Session Law

Identifying Information:L. 2002 ch. 186
Other Identifying Information:2002 Senate Bill 472
Tax Type:Corporate Income Tax; Individual Income Tax; Kansas Retailers' Sales Tax
Brief Description:An Act relating to taxation; amending K.S.A. 79-2015, 79-3226, 79-3271, 79-32,104 and 79-3650 and K.S.A. 2001 Supp. 74-2438, 75-5154 and 79-32,105 and repealing the existing sections.
Keywords:


Body:

CHAPTER 186

SENATE BILL No. 472


An Act relating to taxation; amending K.S.A. 79-2015, 79-3226, 79-3271, 79-32,104 and

79-3650 and K.S.A. 2001 Supp. 74-2438, 75-5154 and 79-32,105 and repealing the ex-


isting sections.


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

New Section 1. (a) The department of revenue is authorized to be-

come a signatory to an agreement with one or more states for the purpose

of providing a multi-state, voluntary, streamlined system for sales and use

tax collection and administration to simplify and modernize sales and use

tax administration in order to substantially reduce the burden of tax com-

pliance for all sellers and for all types of commerce, at such time as the

legislature takes further action to bring the state's laws in compliance with

the requirements of the agreement. The department of revenue is further

authorized to participate in the streamlined sales tax project, identify all

changes in this state's sales and use tax laws and rules and regulations that

would be required in order to comply with such agreement, take such

other actions reasonably required to prepare this state for entry into such

agreement.

(b) The secretary of revenue, or the secretary's designee, is author-

ized to represent this state before other states that are participating in

the streamlined sales tax project or that are signatories to such agreement.

In addition, the president and the minority leader of the senate and the

speaker and the minority leader of the house of representatives may each

appoint a person who is also authorized to so represent this state. All such

appointees attending meetings shall be paid compensation, subsistence

allowances, mileage and other expenses as provided in K.S.A. 75-3223,

and amendments thereto.

New Sec. 2. The secretary of revenue is hereby authorized to adopt

rules and regulations necessary to administer and not inconsistent with

the provisions of chapters 41 and 79 of the Kansas Statutes Annotated.

All rules and regulations of the secretary of revenue in existence on the

effective date of this act shall continue to be in effect and shall be deemed

to be rules and regulations of the secretary until revised, amended or

nullified pursuant to law.

Sec. 3. K.S.A. 2001 Supp. 74-2438 is hereby amended to read as

follows: 74-2438. An appeal may be taken to the state board of tax appeals

from any finding, ruling, order, decision, final determination or other final

action, including action relating to abatement or reduction of penalty and

interest, on any case of the secretary of revenue or the secretary's des-

ignee by any person aggrieved thereby. Notice of such appeal shall be

filed with the secretary of the board within 30 days after such finding,

ruling, order, decision, final determination or other action on a case, and

a copy served upon the secretary of revenue or the secretary's designee.

An appeal may also be taken to the state board of tax appeals at any time

when no final determination has been made by the secretary of revenue

or the secretary's designee after 270 days has passed since the date of the

request for informal conference pursuant to K.S.A. 79-3226, and amend-

ments thereto and no written agreement by the parties to further extend

the time for making such final determination is in effect. Upon receipt of

a timely appeal, the board shall conduct a hearing in accordance with the

provisions of the Kansas administrative procedure act. The hearing before

the board shall be a de novo hearing unless the parties agree to submit

the case on the record made before the secretary of revenue or the sec-

retary's designee. With regard to any matter properly submitted to the

board relating to the determination of valuation of residential property

or real property used for commercial and industrial purposes for taxation

purposes, it shall be the duty of the county or district appraiser to initiate

the production of evidence to demonstrate, by a preponderance of the

evidence, the validity and correctness of such determination, except that

no such duty shall accrue with regard to leased commercial and industrial

property unless the property owner has furnished to the county or district

appraiser a complete income and expense statement for the property for

the three years next preceding the year of appeal. No presumption shall

exist in favor of the county or district appraiser with respect to the validity

and correctness of such determination. No interest shall accrue on the

amount of the assessment of tax subject to any such appeal beyond 120

days after the date the matter was fully submitted, except that, if a final

order is issued within such time period, interest shall continue to accrue

until such time as the tax liability is fully satisfied, and if a final order is

issued beyond such time period, interest shall recommence to accrue

from the date of such order until such time as the tax liability is fully

satisfied.

Sec. 4. 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 issued

within or after 270 days, with or without extension, constitutes 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

at any time provided that a written extension of time is not in effect.

(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. 5. K.S.A. 79-3650 is hereby amended to read as follows: 79-

3650. (a) A refund request may be filed directly by a consumer or pur-

chaser if the consumer or purchaser: (1) paid the tax directly to the de-

partment; (2) provides evidence that the retailer refused or was

unavailable to refund the tax; (3) provides evidence that the retailer did

not act upon its refund request in a timely manner as provided in sub-

section (b), or; (4) submits such a refund request pursuant to subsection

(c) provides a notarized statement to the department from the retailer

that the retailer: (A) Will not claim a refund of the same tax included in

the purchaser's or consumer's refund request; (B) agrees to provide to the

consumer or purchaser any information or documentation in the retailer's

possession needed for submission to the department to support or prove

the refund claim; (C) has remitted to the state the tax sought to be re-

funded; and (D) has not taken or will not take a credit for such tax. A

retailer providing false information in any such statement shall be subject

to penalties prescribed by K.S.A. 2001 Supp. 79-3615(h), and amend-

ments thereto.

(b) If the director of taxation finds upon proper showing that a con-

sumer or purchaser submitted a refund request to a retailer that was not

acted upon by the retailer in a timely manner, the director shall extend

the time for filing the request with the department beyond the three year

limitation period that is otherwise provided by the time attributed to the

delay caused by the retailer.

(c) If, during the course of an audit examination of a business as a

purchaser or consumer, it is determined that a vendor has collected Kan-

sas tax from the purchaser on a transaction that is not subject to tax

imposed under this act, the purchaser may apply directly to the director

for an offset or refund of the tax, notwithstanding subsection (a), if: (1)

the purchaser is currently registered to collect and remit tax, and (2) the

purchaser provides the director with an affidavit or other acceptable doc-

umentation that assures the purchaser has not and will not request a

duplicate refund through the vendor.

Sec. 6. 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) ``Sales'' means all gross receipts of the taxpayer not allocated un-

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

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

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

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

thereof.

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

tary group of entities whose primary business activity is the transmission

of communications in the form of voice, data, signals or facsimile com-

munications by wire or fiber optic cable.

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

cated in a county which has a population of not more than 45,000 persons

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

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

pital 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.

New Sec. 7. If the amount of any tax payment, estimated or other-

wise, made during any calendar year or other taxable period exceeds the

taxpayer's liability for which such payment was made, any excess shall be

applied to any other tax then owed the state of Kansas by such taxpayer,

including fines, penalties and interests, if any, and the balance of such

excess, if any, shall be refunded to the taxpayer.

Sec. 8. K.S.A. 79-2015 is hereby amended to read as follows: 79-

2015. The taxes, fees, interest and penalties, levied and assessed by any

state law administered by the director secretary of revenue may be col-

lected in the same manner as a personal debt of the taxpayer to the state

of Kansas from the time the same shall become due, and shall be recov-

erable in any court of competent jurisdiction in any action in the name

of the state of Kansas, on relation of the director secretary of revenue or

the secretary's designee. Such suit may be maintained, prosecuted, and

all proceedings taken to the same effect and extent as for the enforcement

of a right of action for debt. All provisional remedies available in such

actions shall be, and are hereby made available to the state of Kansas in

the enforcement of the payment of any state tax: Provided, That, except

that the remedy herein provided shall be in addition to the various war-

rant and lien procedures now provided by law for the collection of delin-

quent taxes.

Sec. 9. K.S.A. 79-32,104 is hereby amended to read as follows: 79-

32,104. (a) The amount paid upon declarations of estimated tax under

this act during any calendar year shall be allowed as a credit against the

income tax otherwise imposed on the taxpayer by the ``Kansas income tax

act.''

(b) If the amount paid on the declaration of estimated tax during any

calendar year exceeds the income tax liability of the taxpayer, any excess

shall be applied to any other income tax then owed the state of Kansas

by such taxpayer (,including fines, penalties and interest, if any), as pro-

vided by section 7, and amendments thereto, and the balance of such

excess, if any, refunded to the taxpayer as provided in K.S.A. 79-32,105

(c), and amendments thereto, or at the taxpayer's option credited to his

or her the taxpayer's declaration of estimated tax liability for the suc-

ceeding year.

Sec. 10. K.S.A. 2001 Supp. 79-32,105 is hereby amended to read as

follows: 79-32,105. (a) The director shall remit the entire amount col-

lected under the provisions of this act and from the income tax imposed

upon individuals, corporations, estates or trusts pursuant to the ``Kansas

income tax act'' less amounts withheld as provided in subsection (b) and

any amounts credited to the IMPACT program repayment fund or the

IMPACT program services fund under K.S.A. 74-50,107 and amend-

ments thereto 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 to the credit of the state general fund.

(b) A revolving fund, designated as ``income tax refund fund'' not to

exceed $4,000,000 shall be set apart and maintained by the director from

income tax collections, withholding tax collections, and estimated tax col-

lections and held by the state treasurer for prompt payment of all income

tax refunds, for the payment of interest as provided in subsection (e), for

payment of homestead property tax refunds in accordance with the home-

stead property tax refund act and for payment of property tax refunds

allowed pursuant to the provisions of K.S.A. 2001 Supp. 79-255, and

amendments thereto. The fund shall be in such amount, within the limit

set by this section, as the director determines is necessary to meet current

refunding requirements under this act.

(c) If the director discovers from the examination of the return, or

upon claim duly filed by the taxpayer or upon final judgment of the court

that the income tax, withholding tax, declaration of estimated tax or any

penalty or interest paid by or credited to any taxpayer is in excess of the

amount legally due for such tax or any other tax owed the state of Kansas,

the director shall certify to the director of accounts and reports the name

of the taxpayer, the amount of refund and such other information as the

director may require. Upon receipt of such certification the director of

accounts and reports shall issue a warrant on the state treasurer for the

payment to the taxpayer out of the fund provided in subsection (b), except

that no refund shall be made for a sum less than $5, but such amount

may be claimed by the taxpayer as a credit against the taxpayer's tax

liability in the taxpayer's next succeeding taxable year.

(d) When a resident taxpayer dies, and the director determines that

a refund is due the claimant not in excess of $100, the director shall certify

to the director of accounts and reports the name and address of the

claimant entitled to the refund and the amount of the refund. A refund

may be made upon a claim duly made on behalf of the estate of the

deceased or in the absence of any such claim upon a claim by a surviving

spouse and if none upon the claim by any heir at law. Upon receipt of

such certification the director of accounts and reports shall issue a warrant

on the state treasurer for the payment to the claimant out of the fund

provided in subsection (b).

(e) Interest shall be allowed and paid at the rate of 12% per annum

upon any overpayment of the income tax imposed upon individuals, cor-

porations, estates or trusts pursuant to the Kansas income tax act for any

period prior to January 1, 1995, 6% per annum for the period commenc-

ing on January 1, 1995, and ending on December 31, 1997, and at the

rate prescribed and determined pursuant to K.S.A. 79-2968, and amend-

ments thereto, for any period thereafter.

For the purposes of this subsection:

(1) Any return filed before the last day prescribed for the filing

thereof shall be considered as filed on such last day, determined without

regard to any extension of time granted the taxpayer;

(2) any tax paid by the taxpayer before the last day prescribed for its

payment, any income tax withheld from the taxpayer during any calendar

year and any amount paid by the taxpayer as estimated income tax for a

taxable year shall be deemed to have been paid on the last day prescribed

for filing the return for the taxable year to which such amount constitutes

a credit or payment, determined without regard to any extension of time

granted the taxpayer;

(3) if any overpayment of tax results from a carryback of a net oper-

ating loss or net capital loss, such overpayment shall be deemed not to

have been made prior to the close of the taxable year in which such net

operating loss or net capital loss arises. For purposes of this paragraph,

the return for the loss year shall not be deemed to be filed before claim

for such overpayment is filed;

(4) in the case of a credit, interest shall be allowed and paid from the

date of the overpayment to the due date of the amount against which the

credit is taken, except that if any overpayment of income tax is claimed

as a credit against estimated tax for the succeeding taxable year, such

amount shall be considered as a payment of the income tax for the suc-

ceeding taxable year, whether or not claimed as a credit in the return of

estimated tax for such succeeding taxable year, and no interest shall be

allowed or paid in such overpayment for the taxable year in which the

overpayment arises;

(5) in the case of a tax return which is filed after the last date pre-

scribed for filing such return, determined with regard to extensions, no

interest shall be allowed or paid for any period before the date on which

the return is filed;

(6) in the case of a refund, interest shall be allowed and paid from

the date of the overpayment to a date preceding the date of the refund

check by not more than 30 days, as determined by the director, whether

or not such refund check is accepted by the taxpayer after tender of such

check to the taxpayer, but acceptance of such check shall be without

prejudice to any right of the taxpayer to claim any additional overpayment

and interest thereon; and

(7) if any overpayment is refunded within two months after the last

date prescribed, or permitted by extension of time, for filing the return

of such tax, or within two months after the return was filed, whichever is

later, no interest shall be allowed or paid. For the purposes of this section,

an overpayment shall be deemed to have been refunded at the time the

refund check in the amount of the overpayment, plus any interest due

thereon, is deposited in the United States mail.

New Sec. 11. (a) If any compensation required by K.S.A. 70a-102,

and amendments thereto, is determined by the director to be unpaid: (1)

Not due to negligence or to intentional disregard of this act or rules and

regulations promulgated by the secretary, interest on such compensation

shall be added at the rate per month prescribed by subsection (a) of K.S.A.

79-2968, and amendments thereto, from the date the compensation was

due until paid; (2) due to negligence or to intentional disregard of this

act or rules and regulations promulgated by the secretary, but without

intent to defraud, a penalty of 10% of the amount of such compensation

shall be added, together with interest at the rate per month prescribed

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

date the compensation was due until paid; (3) due to fraud with intent to

evade the compensation, there shall be added thereto a penalty of 50%

of the amount of such compensation, together with interest at the rate

per month prescribed by subsection (a) of K.S.A. 79-2968, and amend-

ments thereto, from the date the compensation was due until paid.

(b) If any person fails or refuses to make any return, when required

to do so under the provisions of K.S.A. 70a-101 et seq., and amendments

thereto, such person shall be subject to a penalty of $25 per day for each

return which such person fails or refuses to file.

(c) Whenever, in the judgment of the director, the failure of any

person to comply with the provisions of subsection (a)(2) and (b) of this

section, was due to reasonable cause, the director may, in the exercise of

discretion, waive or reduce any of the penalties upon making a record of

the reason therefor.

(d) In addition to all other penalties provided by this section, any

person who: (1) Fails to make a return, or to pay any compensation re-

quired to be paid as required by K.S.A. 70a-101 et seq., and amendments

thereto; or (2) makes a false or fraudulent return, or fails to keep any

books or records prescribed by K.S.A. 70a-101 et seq., and amendments

thereto; or (3) willfully violates any rules and regulations promulgated by

the secretary for the enforcement and administration of K.S.A. 70a-101

et seq., and amendments thereto; or (4) aids and abets another in at-

tempting to evade the payment of any compensation required to be paid,

shall be subject to the penalty prescribed for other violations by K.S.A.

70a-108, and amendments thereto.

(e) The director of taxation shall examine all returns filed under the

provision of K.S.A. 70a-101 et seq., and amendments thereto, and shall

issue notices and final determinations of liability hereunder in the manner

prescribed by K.S.A. 79-3226, and amendments thereto, relating to in-

come taxes.

Sec. 12. K.S.A. 2001 Supp. 75-5154 is hereby amended to read as

follows: 75-5154. The secretary of revenue or the secretary's designee

may, in the same manner and to the same extent as provided for income

tax liabilities by K.S.A. 79-3233a through K.S.A. 79-3233i, and amend-

ments thereto, abate all or part of a final liability for any excise tax imposed

under the provisions of K.S.A. 12-1692 et seq., 12-1696 et seq., 41-501 et

seq., 79-3301 et seq., 79-3370 et seq., 79-3401 et seq., 79-3490 et seq., 79-

34,108 et seq., 79-3817 et seq., 79-4101 et seq. or, 79-41a01 or 79-5201

et seq., and amendments thereto.

New Sec. 13. (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. 14. 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. 15. 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. 16. 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. 17. (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. 18. K.S.A. 79-2015, 79-3226, 79-3271, 79-32,104 and 79-3650

and K.S.A. 2001 Supp. 74-2438, 75-5154 and 79-32,105 are hereby re-

pealed.

Sec. 19. This act shall take effect and be in force from and after its

publication in the statute book.

Approved May 30, 2002.


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Date Composed: 10/10/2002 Date Modified: 10/10/2002