as follows: 79-

2803a. Lots or tracts may be sold or transferred as a single group or unit

or in more than one group or unit either:

(a) Upon the motion of any party to the action, the court may, if it

finds and the court grants such motion by order after making a finding

that any two or more lots or tracts constitute a single unit for usual uses

and will sell for a higher price if sold together, order said lots or tracts

sold together as a single unit; or

(b) by the county, without a court order, if such lots or tracts previ-

ously have been offered at public auction for delinquent property taxes,

but which did not sell at the previous public auction.

New Sec. 21. (a) As a part of an order issued pursuant to K.S.A. 79-

2803a, and amendments thereto, and upon application of the county, a

court may authorize the county to dispose of one or more lots or tracts

by negotiated public or private sale or transfer if the court finds that such

property or properties had been included as a part of a prior judgment

and order of sale and had not been purchased at the sale.

(b) Any sale or transfer authorized pursuant to subsection (a), shall

be conducted in accordance with this subsection. The county may ne-

gotiate the sale or transfer of the property on such terms and conditions

it deems advisable and shall publish notice of the proposed sale or transfer

in the official county newspaper. Such notice shall describe the property

and shall state the name of the purchaser or recipient and the sales price

or other consideration, or shall state the other manner of transfer. The

notice also shall state the date, time, and general location of the hearing

to confirm the sale or transfer of the property. The purchaser or recipient

of the property shall execute an affidavit pursuant to the provisions of

K.S.A. 79-2804h, and amendments thereto, and the county may not sell

or transfer of the property to any person who is prohibited from pur-

chasing the property under the provisions of K.S.A. 79-2812, and amend-

ments thereto. Any sale or transfer of real estate by the county under this

section shall be subject to a hearing upon and order of confirmation by

the court and, thereafter, shall be conveyed to the purchaser or recipient

by the sheriff of the county, who shall issue a sheriffs deed, in confor-

mance with K.S.A. 79-2804, and amendments thereto, upon receipt of

the courts order confirming the sale or transfer of the property. The deed

shall convey the property with all rights provided by K.S.A. 79-2804, and

amendments thereto.

Sec. 22. K.S.A. 79-2401a is hereby amended to read as follows: 79-

2401a. (a) (1) Except as provided by paragraph (2) and subsection (b),

real estate bid off by the county for both delinquent taxes and special

assessments, as defined by subsection (c), shall be held by the county

until the expiration of two years from the date of the sale, subject only to

the right of redemption as provided by this section. Any owner or holder

of the record title, the owner's or holder's heirs, devisees, executors, ad-

ministrators, assigns or any mortgagee or the owner's or holder's assigns

may redeem the real estate sold in the sale at any time within two years

after the sale by paying to the county treasurer the amount for which the

real estate was sold plus the interest accrued, all delinquent taxes and

special assessments and interest thereon that have accrued after the date

of such sale which remain unpaid as of the date of redemption and costs

and expenses of the sale and redemption, including but not limited to,

abstracting costs incurred in anticipation of a tax sale.

(2) Any abandoned building or structure and the land accommodat-

ing such building or structure bid off by the county for both delinquent

taxes and special assessments, as defined by subsection (c), shall be held

by the county until the expiration of one year from the date of the sale,

subject only to the right of redemption as provided by this section. Any

owner or holder of the record title, the owner's or holder's heirs, devisees,

executors, administrators, assigns or any mortgagee or the owner's or

holder's assigns may redeem the real estate sold in the sale at any time

within one year after the sale by paying to the county treasurer the amount

for which the real estate was sold plus the interest accrued, all delinquent

taxes and special assessments and interest thereon that have accrued after

the date of such sale which remain unpaid as of the date of redemption

and costs and expenses of the sale and redemption, including but not

limited to abstracting costs incurred in anticipation of a tax sale.

When used in this subsection ``abandoned building or structure and

the land accommodating such building or structure'' shall mean a building

or structure which, for a period of at least one year, has been unoccupied

and which there has been a failure to perform reasonable maintenance

of such building or structure and the land accommodating such building

or structure.

(b) (1) Except as provided by paragraph (2), real estate which is a

homestead under section 9 of article 15 of the Kansas Constitution and

all real estate not described in subsection (a) shall be held by the county

until the expiration of three years from the date of the sale and may be

redeemed partially by paying to the county treasurer the amount of taxes

for which the real estate was sold for one or more years, beginning with

the first year for which the real estate was carried on the tax-sale book of

the county plus interest at the rate prescribed by K.S.A. 79-2004, and

amendments thereto, on the amount from the date the same was carried

on the sale book. Upon payment and partial redemption, the time when

a tax foreclosure sale may be commenced shall be extended by the num-

ber of years paid in the partial redemption.

(2) In Johnson and Wyandotte counties county, real estate which is

a homestead under section 9 of article 15 of the Kansas constitution and

all real estate not described in subsection (a) shall be held by the county

until the expiration of three years from the date of the sale and may be

redeemed partially by paying to the county treasurer the amount of taxes

for which the real estate was sold for one or more years, beginning with

the most recent year for which the real estate was carried on the tax-sale

book of the county plus interest at the rate prescribed by K.S.A. 79-2004,

and amendments thereto, on the amount from the date the same was

carried on the sale book.

(c) For the purpose of this act, the term ``real estate bid off by the

county for both delinquent taxes and special assessments'' shall include

only real estate on which there are delinquent taxes of a general ad va-

lorem property tax nature and delinquent special assessments or other

special taxes levied by a city, county or other municipality in response to

a petition or request of the landowners. Upon publication of the listing

of real estate subject to sale under the provisions of K.S.A. 79-2302, and

amendments thereto, the clerk of any city, county or other municipality

which has levied special assessments during the past 10 years shall certify

to the county treasurer those listed parcels of real estate which are located

within a special assessment district, but no parcel shall be so certified

unless the public improvement was constructed pursuant to a petition or

request of one or more landowners sufficient to authorize the improve-

ment under the applicable statutory special assessment procedure used

by the city, county or other municipality.

(d) If at the expiration of the redemption period, the real estate has

not been redeemed, the real estate shall be disposed of by foreclosure

and sale in the manner provided by K.S.A. 79-2801 et seq., and amend-

ments thereto.

New Sec. 23. (a) Any correspondence issued by the department of

revenue to a taxpayer or the taxpayer's representative demanding pay-

ment of an assessment of any tax the imposition and collection of which

is administered by the department shall consist of a detailed, clear and

accurate explanation of the assessment demand including, but not limited

to, the specific tax and tax year to which such assessment applies and

penalties and interest which apply thereto. If the department proposes

to change the tax or refund due on a return filed by a taxpayer, corre-

spondence detailing the change shall be sent to the taxpayer. The cor-

respondence shall specifically identify the proposed change and explain

in simple and nontechnical terms the reasons for the change.

(b) Any such correspondence demanding the payment of an assess-

ment of tax, penalties and interest in an amount in excess of $750 for

individual accounts and in excess of $2,000 for business accounts shall be

reviewed prior to issuance for accuracy by an employee of the department

and shall provide the employer identification number and contact tele-

phone number of the employee performing any such review.

New Sec. 24. In the event a taxpayer has designated a third party or

other representative to discuss an income tax return upon the taxpayer's

Kansas return, the department shall adhere and comply with such des-

ignation, and shall discuss or correspond with such designee or represen-

tative regarding matters concerning the return, including collection mat-

ters.

New Sec. 25. In addition to the authority to waive any civil penalty

imposed by law for the violation of any law pertaining to any tax admin-

istered by the department of revenue, the secretary or the secretary's

designee shall waive any such penalty upon the finding of any circum-

stance allowing waiver of civil penalties pursuant to the federal internal

revenue code, as in effect on January 1, 2002.

New Sec. 26. Upon a resolution of any assessment of tax, penalties

and interest of any tax the imposition and collection of which is admin-

istered by the department, a closing letter evidencing such resolution shall

be issued to the affected taxpayer or the taxpayer's representative, as the

case may require, within 30 days of the date upon which such resolution

is agreed to. The taxpayer shall be entitled to rely on such closing letter

as it relates to the issues resolved.

New Sec. 27. (a) Notwithstanding any provision of K.S.A. 79-3235,

and amendments thereto, to the contrary, the procedures set forth by

this section shall apply to the issuance of any warrant and the levy upon

property pursuant to such provisions.

(b) The secretary or the secretary's designee shall notify in writing

the person who is the subject of the warrant of the filing of a warrant

under K.S.A. 79-3235, and amendments thereto. The notice required

shall be given in person, left at the dwelling or usual place of business of

such person or sent by certified or registered mail to such person's last

known dwelling address, not more than five business days after the day

of the filing of the notice of lien. The notice shall include in simple and

nontechnical terms the amount of unpaid taxes, the administrative appeals

available to the taxpayer with respect to such warrant and the procedures

relating to such appeals, and the provisions of law and procedures relating

to the release of warrants on property.

Sec. 28. K.S.A. 79-3226 is hereby amended to read as follows: 79-

3226. (a) As soon as practicable after the return is filed, the director of

taxation shall examine it and shall determine the correct amount of the

tax. If the tax found due shall be greater than the amount theretofore

paid, or if a claim for a refund is denied, notice shall be mailed to the

taxpayer. Within 60 days after the mailing of such notice the taxpayer may

request an informal conference with the secretary of revenue or the sec-

retary's designee relating to the tax liability or denial of refund by filing

a written request with the secretary of revenue or the secretary's designee

which sets forth the objections to the proposed liability or proposed denial

of refund. The purpose of such conference shall be to review and recon-

sider all facts and issues that underlie the proposed liability or proposed

denial of refund. The secretary of revenue or the secretary's designee

shall hold an informal conference with the taxpayer and shall issue a

written final determination thereon. The informal conference shall not

constitute an adjudicative proceeding under the Kansas administrative

procedure act. Informal conferences held pursuant to this section may

be conducted by the secretary of revenue or the secretary's designee. The

rules of evidence shall not apply to an informal conference and no record

shall be made, except at the request and expense of the secretary of

revenue or the secretary's designee or taxpayer. The taxpayer may bring

to the informal conference an attorney, certified public accountant and

any other person to represent the taxpayer or to provide information.

Because the purpose of the department staff is to aid the secretary or

secretary's designee in the proper discharge of the secretary's or secre-

tary's designee's duties, the secretary or secretary's designee may confer

at any time with any staff member with respect to the case under recon-

sideration. The secretary of revenue or the secretary's designee shall issue

a written final determination within 270 days of the date of the request

for informal conference unless the parties agree in writing to extend the

time for issuing such final determination. A final determination consti-

tutes final agency action subject to administrative review by the state

board of tax appeals. In the event that a written final determination is not

rendered within 270 days, the taxpayer may appeal to the state board of

tax appeals.

(b) A final determination finding additional tax shall be accompanied

by a notice and demand for payment. Notice under this section shall be

sent by first-class mail in the case of individual taxpayers and by registered

or certified mail in the case of all other taxpayers. The tax shall be paid

within 20 days thereafter, together with interest at the rate per month

prescribed by subsection (a) of K.S.A. 79-2968, and amendments thereto,

on the additional tax from the date the tax was due unless an appeal is

taken in the manner provided by K.S.A. 74-2438 and amendments

thereto, but no additional tax shall be assessed for less than $5 unless the

secretary or the secretary's designee determines the administration and

collection cost involved in collecting an amount over $5 but less than $100

would not warrant collection of the amount due. Interest at such rate shall

continue to accrue on any additional tax liability during the course of any

appeal.

Sec. 29. K.S.A. 2001 Supp. 79-3295 is hereby amended to read as

follows: 79-3295. (a) The term ``employee'' means a resident of this state

as defined by subsection (b) of K.S.A. 79-32,109, and amendments

thereto, performing services for an employer either within or without the

state and a nonresident performing services within this state, and includes

an officer, employee or elected official of the United States, a state, ter-

ritory, or any political subdivision thereof or any agency or instrumentality

thereof, and an officer of a corporation.

(b) The term ``employer'' means any person, firm, partnership, lim-

ited liability company, corporation, association, trust or fiduciary of any

kind or other type organization qualifying as an employer for federal in-

come tax withholding purposes and who maintains an office, transacts

business in or derives any income from sources within the state of Kansas

for whom an individual performs or performed any services, of whatever

nature, as the employee of such employer, and who has control of the

payment of wages for such services, or is the officer, agent or employee

of the person having control of the payment of wages. It also includes the

United States, the state and all political subdivisions thereof, and all agen-

cies or instrumentalities of any of them.

(c) The term ``distributee'' means any person or organization who

receives a distribution which is subject to withholding of income tax pur-

suant to this act.

(d) The term ``distribution'' means a distribution from a corporation

for which an election as an S corporation under subchapter S of the fed-

eral internal revenue code is in effect, from a limited liability company

formed under the laws of the state of Kansas, or from a partnership.

(e) The term ``payee'' means any person or organization who receives

a payment other than wages which is subject to withholding of income

tax pursuant to this act.

(f) The term ``payment other than wages'' means a payment that is

subject to federal income tax withholding and taxable under the Kansas

income tax act, and that is a payment:

(1) for any supplemental unemployment compensation, annuity, or

sick pay;

(2) pursuant to a voluntary withholding agreement;

(3) of gambling winnings;

(4) of taxable payments of Indian casino profits;

(5) for any vehicle fringe benefit;

(6) of periodic payments of pensions, annuities, and other deferred

income;

(7) of nonperiodic distributions of pensions, annuities, and other de-

ferred income; or

(8) of eligible rollover distributions of pensions, annuities, and other

deferred income.

(c) (g) The term ``payor'' means any person or organization, other

than an employer, who makes payments, other than wages or distribu-

tions, which are subject to withholding of income tax pursuant to this act.

(d) (h) The term ``wages'' means wages as defined by section 3401(a)

of the federal internal revenue code which are taxable under the Kansas

income tax act, and shall include any prize or award paid to a professional

athlete at a sporting event held in this state.

Sec. 30. K.S.A. 2001 Supp. 79-32,100a is hereby amended to read as

follows: 79-32,100a. (a) Every payor who withholds federal income tax:

(a) For any supplemental unemployment compensation, annuity or

sick pay;

(b) pursuant to a voluntary withholding agreement;

(c) on gambling winnings;

(d) on taxable payments of Indian casino profits;

(e) for any vehicle fringe benefit;

(f) on periodic payments of pensions, annuities and other deferred

income;

(g) on nonperiodic distributions of pensions, annuities and other de-

ferred income; or

(h) on eligible rollover distributions of pensions, annuities and other

deferred income, from payments made to those persons whose primary

residence is in Kansas shall withhold and deduct an amount to be deter-

mined in accordance with K.S.A. 2001 Supp. 79-32,100b 79-32,100d, and

amendments thereto. is required under federal law to withhold upon

payments other than wages pursuant to the federal internal revenue code

shall withhold and deduct an amount to be determined in accordance

with K.S.A. 79-32,100d, and amendments thereto, whenever the payee is

a person whose primary residence is in Kansas.

(b) A determination by the internal revenue service that relieves a

payor from withholding responsibility with respect to payments other

than wages to a payee shall also apply for Kansas income tax withholding

purposes. Whenever a payor is required to reinstate withholding for fed-

eral income tax with regard to any payee, such obligation shall be equally

applicable for Kansas withholding purposes.

(c) Every payor who makes a distribution as defined by subsection

(d) of K.S.A. 79-3295, and amendments thereto, shall withhold and deduct

an amount to be determined in accordance with K.S.A. 79-32,100d, and

amendments thereto, from amounts distributed or distributable to each

nonresident shareholder or partner.

Sec. 31. K.S.A. 2001 Supp. 79-32,211 is hereby amended to read as

follows: 79-32,211. (a) For all taxable years commencing after December

31, 2000 2001, there shall be allowed a tax credit against the income,

privilege or premium tax liability imposed upon a taxpayer pursuant to

the Kansas income tax act, the privilege tax imposed upon any national

banking association, state bank, trust company or savings and loan as-

sociation pursuant to article 11 of chapter 79 of the Kansas Statutes An-

notated, or the premiums tax and privilege fees imposed upon an insur-

ance company pursuant to K.S.A. 40-252, and amendments thereto, in an

amount equal to 25% of qualified expenditures incurred in the restoration

and preservation of a qualified historic structure pursuant to a qualified

rehabilitation plan by a qualified taxpayer if the total amount of such

expenditures equal $5,000 or more. If the amount of such tax credit ex-

ceeds the qualified taxpayer's income, privilege or premium tax liability

for the year in which such costs and expenses were incurred, the qualified

rehabilitation plan was placed in service, as defined by section 47(b)(1)

of the federal internal revenue code and federal regulation section 1.48-

12(f)(2), such excess amount may be carried over for deduction from such

taxpayer's income, privilege or premium tax liability in the next succeed-

ing year or years until the total amount of the credit has been deducted

from tax liability, except that no such credit shall be carried over for

deduction after the 10th taxable year succeeding the taxable year in which

the qualified expenditures were incurred rehabilitation plan was placed

in service.

(b) As used in this section, unless the context clearly indicates oth-

erwise:

(1) ``Qualified expenditures'' means the costs and expenses incurred

by a qualified taxpayer in the restoration and preservation of a qualified

historic structure pursuant to a qualified rehabilitation plan which are

defined as a qualified rehabilitation expenditure by section 47(c)(2) of the

federal internal revenue code;

(2) ``qualified historic structure'' means any building, whether or not

income producing, which is defined as a certified historic structure by

section 47(c)(3) of the federal internal revenue code, is individually listed

on the register of Kansas historic places, or is located and contributes to

a district listed on the register or of Kansas historic places;

(3) ``qualified rehabilitation plan'' means a project which is approved

by the cultural resources division of the state historical society, or by a

local government certified by the division to so approve, as being consis-

tent with the standards for rehabilitation and guidelines for rehabilitation

of historic buildings as adopted by the federal secretary of interior and in

effect on the effective date of this act. The society shall adopt rules and

regulations providing application and approval procedures necessary to

effectively and efficiently provide compliance with this act, and may col-

lect fees in order to defray its approval costs in accordance with rules and

regulations adopted therefor; and

(4) ``qualified taxpayer'' means the owner of the qualified historic

structure or any other person who may qualify for the federal rehabili-

tation credit allowed by section 47 of the federal internal revenue code.

If the taxpayer is a corporation having an election in effect under sub-

chapter S of the federal internal revenue code, a partnership or a limited

liability company, the credit provided by this section shall be claimed by

the shareholders of such corporation, the partners of such partnership or

the members of such limited liability company in the same manner as such

shareholders, partners or members account for their proportionate shares

of the income or loss of the corporation, partnership or limited liability

company, or as the corporation, partnership or limited liability company

mutually agree as provided in the bylaws or other executed agreement.

Credits granted to a partnership, a limited liability company taxed as a

partnership or other multiple owners of property shall be passed through

to the partners, members or owners respectively pro rata or pursuant to

an executed agreement among the partners, members or owners docu-

menting any alternate distribution method.

(c) Any person, hereinafter designated the assignor, may sell, assign,

convey or otherwise transfer tax credits allowed and earned pursuant to

subsection (a). The taxpayer acquiring credits, hereinafter designated the

assignee, may use the amount of the acquired credits to offset up to 100%

of its income, privilege or premiums tax liability for either the taxable year

in which the qualified rehabilitation plan was first placed into service or

the taxable year in which such acquisition was made. Unused credit

amounts claimed by the assignee may be carried forward for up to five

years, except that all such amounts shall be claimed within 10 years fol-

lowing the tax year in which the qualified rehabilitation plan was first

placed into service. The assignor shall enter into a written agreement with

the assignee establishing the terms and conditions of the agreement and

shall perfect such transfer by notifying the cultural resources division of

the state historical society in writing within 90 calendar days following

the effective date of the transfer and shall provide any information as may

be required by such division to administer and carry out the provisions

of this section. The amount received by the assignor of such tax credit

shall be taxable as income of the assignor, and the excess of the value of

such credit over the amount paid by the assignee for such credit shall be

taxable as income of the assignee.

New Sec. 32. (a) As used in this section:

(1) ``Administrative fee'' means those amounts charged by the pro-

fessional employer organization to the client over and above amounts

applied to the mandatory state and federal taxes, wages of assigned work-

ers and amounts applied to premiums or contributions for benefits pro-

vided for assigned workers.

(2) ``Assigned worker'' means a person having an employment rela-

tionship with both the professional employer organization and the client.

(3) ``Client'' means a person who contracts with a professional em-

ployer organization to obtain employer services from another person

through a professional employer arrangement.

(4) ``Person'' means an individual, an association, a company, a firm,

a partnership, a corporation or any other form of legally recognized entity.

(5) ``Professional employer arrangement'' means an arrangement, un-

der contract or whereby:

(A) A professional employer organization agrees to employ all or a

majority of a client's workforce;

(B) the arrangement is intended to be, or is, ongoing rather than

temporary in nature;

(C) employer responsibilities for workers under the arrangement are

in fact shared by the professional employer organization and the client;

and

(D) for the purposes of this act, a professional employer arrangement

shall not include:

(i) Arrangements wherein a person, whose principal business activity

is not entering into professional employer arrangements, shares employ-

ees with a commonly owned company within the meaning of section

414(b) and (c) of the federal internal revenue code of 1986, as amended,

and which does not hold itself out as a professional employer organization.

(ii) Arrangements in which a person assumes full responsibility for

the product or service performed by such person or such person's agents

and retains and exercises, both legally and in fact, a right of direction and

control over the individuals whose services are supplied under such con-

tractual arrangements, and such person and such person's agents perform

a specified function for the client which is separate and divisible from the

primary business or operations of the client.

(iii) Any person otherwise subject to this act if, during any fiscal year

of the person commencing after July 1, 2000, the person pays total gross

wages to employees employed by the person in the state under one or

more professional employer arrangements which do not exceed 5% of the

total gross wages paid to all employees employed by the person in the

state during the same fiscal year under all arrangements described in

paragraph (4) and that each person does not advertise or hold itself out

to the public as providing services as a professional employer organization.

(6) ``Professional employer organization'' means any person engaged

in providing the services of employees pursuant to one or more profes-

sional employer arrangements or any person that represents itself to the

public as providing services pursuant to a professional employer arrange-

ment.

(b) A professional employer organization shall be considered an em-

ployer for the purposes of withholding state income tax of the assigned

workers pursuant to the Kansas income tax act. Commencing after De-

cember 31, 1999, the client shall be considered as the employer of an

assigned worker under the terms of the professional employer arrange-

ment between the client and the professional employer organization, for

purposes of: (1) subsection (d) of K.S.A. 79-32,154, subsection (d) of

K.S.A. 74-50,114, K.S.A. 79-32,160a or K.S.A. 2001 Supp. 74-50,131, and

amendments thereto; and (2) calculating the client's payroll factor under

K.S.A. 79-3283. The client shall provide to the department of revenue

the payroll information for assigned workers needed for purposes of ad-

ministering the above provisions.

New Sec. 33. (a) The value for property tax purposes of any vessel,

as defined by K.S.A. 32-1102, and amendments thereto, which is acquired

or sold after January 1 and prior to September 1 of any taxable year shall

be equal to the value determined therefor pursuant to K.S.A. 79-503a,

and amendments thereto, multiplied by: (1) In the case of a sale, a fraction

the numerator of which is the number of months, or major portion

thereof, such vessel was owned by the record owner thereof during the

taxable year in which such vessel was sold, and the denominator of which

is 12; and (2) in the case of an acquisition, a fraction the numerator of

which is the number of months, or major portion thereof, remaining in

the taxable year after the date of acquisition by the record owner thereof,

and the denominator of which is 12.

(b) Notice of the acquisition or sale of any such vessel shall be pro-

vided by the record owner thereof to the appropriate county appraiser

within 30 days after such acquisition or sale. Upon receipt of such notice,

and after computation of the value of any such vessel in accordance with

the provision of subsection (a), a notification or revised notification of

value shall be mailed to the taxpayer.

(c) Vessels acquired after September 1 of a taxable year shall not be

subject to assessment and taxation for such year, except as provided by

paragraph (1) of subsection (a).

(d) The provisions of this section shall apply to all taxable years com-

mencing after December 31, 2002.

Sec. 34. K.S.A. 12-187 is hereby amended to read as follows: 12-187.

(a) (1) No city shall impose a retailers' sales tax under the provisions of

this act without the governing body of such city having first submitted

such proposition to and having received the approval of a majority of the

electors of the city voting thereon at an election called and held therefor.

The governing body of any city may submit the question of imposing a

retailers' sales tax and the governing body shall be required to submit the

question upon submission of a petition signed by electors of such city

equal in number to not less than 10% of the electors of such city.

(2) The governing body of any class B city located in any county which

does not impose a countywide retailers' sales tax pursuant to paragraph

(5) of subsection (b) may submit the question of imposing a retailers' sales

tax at the rate of .25%, .5%, .75% or 1% and pledging the revenue re-

ceived therefrom for the purpose of financing the provision of health care

services, as enumerated in the question, to the electors at an election

called and held thereon. The tax imposed pursuant to this paragraph shall

be deemed to be in addition to the rate limitations prescribed in K.S.A.

12-189, and amendments thereto. As used in this paragraph, health care

services shall include but not be limited to the following: Local health

departments, city, county or district hospitals, city or county nursing

homes, preventive health care services including immunizations, prenatal

care and the postponement of entry into nursing homes by home health

care services, mental health services, indigent health care, physician or

health care worker recruitment, health education, emergency medical

services, rural health clinics, integration of health care services, home

health services and rural health networks.

(b) (1) The board of county commissioners of any county may submit

the question of imposing a countywide retailers' sales tax to the electors

at an election called and held thereon, and any such board shall be re-

quired to submit the question upon submission of a petition signed by

electors of such county equal in number to not less than 10% of the

electors of such county who voted at the last preceding general election

for the office of secretary of state, or upon receiving resolutions request-

ing such an election passed by not less than 2/3 of the membership of the

governing body of each of one or more cities within such county which

contains a population of not less than 25% of the entire population of the

county, or upon receiving resolutions requesting such an election passed

by 2/3 of the membership of the governing body of each of one or more

taxing subdivisions within such county which levy not less than 25% of

the property taxes levied by all taxing subdivisions within the county.

(2) The board of county commissioners of Anderson, Atchison, Bar-

ton, Butler, Cowley, Cherokee, Crawford, Ford, Jefferson, Lyon, Mont-

gomery, Neosho, Osage, Ottawa, Riley, Saline, Seward, Wabaunsee, Wil-

son and Wyandotte counties may submit the question of imposing a

countywide retailers' sales tax and pledging the revenue received there-

from for the purpose of financing the construction or remodeling of a

courthouse, jail, law enforcement center facility or other county admin-

istrative facility, to the electors at an election called and held thereon.

The tax imposed pursuant to this paragraph shall expire when sales tax

sufficient to pay all of the costs incurred in the financing of such facility

has been collected by retailers as determined by the secretary of revenue.

Nothing in this paragraph shall be construed to allow the rate of tax

imposed by Butler, Cowley, Lyon, Montgomery, Neosho, Riley or Wilson

county pursuant to this paragraph to exceed or be imposed at any rate

other than the rates prescribed in K.S.A. 12-189, and amendments

thereto.

(3) (A) Except as otherwise provided in this paragraph, the result of

the election held on November 8, 1988, on the question submitted by

the board of county commissioners of Jackson county for the purpose of

increasing its countywide retailers' sales tax by 1% is hereby declared

valid, and the revenue received therefrom by the county shall be ex-

pended solely for the purpose of financing the Banner Creek reservoir

project. The tax imposed pursuant to this paragraph shall take effect on

the effective date of this act and shall expire not later than five years after

such date.

(B) The result of the election held on November 8, 1994, on the

question submitted by the board of county commissioners of Ottawa

county for the purpose of increasing its countywide retailers' sales tax by

1% is hereby declared valid, and the revenue received therefrom by the

county shall be expended solely for the purpose of financing the erection,

construction and furnishing of a law enforcement center and jail facility.

(4) The board of county commissioners of Finney and Ford counties

may submit the question of imposing a countywide retailers' sales tax at

the rate of .25% and pledging the revenue received therefrom for the

purpose of financing all or any portion of the cost to be paid by Finney

or Ford county for construction of highway projects identified as system

enhancements under the provisions of paragraph (5) of subsection (b) of

K.S.A. 68-2314, and amendments thereto, to the electors at an election

called and held thereon. Such election shall be called and held in the

manner provided by the general bond law. The tax imposed pursuant to

this paragraph shall expire upon the payment of all costs authorized pur-

suant to this paragraph in the financing of such highway projects. Nothing

in this paragraph shall be construed to allow the rate of tax imposed by

Finney or Ford county pursuant to this paragraph to exceed the maximum

rate prescribed in K.S.A. 12-189, and amendments thereto. If any funds

remain upon the payment of all costs authorized pursuant to this para-

graph in the financing of such highway projects in Finney county, the

state treasurer shall remit such funds to the treasurer of Finney county

and upon receipt of such moneys shall be deposited to the credit of the

county road and bridge fund. If any funds remain upon the payment of

all costs authorized pursuant to this paragraph in the financing of such

highway projects in Ford county, the state treasurer shall remit such funds

to the treasurer of Ford county and upon receipt of such moneys shall

be deposited to the credit of the county road and bridge fund.

(5) The board of county commissioners of any county may submit the

question of imposing a retailers' sales tax at the rate of .25%, .5%, .75%

or 1% and pledging the revenue received therefrom for the purpose of

financing the provision of health care services, as enumerated in the ques-

tion, to the electors at an election called and held thereon. Whenever any

county imposes a tax pursuant to this paragraph, any tax imposed pursuant

to paragraph (2) of subsection (a) by any city located in such county shall

expire upon the effective date of the imposition of the countywide tax,

and thereafter the state treasurer shall remit to each such city that portion

of the countywide tax revenue collected by retailers within such city as

certified by the director of taxation. The tax imposed pursuant to this

paragraph shall be deemed to be in addition to the rate limitations pre-

scribed in K.S.A. 12-189, and amendments thereto. As used in this par-

agraph, health care services shall include but not be limited to the follow-

ing: Local health departments, city or county hospitals, city or county

nursing homes, preventive health care services including immunizations,

prenatal care and the postponement of entry into nursing homes by home

care services, mental health services, indigent health care, physician or

health care worker recruitment, health education, emergency medical

services, rural health clinics, integration of health care services, home

health services and rural health networks.

(6) The board of county commissioners of Allen county may submit

the question of imposing a countywide retailers' sales tax at the rate of

.5% and pledging the revenue received therefrom for the purpose of

financing the costs of operation and construction of a solid waste disposal

area or the modification of an existing landfill to comply with federal

regulations to the electors at an election called and held thereon. The tax

imposed pursuant to this paragraph shall expire upon the payment of all

costs incurred in the financing of the project undertaken. Nothing in this

paragraph shall be construed to allow the rate of tax imposed by Allen

county pursuant to this paragraph to exceed or be imposed at any rate

other than the rates prescribed in K.S.A. 12-189 and amendments

thereto.

(7) The board of county commissioners of Clay, Dickinson and Miami

county may submit the question of imposing a countywide retailers' sales

tax at the rate of .50% in the case of Clay and Dickinson county and at a

rate of up to 1% in the case of Miami county, and pledging the revenue

received therefrom for the purpose of financing the costs of roadway

construction and improvement to the electors at an election called and

held thereon. The tax imposed pursuant to this paragraph shall expire

after five years from the date such tax is first collected.

(8) The board of county commissioners of Sherman county may sub-

mit the question of imposing a countywide retailers' sales tax at the rate

of .25%, .5% or .75% and pledging the revenue therefrom for the purpose

of financing the costs of the county roads 64 and 65 construction and

improvement project. The tax imposed pursuant to this paragraph shall

expire upon payment of all costs authorized pursuant to this paragraph

in the financing of such project.

(9) The board of county commissioners of Cowley, Russell and

Woodson county may submit the question of imposing a countywide re-

tailers' sales tax at the rate of .5% in the case of Russell and Woodson

county and at a rate of up to .25%, in the case of Cowley county and

pledging the revenue received therefrom for the purpose of financing

economic development initiatives or public infrastructure projects. The

tax imposed pursuant to this paragraph shall expire after five years from

the date such tax is first collected.

(10) The board of county commissioners of Franklin county may sub-

mit the question of imposing a countywide retailers' sales tax at the rate

of .25% and pledging the revenue received therefrom for the purpose of

financing recreational facilities. The tax imposed pursuant to this para-

graph shall expire upon payment of all costs authorized in financing such

facilities.

(11) The board of county commissioners of Douglas county may sub-

mit to the question of imposing a countywide retailers' sales tax at the

rate of .25% and pledging the revenue received therefrom for the purposes

of preservation, access and management of open space, and for industrial

and business park related economic development.

(c) The boards of county commissioners of any two or more contig-

uous counties, upon adoption of a joint resolution by such boards, may

submit the question of imposing a retailers' sales tax within such counties

to the electors of such counties at an election called and held thereon

and such boards of any two or more contiguous counties shall be required

to submit such question upon submission of a petition in each of such

counties, signed by a number of electors of each of such counties where

submitted equal in number to not less than 10% of the electors of each

of such counties who voted at the last preceding general election for the

office of secretary of state, or upon receiving resolutions requesting such

an election passed by not less than 2/3 of the membership of the governing

body of each of one or more cities within each of such counties which

contains a population of not less than 25% of the entire population of

each of such counties, or upon receiving resolutions requesting such an

election passed by 2/3 of the membership of the governing body of each

of one or more taxing subdivisions within each of such counties which

levy not less than 25% of the property taxes levied by all taxing subdivi-

sions within each of such counties.

(d) Any city retailers' sales tax in the amount of .5% being levied by

a city on July 1, 1990, shall continue in effect until repealed in the manner

provided herein for the adoption and approval of such tax or until re-

pealed by the adoption of an ordinance so providing. In addition to any

city retailers' sales tax being levied by a city on July 1, 1990, any such city

may adopt an additional city retailers' sales tax in the amount of .25% or

.5%, provided that such additional tax is adopted and approved in the

manner provided for the adoption and approval of a city retailers' sales

tax. Any countywide retailers' sales tax in the amount of .5% or 1% in

effect on July 1, 1990, shall continue in effect until repealed in the manner

provided herein for the adoption and approval of such tax.

(e) A class D city shall have the same power to levy and collect a city

retailers' sales tax that a class A city is authorized to levy and collect and

in addition, the governing body of any class D city may submit the ques-

tion of imposing an additional city retailers' sales tax in the amount of

.125%, .25%, .5% or .75% and pledging the revenue received therefrom

for economic development initiatives, strategic planning initiatives or for

public infrastructure projects including buildings to the electors at an

election called and held thereon. Any additional sales tax imposed pur-

suant to this paragraph shall expire no later than five years from the date

of imposition thereof, except that any such tax imposed by any class D

city after the effective date of this act shall expire no later than 10 years

from the date of imposition thereof.

(f) Any city or county proposing to adopt a retailers' sales tax shall

give notice of its intention to submit such proposition for approval by the

electors in the manner required by K.S.A. 10-120, and amendments

thereto. The notices shall state the time of the election and the rate and

effective date of the proposed tax. If a majority of the electors voting

thereon at such election fail to approve the proposition, such proposition

may be resubmitted under the conditions and in the manner provided in

this act for submission of the proposition. If a majority of the electors

voting thereon at such election shall approve the levying of such tax, the

governing body of any such city or county shall provide by ordinance or

resolution, as the case may be, for the levy of the tax. Any repeal of such

tax or any reduction or increase in the rate thereof, within the limits

prescribed by K.S.A. 12-189, and amendments thereto, shall be accom-

plished in the manner provided herein for the adoption and approval of

such tax except that the repeal of any such city retailers' sales tax may be

accomplished by the adoption of an ordinance so providing.

(g) The sufficiency of the number of signers of any petition filed

under this section shall be determined by the county election officer.

Every election held under this act shall be conducted by the county elec-

tion officer.

(h) The governing body of the city or county proposing to levy any

retailers' sales tax shall specify the purpose or purposes for which the

revenue would be used, and a statement generally describing such pur-

pose or purposes shall be included as a part of the ballot proposition.

Sec. 35. K.S.A. 12-189 is hereby amended to read as follows: 12-189.

Except as otherwise provided by paragraph (2) of subsection (a) of K.S.A.

12-187, and amendments thereto, the rate of any class A, class B or class

C city retailers' sales tax shall be fixed in the amount of .25%, .5%, .75%

or 1% which amount shall be determined by the governing body of the

city. Except as otherwise provided by paragraph (2) of subsection (a) of

K.S.A. 12-187, and amendments thereto, the rate of any class D city

retailers' sales tax shall be fixed in the amount of .10%, .25%, .5%, .75%,

1%, 1.125%, 1.25%, 1.5% or 1.75%. The rate of any countywide retailers'

sales tax shall be fixed in an amount of either .25%, .5%, .75% or 1%

which amount shall be determined by the board of county commissioners,

except that:

(a) The board of county commissioners of Wabaunsee county, for the

purposes of paragraph (2) of subsection (b) of K.S.A. 12-187, and amend-

ments thereto, may fix such rate at 1.25%; the board of county commis-

sioners of Osage county, for the purposes of paragraph (2) of subsection

(b) of K.S.A. 12-187, and amendments thereto, may fix such rate at 1.25%

or 1.5%; the board of county commissioners of Cherokee, Crawford,

Ford, Saline, Seward or Wyandotte county, for the purposes of paragraph

(2) of subsection (b) of K.S.A. 12-187, and amendments thereto, may fix

such rate at 1.5%, the board of county commissioners of Atchison county,

for the purposes of paragraph (2) of subsection (b) of K.S.A. 12-187, and

amendments thereto, may fix such rate at 1.5% or 1.75% and the board

of county commissioners of Anderson, Barton, Jefferson or Ottawa

county, for the purposes of paragraph (2) of subsection (b) of K.S.A. 12-

187, and amendments thereto, may fix such rate at 2%;

(b) the board of county commissioners of Jackson county, for the

purposes of paragraph (3) of subsection (b) of K.S.A. 12-187, and amend-

ments thereto, may fix such rate at 2%;

(c) the boards of county commissioners of Finney and Ford counties,

for the purposes of paragraph (4) of subsection (b) of K.S.A. 12-187, and

amendments thereto, may fix such rate at .25%;

(d) the board of county commissioners of any county for the purposes

of paragraph (5) of subsection (b) of K.S.A. 12-187, and amendments

thereto, may fix such rate at a percentage which is equal to the sum of

the rate allowed to be imposed by a board of county commissioners on

the effective date of this act plus .25%, .5%, .75% or 1%, as the case

requires;

(e) the board of county commissioners of Dickinson county, for the

purposes of paragraph (7) of subsection (b) of K.S.A. 12-187, and amend-

ments thereto, may fix such rate at 1.5%, and the board of county com-

missioners of Miami county, for the purposes of paragraph (7) of subsec-

tion (b) of K.S.A. 12-187, and amendments thereto, may fix such rate at

1.25%, 1.5%, 1.75% or 2%;

(f) the board of county commissioners of Sherman county, for the

purposes of paragraph (8) of subsection (b) of K.S.A. 12-187, and amend-

ments thereto, may fix such rate at 1.5%, 1.75% or 2%;

(g) the board of county commissioners of Russell county for the pur-

poses of paragraph (9) of subsection (b) of K.S.A. 12-187, and amend-

ments thereto, may fix such rate at 1.5%; or

(h) the board of county commissioners of Franklin county, for the

purposes of paragraph (10) of subsection (b) of K.S.A. 12-187, and

amendments thereto, may fix such rate at 1.75%.; or

(i) the board of county commissioners of Douglas county, for the pur-

poses of paragraph (11) of subsection (b) of K.S.A. 12-187, and amend-

ments thereto, may fix such rate at 1.25%.

Any county or city levying a retailers' sales tax is hereby prohibited

from administering or collecting such tax locally, but shall utilize the serv-

ices of the state department of revenue to administer, enforce and collect

such tax. Except as otherwise specifically provided in K.S.A. 12-189a, and

amendments thereto, such tax shall be identical in its application, and

exemptions therefrom, to the Kansas retailers' sales tax act and all laws

and administrative rules and regulations of the state department of rev-

enue relating to the Kansas retailers' sales tax shall apply to such local

sales tax insofar as such laws and rules and regulations may be made

applicable. The state director of taxation is hereby authorized to admin-

ister, enforce and collect such local sales taxes and to adopt such rules

and regulations as may be necessary for the efficient and effective ad-

ministration and enforcement thereof.

Upon receipt of a certified copy of an ordinance or resolution author-

izing the levy of a local retailers' sales tax, the director of taxation shall

cause such taxes to be collected within or without the boundaries of such

taxing subdivision at the same time and in the same manner provided for

the collection of the state retailers' sales tax. Such copy shall be submitted

to the director of taxation within 30 days after adoption of any such or-

dinance or resolution. All moneys collected by the director of taxation

under the provisions of this section shall be credited to a county and city

retailers' sales tax fund which fund is hereby established in the state treas-

ury. Any refund due on any county or city retailers' sales tax collected

pursuant to this act shall be paid out of the sales tax refund fund and

reimbursed by the director of taxation from collections of local retailers'

sales tax revenue. Except for local retailers' sales tax revenue required to

be deposited in the redevelopment bond fund established under K.S.A.

2001 Supp. 74-8927, and amendments thereto, all local retailers' sales tax

revenue collected within any county or city pursuant to this act shall be

apportioned and remitted at least quarterly by the state treasurer, on

instruction from the director of taxation, to the treasurer of such county

or city.

Revenue that is received from the imposition of a local retailers' sales

tax which exceeds the amount of revenue required to pay the costs of a

special project for which such revenue was pledged shall be credited to

the city or county general fund, as the case requires.

The director of taxation shall provide, upon request by a city or county

clerk or treasurer of any city or county levying a local retailers' sales tax,

monthly reports identifying each retailer having a place of business in

such city or county setting forth the tax liability and the amount of such

tax remitted by each retailer during the preceding month and identifying

each business location maintained by the retailer within such city or

county. Such report shall be made available to the clerk or treasurer of

such city or county within a reasonable time after it has been requested

from the director of taxation. The director of taxation shall be allowed to

assess a reasonable fee for the issuance of such report. Information re-

ceived by any city or county pursuant to this section shall be confidential,

and it shall be unlawful for any officer or employee of such city or county

to divulge any such information in any manner. Any violation of this par-

agraph by a city or county officer or employee is a class B misdemeanor,

and such officer or employee shall be dismissed from office.

New Sec. 36. On or before September 1, 2002, the director of prop-

erty valuation of the department of revenue shall issue and submit a

report pertaining to the interpretation and implementation of the provi-

sions of K.S.A. 79-1476, and amendments thereto, relating to the pro-

cedures of valuation of land devoted to agriculture use. Such report shall

include a summary of changes in each class of land which have been

implemented within the past 10 years, when the change was made, and

an explanation of the rationale for each such change. Such report shall

be submitted to the following: The governor, the legislative coordinating

council, the house taxation committee and the senate assessment and

taxation committee, and shall be made available to the public on the

internet.

Sec. 37. K.S.A. 2001 Supp. 79-1476 is hereby amended to read as

follows: 79-1476. The director of property valuation is hereby directed

and empowered to administer and supervise a statewide program of re-

appraisal of all real property located within the state. Except as otherwise

authorized by K.S.A. 19-428, and amendments thereto, each county shall

comprise a separate appraisal district under such program, and the county

appraiser shall have the duty of reappraising all of the real property in

the county pursuant to guidelines and timetables prescribed by the di-

rector of property valuation and of updating the same on an annual basis.

In the case of multi-county appraisal districts, the district appraiser shall

have the duty of reappraising all of the real property in each of the coun-

ties comprising the district pursuant to such guidelines and timetables

and of updating the same on an annual basis. Commencing in 2000, every

parcel of real property shall be actually viewed and inspected by the

county or district appraiser once every six years. Any county or district

appraiser shall be deemed to be in compliance with the foregoing re-

quirement in any year if 17% or more of the parcels in such county or

district are actually viewed and inspected.

Compilation of data for the initial preparation or updating of invento-

ries for each parcel of real property and entry thereof into the state com-

puter system as provided for in K.S.A. 79-1477, and amendments thereto,

shall be completed not later than January 1, 1989. Whenever the director

determines that reappraisal of all real property within a county is com-

plete, notification thereof shall be given to the governor and to the state

board of tax appeals.

Valuations shall be established for each parcel of real property at its

fair market value in money in accordance with the provisions of K.S.A.

79-503a, and amendments thereto.

In addition thereto valuations shall be established for each parcel of

land devoted to agricultural use upon the basis of the agricultural income

or productivity attributable to the inherent capabilities of such land in its

current usage under a degree of management reflecting median produc-

tion levels in the manner hereinafter provided. A classification system for

all land devoted to agricultural use shall be adopted by the director of

property valuation using criteria established by the United States depart-

ment of agriculture soil conservation service. For all taxable years com-

mencing after December 31, 1989, all land devoted to agricultural use

which is subject to the federal conservation reserve program shall be

classified as cultivated dry land for the purpose of valuation for property

tax purposes pursuant to this section. For all taxable years commencing

after December 31, 1999, all land devoted to agricultural use which is

subject to the federal wetlands reserve program shall be classified as na-

tive grassland for the purpose of valuation for property tax purposes pur-

suant to this section. Productivity of land devoted to agricultural use shall

be determined for all land classes within each county or homogeneous

region based on an average of the eight calendar years immediately pre-

ceding the calendar year which immediately precedes the year of valua-

tion, at a degree of management reflecting median production levels. The

director of property valuation shall determine median production levels

based on information available from state and federal crop and livestock

reporting services, the soil conservation service, and any other sources of

data that the director considers appropriate.

The share of net income from land in the various land classes within

each county or homogeneous region which is normally received by the

landlord shall be used as the basis for determining agricultural income

for all land devoted to agricultural use except pasture or rangeland. The

net income normally received by the landlord from such land shall be

determined by deducting expenses normally incurred by the landlord

from the share of the gross income normally received by the landlord.

The net rental income normally received by the landlord from pasture or

rangeland within each county or homogeneous region shall be used as

the basis for determining agricultural income from such land. The net

rental income from pasture and rangeland which is normally received by

the landlord shall be determined by deducting expenses normally in-

curred from the gross income normally received by the landlord. Com-

modity prices, crop yields and pasture and rangeland rental rates and

expenses shall be based on an average of the eight calendar years im-

mediately preceding the calendar year which immediately precedes the

year of valuation. Net income for every land class within each county or

homogeneous region shall be capitalized at a rate determined to be the

sum of the contract rate of interest on new federal land bank loans in

Kansas on July 1 of each year averaged over a five-year period which

includes the five years immediately preceding the calendar year which

immediately precedes the year of valuation, plus a percentage not less

than .75% nor more than 2.75%, as determined by the director of prop-

erty valuation, except that the capitalization rate calculated for property

tax year 2003, and all such years thereafter, shall not be less than 11%

nor more than 12%.

Based on the foregoing procedures the director of property valuation

shall make an annual determination of the value of land within each of

the various classes of land devoted to agricultural use within each county

or homogeneous region and furnish the same to the several county ap-

praisers who shall classify such land according to its current usage and

apply the value applicable to such class of land according to the valuation

schedules prepared and adopted by the director of property valuation

under the provisions of this section.

It is the intent of the legislature that appraisal judgment and appraisal

standards be followed and incorporated throughout the process of data

collection and analysis and establishment of values pursuant to this sec-

tion.

For the purpose of the foregoing provisions of this section the phrase

``land devoted to agricultural use'' shall mean and include land, regardless

of whether it is located in the unincorporated area of the county or within

the corporate limits of a city, which is devoted to the production of plants,

animals or horticultural products, including but not limited to: Forages;

grains and feed crops; dairy animals and dairy products; poultry and poul-

try products; beef cattle, sheep, swine and horses; bees and apiary prod-

ucts; trees and forest products; fruits, nuts and berries; vegetables; nurs-

ery, floral, ornamental and greenhouse products. Land devoted to

agricultural use shall not include those lands which are used for recrea-

tional purposes, other than that land established as a controlled shooting

area pursuant to K.S.A. 32-943, and amendments thereto, which shall be

deemed to be land devoted to agricultural use, suburban residential acre-

ages, rural home sites or farm home sites and yard plots whose primary

function is for residential or recreational purposes even though such prop-

erties may produce or maintain some of those plants or animals listed in

the foregoing definition.

The term ``expenses'' shall mean those expenses typically incurred in

producing the plants, animals and horticultural products described above

including management fees, production costs, maintenance and depre-

ciation of fences, irrigation wells, irrigation laterals and real estate taxes,

but the term shall not include those expenses incurred in providing tem-

porary or permanent buildings used in the production of such plants,

animals and horticultural products.

The provisions of this act shall not be construed to conflict with any

other provisions of law relating to the appraisal of tangible property for

taxation purposes including the equalization processes of the county and

state board of tax appeals.

Sec. 38. K.S.A. 2001 Supp. 79-32,205 is hereby amended to read as

follows: 79-32,205. (a) There shall be allowed as a credit against the tax

liability of a resident individual imposed under the Kansas income tax act

an amount equal to 10% 15% for tax year 1998 2002, and all tax years

thereafter, of the amount of the earned income credit allowed against

such taxpayer's federal income tax liability pursuant to section 32 of the

federal internal revenue code for the taxable year in which such credit

was claimed against the taxpayer's federal income tax liability.

(b) If the amount of the credit allowed by subsection (a) exceeds the

taxpayer's income tax liability imposed under the Kansas income tax act,

such excess amount shall be refunded to the taxpayer.

(c) The provisions of this section shall be applicable to all taxable

years commencing after December 31, 1997.

Sec. 39. On and after July 1, 2002, K.S.A. 2001 Supp. 17-2036 is

hereby amended to read as follows: 17-2036. Every business trust shall

make an annual report in writing to the secretary of state, showing its

financial condition at the close of business on the last day of its tax period

under the Kansas income tax act next preceding the date of filing, but if

a business trust's tax period is other than the calendar year, it shall give

notice thereof to the secretary of state prior to December 31 of the year

it commences such tax period. The reports shall be made on forms pro-

vided by the secretary of state and shall be filed at the time prescribed

by law for filing the business trust's annual Kansas income tax return,

except that if any such business trust shall receive an extension of time

for filing its annual income tax return from the internal revenue service

or pursuant to subsection (c) of K.S.A. 79-3221, and amendments thereto,

the time for filing the report hereunder shall be extended, correspond-

ingly, upon filing with the secretary of state a copy of the extension

granted by the internal revenue service or the director of taxation. The

report shall contain the following:

(a) Executed copies of all amendments to the instrument by which

the business trust was created, or to prior amendments thereto, which

have been adopted and have not theretofore been filed under K.S.A. 17-

2033, and amendments thereto, and accompanied by the fee prescribed

therein for each such amendment;

(b) a verified list of the names and addresses of its trustees as of the

end of its tax period; and

(c) a balance sheet as of the end of its tax period, certified by the

trustee, fairly and truly reflecting its assets and liabilities and specifically

setting out its corpus, and, in the case of a foreign business trust, fairly

and truly reflecting an allocation of its moneys and other assets as between

those located, used, or to be used in this state and those located, used or

to be used elsewhere.

At the time of filing its annual report, the business trust shall pay to

the secretary of state an annual franchise tax in an amount equal to $1 $2

for each $1,000 of its corpus as shown by its balance sheet, or, in the case

of a foreign business trust, in an amount equal to $1 $2 for each $1,000

of that portion of its corpus which is located in or which it uses or intends

to use in this state as shown by its balance sheet, except that in any case

no such tax shall be less than $20 $40 nor more than $2,500 $5,000.

The failure of any domestic or foreign business trust to file its annual

report and pay its annual franchise tax within 90 days from the date on

which they are due, as aforesaid, shall work a forfeiture of its authority

to transact business in this state and all of the remedies, procedures, and

penalties specified in K.S.A. 17-7509 and 17-7510, and amendments

thereto, with respect to a corporation which fails to file its annual report

or pay its annual franchise tax within 90 days after they are due, shall be

applicable to such business trust.

Sec. 40. On and after July 1, 2002, K.S.A. 17-4634 is hereby

amended to read as follows: 17-4634. (a) Every corporation organized

under the electric cooperative act of this state shall make an annual report

in writing to the secretary of state, showing the financial condition of the

corporation at the close of business on the last day of its tax period next

preceding the date of filing, but if any such corporation's tax period is

other than the calendar year, it shall give notice thereof to the secretary

of state prior to December 31 of the year it commences such tax period.

The report shall be filed on or before the fifteenth day of the fourth

month following the close of the tax year of the electric cooperative. An

extension for filing the annual report may be granted upon the filing of

a written application with the secretary of state prior to the due date of

the report, except that no such extension may be granted for a period of

more than ninety (90) days. The report shall be made on a form provided

by the secretary of state, containing the following information:

(1) The name of the corporation;

(2) The location of the principal office;

(3) The name of the president, secretary and treasurer and the names

of directors with the residence address of each;

(4) The number of memberships issued;

(5) A balance sheet showing the financial condition of the corporation

at the close of business on the last day of its tax period next preceding

the date of filing; and

(6) The change or changes, if any, in the particulars made since the

last annual report.

(b) Such reports shall be signed by the president, vice-president or

secretary of the corporation, sworn to before an officer duly authorized

to administer oaths and forwarded to the secretary of state. At the time

of filing such annual report, each such corporation shall pay an annual

franchise tax of twenty dollars ($20) $40.

Sec. 41. On and after July 1, 2002, K.S.A. 2001 Supp. 17-7503 is

hereby amended to read as follows: 17-7503. (a) Every domestic corpo-

ration organized for profit shall make an annual report in writing to the

secretary of state, stating the prescribed information concerning the cor-

poration at the close of business on the last day of its tax period next

preceding the date of filing, but if a corporation's tax period is other than

the calendar year, it shall give notice thereof to the secretary of state prior

to December 31 of the year it commences such tax period. The reports

shall be made on forms prescribed by the secretary of state. The report

shall be filed at the time prescribed by law for filing the corporation's

annual Kansas income tax return, except that if any such corporation shall

apply for an extension of time for filing its annual income tax return under

the internal revenue service or under subsection (c) of K.S.A. 79-3221,

and amendments thereto, such corporation shall also apply, not more than

90 days after the due date of its annual report, to the secretary of state

for an extension of the time for filing the report and an extension shall

be granted for a period of time corresponding to that granted under the

internal revenue code or K.S.A. 79-3221, and amendments thereto. Such

application shall include a copy of the application to income tax authori-

ties. The report shall contain the following information:

(1) The name of the corporation;

(2) the location of the principal office;

(3) the names of the president, secretary, treasurer and members of

the board of directors, with the residence address of each;

(4) the number of shares of capital stock issued and the amount of

capital stock paid up;

(5) the nature and kind of business in which the corporation is en-

gaged; and

(6) a list of stockholders owning at least 5% of the capital stock of the

corporation, with the post office address of each.

(b) Every corporation subject to the provisions of this section which

holds agricultural land, as defined in K.S.A. 17-5903, and amendments

thereto, within this state shall show the following additional information

on the report:

(1) The acreage and location listed by section, range, township and

county of each lot, tract or parcel of agricultural land in this state owned

or leased by or to the corporation;

(2) the purposes for which such agricultural land is owned or leased

and, if leased, to whom such agricultural land is leased;

(3) the value of the nonagricultural assets and the agricultural assets,

stated separately, owned and controlled by the corporation both within

and without the state of Kansas and where situated;

(4) the total number of stockholders of the corporation;

(5) the number of acres owned or operated by the corporation, the

number of acres leased by the corporation and the number of acres leased

to the corporation;

(6) the number of acres of agricultural land, held and reported in

each category under provision (5), state separately, being irrigated; and

(7) whether any of the agricultural land held and reported under this

subsection was acquired after July 1, 1981.

(c) The report shall be signed by its president, secretary, treasurer or

other officer duly authorized so to act, or by any two of its directors, or

by an incorporator in the event its board of directors shall not have been

elected. The fact that an individual's name is signed on such report shall

be prima facie evidence that such individual is authorized to sign the

report on behalf of the corporation; however, the official title or position

of the individual signing the report shall be designated. This report will

be dated and subscribed by the person as true, under penalty of perjury.

At the time of filing such annual report it shall be the duty of each do-

mestic corporation organized for profit to pay to the secretary of state an

annual franchise tax in an amount equal to $1 $2 for each $1,000 of the

corporation's shareholder's equity attributable to Kansas, except that no

such tax shall be less than $20 $40 or more than $2,500 $5,000. The

amount of any such franchise tax paid by the corporation to the secretary

as provided by this subsection shall not be disclosed by the secretary.

Sec. 42. On and after July 1, 2002, K.S.A. 2001 Supp. 17-7504 is

hereby amended to read as follows: 17-7504. (a) Every corporation or-

ganized not for profit shall make an annual report in writing to the sec-

retary of state, stating the prescribed information concerning the corpo-

ration at the close of business on the last day of its tax period next

preceding the date of filing, but if a corporation's tax period is other than

the calendar year, it shall give notice thereof to the secretary of state prior

to December 31 of the year it commences such tax period. The reports

shall be made on forms prescribed by the secretary of state. The report

shall be filed on the 15th day of the sixth month following the close of

the taxable year, except that such corporation may apply to the secretary

of state not more than 90 days after the due date of its annual report for

an extension of the time for filing the report, and an extension shall be

granted for a period of time corresponding to that granted under the

internal revenue code or K.S.A. 79-3221, and amendments thereto. The

report shall contain the following information:

(1) The name of the corporation;

(2) the location of the principal office;

(3) the names of the president, secretary and treasurer, and the mem-

bers of the board of directors, with the residence address of each;

(4) the number of memberships or the number of shares of capital

stock issued and the amount of capital stock paid up.

(b) Every corporation subject to the provisions of this section which

holds agricultural land, as defined in K.S.A. 17-5903, and amendments

thereto, within this state shall show the following additional information

on the report:

(1) The acreage and location listed by section, range, township and

county of each lot, tract or parcel of agricultural land in this state owned

or leased by or to the corporation;

(2) the purposes for which such agricultural land is owned or leased

and, if leased, to whom such agricultural land is leased;

(3) the value of the nonagricultural assets and the agricultural assets,

stated separately, owned and controlled by the corporation both within

and without the state of Kansas and where situated;

(4) the total number of stockholders of the corporation;

(5) the number of acres owned or operated by the corporation, the

number of acres leased by the corporation and the number of acres leased

to the corporation;

(6) the number of acres of agricultural land, held and reported in

each category under paragraph (5) of this subsection (b), stated sepa-

rately, being irrigated; and

(7) whether any of the agricultural land held and reported under this

subsection was acquired after July 1, 1981.

(c) The report shall be signed by its president, secretary, treasurer or

other officer duly authorized so to act, or by any two of its directors, or

by an incorporator in the event its board of directors shall not have been

elected. The fact that an individual's name is signed on such report shall

be prima facie evidence that such individual is authorized to sign the

report on behalf of the corporation; however, the official title or position

of the individual signing the report shall be designated. This report will

be dated and subscribed by the person as true, under penalty of perjury.

At the time of filing such report, each nonprofit corporation shall pay an

annual privilege fee of $5, except that the annual fee for tax periods

ending after December 31, 1992, shall be $20 $40 for all tax years com-

mencing after December 31, 2001.

Sec. 43. On and after July 1, 2002, K.S.A. 2001 Supp. 17-7505 is

hereby amended to read as follows: 17-7505. (a) Every foreign corpora-

tion organized for profit, or organized under the cooperative type statutes

of the state, territory or foreign country of incorporation, now or hereafter

doing business in this state, and owning or using a part or all of its capital

in this state, and subject to compliance with the laws relating to the ad-

mission of foreign corporations to do business in Kansas, shall make an

annual report in writing to the secretary of state, stating the prescribed

information concerning the corporation at the close of business on the

last day of its tax period next preceding the date of filing, but if a cor-

poration operates on a fiscal year other than the calendar year it shall give

written notice thereof to the secretary of state prior to December 31 of

the year commencing such fiscal year. The report shall be made on a form

prescribed by the secretary of state. The report shall be filed at the time

prescribed by law for filing the corporation's annual Kansas income tax

return, except that if any such corporation shall apply for an extension of

time for filing its annual income tax return under the internal revenue

service or under subsection (c) of K.S.A. 79-3221, and amendments

thereto, such corporation shall also apply, not more than 90 days after

the due date of its annual report, to the secretary of state for an extension

of the time for filing the report and an extension shall be granted for a

period of time corresponding to that granted under the internal revenue

code or K.S.A. 79-3221, and amendments thereto. Such application shall

include a copy of the application to income tax authorities. The report

shall contain the following facts:

(1) The name of the corporation and under the laws of what state or

country organized;

(2) the location of its principal office;

(3) the names of the president, secretary, treasurer and members of

the board of directors, with the residence address of each;

(4) the number of shares of capital stock issued and the amount of

capital stock paid up;

(5) the nature and kind of business in which the company is engaged

and its place or places of business both within and without the state of

Kansas;

(6) the value of the property owned and used by the company in

Kansas, where situated, and the value of the property owned and used

outside of Kansas and where situated; and

(7) the corporation's shareholder's equity attributable to Kansas.

(b) Every corporation subject to the provisions of this section which

holds agricultural land, as defined in K.S.A. 17-5903, and amendments

thereto, within this state shall show the following additional information

on the report:

(1) The acreage and location listed by section, range, township and

county of each lot, tract or parcel of agricultural land in this state owned

or leased by or to the corporation;

(2) the purposes for which such agricultural land is owned or leased

and, if leased, to whom such agricultural land is leased;

(3) the value of the nonagricultural assets and the agricultural assets,

stated separately, owned and controlled by the corporation both within

and without the state of Kansas and where situated;

(4) the total number of stockholders of the corporation;

(5) the number of acres owned or operated by the corporation, the

number of acres leased by the corporation and the number of acres leased

to the corporation;

(6) the number of acres of agricultural land, held and reported in

each category under paragraph (5) of this subsection (b), stated sepa-

rately, being irrigated; and

(7) whether any of the agricultural land held and reported under this

subsection was acquired after July 1, 1981.

The report shall be signed by its president, secretary, treasurer or other

officer duly authorized so to act, or by any two of its directors, or by an

incorporator in the event its board of directors shall not have been

elected. The fact that an individual's name is signed on such report shall

be prima facie evidence that such individual is authorized to sign the

report on behalf of the corporation; however, the official title or position

of the individual signing the report shall be designated. This report will

be dated and subscribed by the person as true, under penalty of perjury.

At the time of filing its annual report, each such foreign corporation shall

pay to the secretary of state an annual franchise tax in an amount equal

to $1 $2 for each $1,000 of the corporation's shareholder's equity attrib-

utable to Kansas, except that no such tax shall be less than $20 $40 or

more than $2,500 $5,000. The amount of any such franchise tax paid by

the foreign corporation to the secretary as provided by this subsection

shall not be disclosed by the secretary.

Sec. 44. On and after July 1, 2002, K.S.A. 2001 Supp. 17-76,139 is

hereby amended to read as follows: 17-76,139. (a) Every limited liability

company organized under the laws of this state shall make an annual

report in writing to the secretary of state, stating the prescribed infor-

mation concerning the limited liability company at the close of business

on the last day of its tax period next preceding the date of filing. If the

limited liability company's tax period is other than the calendar year, it

shall give notice of its different tax period in writing to the secretary of

state prior to December 31 of the year it commences the different tax

period. The annual report shall be filed at the time prescribed by law for

filing the limited liability company's annual Kansas income tax return. If

the limited liability company applies for an extension of time for filing its

annual income tax return under the internal revenue code, the limited

liability company shall also apply, not more than 90 days after the due

date of its annual report, to the secretary of state for an extension of the

time for filing its report and an extension shall be granted for a period of

time corresponding to that granted under the internal revenue code. The

application shall include a copy of the application to income tax authori-

ties. The annual report shall be made on a form prescribed by the sec-

retary of state. The report shall contain the following information:

(1) The name of the limited liability company; and

(2) a list of the members owning at least 5% of the capital of the

company, with the post office address of each.

(b) Every foreign limited liability company shall make an annual re-

port in writing to the secretary of state, stating the prescribed information

concerning the limited liability company at the close of business on the

last day of its tax period next preceding the date of filing. If the limited

liability company's tax period is other than the calendar year, it shall give

notice in writing of its different tax period to the secretary of state prior

to December 31 of the year it commences the different tax period. The

annual report shall be filed at the time prescribed by law for filing the

limited liability company's annual Kansas income tax return. If the limited

liability company applies for an extension of time for filing its annual

income tax return under the internal revenue code, the limited liability

company also shall apply, not more than 90 days after the due date of its

annual report, to the secretary of state for an extension of the time for

filing its report and an extension shall be granted for a period of time

corresponding to that granted under the internal revenue code. The ap-

plication shall include a copy of the application to income tax authorities.

The annual report shall be made on a form prescribed by the secretary

of state. The report shall contain the name of the limited liability com-

pany.

(c) The annual report required by this section shall be signed by a

member of the limited liability company and forwarded to the secretary

of state. At the time of filing the report, the limited liability company shall

pay to the secretary of state an annual franchise tax in an amount equal

to $1 $2 for each $1,000 of the net capital accounts located in or used in

this state at the end of the preceding taxable year as required to be re-

ported on the federal partnership return of income, or for a one-member

LLC taxed as a sole proprietorship, $1 $2 for each $1,000 of net book

value of the LLC as calculated on an income tax basis located in or used

in this state at the end of the preceding taxable year, except that no annual

tax shall be less than $20 $40 or more than $2,500 $5,000. The amount

of any such franchise tax paid by the limited liability company to the

secretary as provided by this subsection shall not be disclosed by the

secretary.

(d) The provisions of K.S.A. 17-7509, and amendments thereto, re-

lating to penalties for failure of a corporation to file an annual report or

pay the required franchise tax, and the provisions of subsection (a) of

K.S.A. 17-7510 and amendments thereto, relating to penalties for failure

of a corporation to file an annual report or pay the required franchise tax,

shall be applicable to the articles of organization of any domestic limited

liability company or to the authority of any foreign limited liability com-

pany which fails to file its annual report or pay the franchise tax within

90 days of the time prescribed in this section for filing and paying the

same. Whenever the articles of organization of a domestic limited liability

company or the authority of any foreign limited liability company are

forfeited for failure to file an annual report or to pay the required fran-

chise tax, the domestic limited liability company or the authority of a

foreign limited liability company may be reinstated by filing a certificate

of reinstatement, in the manner and form to be prescribed by the sec-

retary of state and paying to the secretary of state all fees and taxes,

including any penalties thereon, due to the state. The fee for filing a

certificate of reinstatement shall be the same as that prescribed by K.S.A.

17-7506, and amendments thereto, for filing a certificate of extension,

restoration, renewal or revival of a corporation's articles of incorporation.

(e) When reinstatement is effective, it relates back to and takes effect

as of the effective date of the forfeiture and the company may resume its

business as if the forfeiture had never occurred.

(f) No limited liability company shall be required to file its first annual

report under this act, or pay any annual franchise tax required to accom-

pany such report, unless such limited liability company has filed its articles

of organization or application for authority at least six months prior to the

last day of its tax period. If any limited liability company files with the

secretary of state a notice of change in its tax period and the next annual

report filed by such limited liability company subsequent to such notice

is based on a tax period of less than 12 months, the annual tax liability

shall be determined by multiplying the annual franchise tax liability for

such year by a fraction, the numerator of which is the number of months

or any portion thereof covered by the annual report and the denominator

of which is 12, except that the tax shall not be less than $20 $40.

Sec. 45. On and after July 1, 2002, K.S.A. 17-7507 is hereby

amended to read as follows: 17-7507. No corporation shall be required

to file its first annual report under this act, or pay any annual franchise

tax required to accompany such report, unless such corporation has filed

its articles of incorporation or certificate of good standing at least six

months prior to the last day of its tax period. If any corporation shall file

with the secretary of state a notice of change in its tax period, and the

next annual report filed by such corporation subsequent to such notice is

based on a tax period of less than 12 months. The annual tax liability shall

be determined by multiplying the annual franchise tax liability for such

year by a fraction the numerator of which is the number of months, or

any portion thereof, covered by the annual report and the denominator

of which is 12. Notwithstanding the foregoing, the minimum annual fran-

chise tax shall be $20. This section shall be applicable to all annual reports

filed by corporations with tax periods ending after November 30, 1987

$40.

Sec. 46. On and after July 1, 2002, K.S.A. 2001 Supp. 56-1a606 is

hereby amended to read as follows: 56-1a606. (a) Every limited partner-

ship organized under the laws of this state shall make an annual report

in writing to the secretary of state, stating the prescribed information

concerning the limited partnership at the close of business on the last day

of its tax period next preceding the date of filing. If the limited partner-

ship's tax period is other than the calendar year, it shall give notice of its

different tax period to the secretary of state prior to December 31 of the

year it commences the different tax period. The annual report shall be

filed at the time prescribed by law for filing the limited partnership's

annual Kansas income tax return. If the limited partnership applies for

an extension of time for filing its annual income tax return under the

internal revenue code or under K.S.A. 79-3221 and amendments thereto,

the limited partnership shall also apply, not more than 90 days after the

due date of its annual report, to the secretary of state for an extension of

the time for filing its report and an extension shall be granted for a period

of time corresponding to that granted under the internal revenue code

or K.S.A. 79-3221 and amendments thereto. The application shall include

a copy of the application to income tax authorities.

(b) The annual report shall be made on a form prescribed by the

secretary of state. The report shall contain the following information:

(1) The name of the limited partnership; and

(2) a list of the partners owning at least 5% of the capital of the

partnership, with the post office address of each.

(c) Every limited partnership subject to the provisions of this section

which is a limited corporate partnership, as defined in K.S.A. 17-5903

and amendments thereto, and which holds agricultural land, as defined

in K.S.A. 17-5903 and amendments thereto, within this state shall show

the following additional information on the report:

(1) The number of acres and location, listed by section, range, town-

ship and county of each lot, tract or parcel of agricultural land in this state

owned or leased by the limited partnership; and

(2) whether any of the agricultural land held and reported under sub-

section (c)(1) was acquired after July 1, 1981.

(d) The annual report shall be signed by the general partner or part-

ners of the limited partnership, sworn to before an officer duly authorized

to administer oaths and forwarded to the secretary of state. At the time

of filing the report, the limited partnership shall pay to the secretary of

state an annual franchise tax in an amount equal to $1 $2 for each $1,000

of the partners' net capital accounts located in or used in this state at the

end of the preceding taxable year as required to be reported on the fed-

eral partnership return of income, except that no annual tax shall be less

than $20 $40 or more than $2,500 $5,000. The amount of any such fran-

chise tax paid by the limited partnership to the secretary as provided by

this subsection shall not be disclosed by the secretary.

(e) The provisions of K.S.A. 17-7509 and amendments thereto, re-

lating to penalties for failure of a corporation to file an annual report or

pay the required franchise tax, and the provisions of subsection (a) of

K.S.A. 17-7510 and amendments thereto, relating to forfeiture of a do-

mestic corporation's articles of incorporation for failure to file an annual

report or pay the required franchise tax, shall be applicable to the certif-

icate of partnership of any limited partnership which fails to file its annual

report or pay the franchise tax within 90 days of the time prescribed in

this section for filing and paying the same. Whenever the certificate of

partnership of a limited partnership is forfeited for failure to file an annual

report or to pay the required franchise tax, the limited partnership may

be reinstated by filing a certificate of reinstatement, in the manner and

form to be prescribed by the secretary of state and paying to the secretary

of state all fees and taxes, including any penalties thereon, due to the

state. The fee for filing a certificate of reinstatement shall be the same as

that prescribed by K.S.A. 17-7506 and amendments thereto for filing a

certificate of extension, restoration, renewal or revival of a corporation's

articles of incorporation.

Sec. 47. On and after July 1, 2002, K.S.A. 2001 Supp. 56-1a607 is

hereby amended to read as follows: 56-1a607. (a) Every foreign limited

partnership shall make an annual report in writing to the secretary of

state, stating the prescribed information concerning the limited partner-

ship at the close of business on the last day of its tax period next preceding

the date of filing. If the limited partnership's tax period is other than the

calendar year, it shall give notice of its different tax period to the secretary

of state prior to December 31 of the year it commences the different tax

period. The annual report shall be filed at the time prescribed by law for

filing the limited partnership's annual Kansas income tax return. If the

limited partnership applies for an extension of time for filing its annual

income tax return under the internal revenue code or under K.S.A. 79-

3221 and amendments thereto, the limited partnership shall also apply,

not more than 90 days after the due date of its annual report, to the

secretary of state for an extension of the time for filing its report and an

extension shall be granted for a period of time corresponding to that

granted under the internal revenue code or K.S.A. 79-3221 and amend-

ments thereto. The application shall include a copy of the application to

income tax authorities.

(b) The annual report shall be made on a form prescribed by the

secretary of state. The report shall contain the name of the limited part-

nership.

(c) Every foreign limited partnership subject to the provisions of this

section which is a limited corporate partnership, as defined in K.S.A. 17-

5903 and amendments thereto, and which holds agricultural land, as de-

fined in K.S.A. 17-5903 and amendments thereto, within this state shall

show the following additional information on the report:

(1) The number of acres and location, listed by section, range, town-

ship and county of agricultural land in this state owned or leased by the

limited partnership; and

(2) whether any of the agricultural land held and reported under sub-

section (c)(1) was acquired after July 1, 1981.

(d) The annual report shall be signed by the general partner or part-

ners of the limited partnership, sworn to before an officer duly authorized

to administer oaths and forwarded to the secretary of state. At the time

of filing the report, the foreign limited partnership shall pay to the sec-

retary of state an annual franchise tax in an amount equal to $1 $2 for

each $1,000 of the partners' net capital accounts located in or used in this

state at the end of the preceding taxable year as required to be reported

on the federal partnership return of income, except that no annual tax

shall be less than $20 $40 or more than $2,500 $5,000. The amount of

any such franchise tax paid by the limited partnership to the secretary as

provided by this subsection shall not be disclosed by the secretary.

(e) The provisions of K.S.A. 17-7509 and amendments thereto, re-

lating to penalties for failure of a corporation to file an annual report or

pay the required franchise tax, and the provisions of subsection (b) of

K.S.A. 17-7510 and amendments thereto, relating to forfeiture of a for-

eign corporation's authority to do business in this state for failure to file

an annual report or pay the required franchise tax, shall be applicable to

the authority of any foreign limited partnership which fails to file its an-

nual report or pay the franchise tax within 90 days of the time prescribed

in this section for filing and paying the same. Whenever the authority of

a foreign limited partnership to do business in this state is forfeited for

failure to file an annual report or to pay the required franchise tax, the

foreign limited partnership's authority to do business in this state may be

reinstated by filing a certificate of reinstatement, in the manner and form

to be prescribed by the secretary of state and paying to the secretary of

state all fees and taxes, including any penalties thereon, due to the state.

The fee for filing a certificate of reinstatement shall be the same as that

prescribed by K.S.A. 17-7506 and amendments thereto for filing a cer-

tificate of extension, restoration, renewal or revival of a corporation's ar-

ticles of incorporation.

Sec. 48. On and after July 1, 2002, K.S.A. 2001 Supp. 56a-1201 is

hereby amended to read as follows: 56a-1201. (a) Every limited liability

partnership organized under the laws of this state shall make an annual

report in writing to the secretary of state, stating the prescribed infor-

mation concerning the limited liability partnership at the close of business

on the last day of its tax period next preceding the date of filing. If the

limited liability partnership's tax period is other than the calendar year,

it shall give notice of its different tax period in writing to the secretary of

state prior to December 31 of the year it commences the different tax

period. The annual report shall be filed at the time prescribed by law for

filing the limited liability partnership's annual Kansas income tax return.

If the limited liability partnership applies for an extension of time for

filing its annual income tax return under the internal revenue code, the

limited liability partnership shall also apply, not more than 90 days after

the due date of its annual report, to the secretary of state for an extension

of the time for filing its report and an extension shall be granted for a

period of time corresponding to that granted under the internal revenue

code. The application shall include a copy of the application to income

tax authorities.

(b) The annual report shall be made on a form prescribed by the

secretary of state. The report shall contain the following information:

(1) The name of the limited liability partnership; and

(2) a list of the partners owning at least 5% of the capital of the

partnership, with the post office address of each.

(c) The annual report shall be signed by a partner of the limited

liability partnership and forwarded to the secretary of state. At the time

of filing the report, the limited liability partnership shall pay to the sec-

retary of state an annual franchise tax in an amount equal to $1 $2 for

each $1,000 of the net capital accounts located in or used in this state at

the end of the preceding taxable year as required to be reported on the

federal partnership return of income, except that no annual tax shall be

less than $20 $40 or more than $2,500 $5,000. The amount of any such

franchise tax paid by the limited liability partnership to the secretary as

provided by this subsection shall not be disclosed by the secretary.

(d) The provisions of K.S.A. 17-7509, and amendments thereto, re-

lating to penalties for failure of a corporation to file an annual report or

pay the required franchise tax, and the provisions of subsection (a) of

K.S.A. 17-7510 and amendments thereto, relating to penalties for failure

of a corporation to file an annual report or pay the required franchise tax,

shall be applicable to the statement of qualification of any limited liability

partnership which fails to file its annual report or pay the franchise tax

within 90 days of the time prescribed in this section for filing and paying

the same. Whenever the statement of qualification of a limited liability

partnership is forfeited for failure to file an annual report or to pay the

required franchise tax, the limited liability partnership may be reinstated

by filing a certificate of reinstatement, in the manner and form to be

prescribed by the secretary of state and paying to the secretary of state

all fees and taxes, including any penalties thereon, due to the state. The

fee for filing a certificate of reinstatement shall be the same as that pre-

scribed by K.S.A. 17-7506, and amendments thereto, for filing a certifi-

cate of extension, restoration, renewal or revival of a corporation's articles

of incorporation.

Sec. 49. On and after July 1, 2002, K.S.A. 2001 Supp. 56a-1202 is

hereby amended to read as follows: 56a-1202. (a) Every foreign limited

liability partnership shall make an annual report in writing to the secretary

of state, stating the prescribed information concerning the foreign limited

liability partnership at the close of business on the last day of its tax period

next preceding the date of filing. If the foreign limited liability partner-

ship's tax period is other than the calendar year, it shall give notice in

writing of its different tax period to the secretary of state prior to Decem-

ber 31 of the year it commences the different tax period. The annual

report shall be filed at the time prescribed by law for filing the foreign

limited liability partnership's annual Kansas income tax return. If the for-

eign limited liability partnership applies for an extension of time for filing

its annual income tax return under the internal revenue code, the foreign

limited liability partnership shall also apply, not more than 90 days after

the due date of its annual report, to the secretary of state for an extension

of the time for filing its report and an extension shall be granted for a

period of time corresponding to that granted under the internal revenue

code. The application shall include a copy of the application to income

tax authorities.

(b) The annual report shall be made on a form prescribed by the

secretary of state. The report shall contain the name of the foreign limited

liability partnership.

(c) The annual report shall be signed by a partner of the foreign

limited liability partnership and forwarded to the secretary of state. At

the time of filing the report, the foreign limited liability partnership shall

pay to the secretary of state an annual franchise tax in an amount equal

to $1 $2 for each $1,000 of the net capital accounts located in or used in

this state at the end of the preceding taxable year as required to be re-

ported on the federal partnership return of income, except that no annual

tax shall be less than $20 $40 or more than $2,500 $5,000. The amount

of any such franchise tax paid by the foreign limited liability partnership

to the secretary as provided by this subsection shall not be disclosed by

the secretary.

(d) The provisions of K.S.A. 17-7509, and amendments thereto, re-

lating to penalties for failure of a corporation to file an annual report or

pay the required franchise tax, and the provisions of subsection (a) of

K.S.A. 17-7510, and amendments thereto, relating to penalties for failure

of a corporation to file an annual report or pay the required franchise tax,

shall be applicable to the statement of foreign qualification of any foreign

limited liability partnership which fails to file its annual report or pay the

franchise tax within 90 days of the time prescribed in this section for filing

and paying the same. Whenever the statement of foreign qualification of

a foreign limited liability partnership is forfeited for failure to file an

annual report or to pay the required franchise tax, the statement of foreign

qualification of the foreign limited liability partnership may be reinstated

by filing a certificate of reinstatement, in the manner and form to be

prescribed by the secretary of state and paying to the secretary of state

all fees and taxes, including any penalties thereon, due to the state. The

fee for filing a certificate of reinstatement shall be the same as that pre-

scribed by K.S.A. 17-7506, and amendments thereto, for filing a certifi-

cate of extension, restoration, renewal or revival of a corporation's articles

of incorporation.

Sec. 50. On and after July 1, 2002, K.S.A. 2001 Supp. 56a-1203 is

hereby amended to read as follows: 56a-1203. No limited liability part-

nership or foreign limited liability partnership shall be required to file its

first annual report under this act, or pay any annual franchise tax required

to accompany such report, unless such partnership has filed its statement

of qualification or foreign qualification at least six months prior to the last

day of its tax period. If any such partnership files with the secretary of

state a notice of change in its tax period and the next annual report filed

by such partnership subsequent to such notice is based on a tax period

of less than 12 months, the annual tax liability shall be determined by

multiplying the annual franchise tax liability for such year by a fraction,

the numerator of which is the number of months or any portion thereof

covered by the annual report and the denominator of which is 12, except

that the tax shall not be less than $20 $40.

Sec. 51. On and after July 1, 2002, K.S.A. 17-4634, 17-7507, 79-3310

and 79-3312 and K.S.A. 2001 Supp. 17-2036, 17-7503, 17-7504, 17-7505,

17-76,139, 56-1a606, 56-1a607, 56a-1201, 56a-1202, 56a-1203, 79-3311,

79-3603, 79-3603, as amended by section 1 of 2002 Senate Bill No. 372,

79-3620, 79-3635, 79-3703 and 79-3710 are hereby repealed.

Sec. 52. K.S.A. 12-187, 12-189, 12-189e, 79-2401a, 79-2803a, 79-

3226, 79-3271 and 79-3279 and K.S.A. 2001 Supp. 79-201w, 79-1476, 79-

3295, 79-32,100a, 79-32,205, 79-32,206 and 79-32,211 are hereby re-

pealed.

Sec. 53. This act shall take effect and be in force from and after its

publication in the Kansas register.

Approved May 30, 2002.

Published in the Kansas Register June 6, 2002.


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Date Composed: 10/10/2002 Date Modified: 10/10/2002