Session Law

Identifying Information:L. 2002 ch. 089
Other Identifying Information:2002 Senate Bill 372
Tax Type:Kansas Retailers' Sales Tax
Brief Description:(Amended by Chapter 185)An Act relating to sales taxation; concerning the sourcing of mobile telecommunications services; amending K.S.A. 2001 Supp. 79-3603 and repealing the existing section; also repealing K.S.A. 2001 Supp. 79-3603b.
Keywords:


Body:

CHAPTER 89

SENATE BILL No. 372

(Amended by Chapter 185)


An Act relating to sales taxation; concerning the sourcing of mobile telecommunications

services; amending K.S.A. 2001 Supp. 79-3603 and repealing the existing section; also


repealing K.S.A. 2001 Supp. 79-3603b.


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

Section 1. 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% and, within a rede-

velopment district established pursuant to K.S.A. 74-8921, and amend-

ments thereto, there is hereby levied and there shall be collected and

paid an additional tax at the rate of 2% until the earlier of the date the

bonds issued to finance or refinance the redevelopment project have been

paid in full or the final scheduled maturity of the first series of bonds

issued to finance any part of the project upon:

(a) The gross receipts received from the sale of tangible personal

property at retail within this state;

(b) (1) the gross receipts from intrastate telephone or telegraph serv-

ices; (2) the gross receipts received from the sale of interstate telephone

or telegraph services, which (A) originate within this state and terminate

outside the state and are billed to a customer's telephone number or

account in this state; or (B) originate outside this state and terminate

within this state and are billed to a customer's telephone number or ac-

count in this state except that the sale of interstate telephone or telegraph

service does not include: (A) Any interstate incoming or outgoing wide

area telephone service or wide area transmission type service which en-

titles the subscriber to make or receive an unlimited number of com-

munications to or from persons having telephone service in a specified

area which is outside the state in which the station provided this service

is located; (B) any interstate private communications service to the per-

sons contracting for the receipt of that service that entitles the purchaser

to exclusive or priority use of a communications channel or group of

channels between exchanges; (C) any value-added nonvoice service in

which computer processing applications are used to act on the form, con-

tent, code or protocol of the information to be transmitted; (D) any tel-

ecommunication service to a provider of telecommunication services

which will be used to render telecommunications services, including car-

rier access services; or (E) any service or transaction defined in this sec-

tion among entities classified as members of an affiliated group as pro-

vided by section 1504 of the federal internal revenue code of 1986, as in

effect on January 1, 2001. For the purposes of this subsection the term

gross receipts does not include purchases of telephone, telegraph or tel-

ecommunications using a prepaid telephone calling card or prepaid au-

thorization number. As used in this subsection, a prepaid telephone call-

ing card or prepaid authorization number means the right to exclusively

make telephone calls, paid for in advance, 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;

(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 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 services

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. 2. K.S.A. 2001 Supp. 79-3603 and 79-3603b are hereby re-

pealed.

Sec. 3. This act shall take effect and be in force from and after its

publication in the statute book.

Approved April 24, 2002.


__________




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