----------------------------------------------------------------------------


AN ACT relating to income taxation; concerning the taxation of retire-
  ment benefits; amending K.S.A. 14-10a10, 20-2618, 74-4978g and 74-
  49,106 and K.S.A. 1996 Supp. 12-111a, 12-5005, 13-1246a, 13-14a10,
  74-4923, 74-49,105 and 79-32,117 and repealing the existing sections;
  also repealing K.S.A. 72-17,122.
Be it enacted by the Legislature of the State of Kansas:
  Section 1.  K.S.A. 1996 Supp. 12-111a is hereby amended to read as
follows: 12-111a. Except as hereinafter provided further and to the extent
otherwise provided by K.S.A. 79-32,117, and amendments thereto, all an-
nuities, pensions and benefits paid, which arise from services of a police-
man or fireman, by a pension and benefit plan of a city of the first or
second class under a charter ordinance related to K.S.A. 13-14a01 et seq.
or K.S.A. 14-10a01 et seq., and amendments thereto, are hereby made
and declared exempt from any tax of the state of Kansas or any political
subdivision or taxing body thereof and shall not be subject to execution,
garnishment or attachment. Any pension benefit or annuity accruing to
services of a policeman or fireman by a charter ordinance under this
section shall not be exempt from claims of an alternate payee under a
qualified domestic relations order. As used in this section, the terms ``al-
ternate payee'' and ``qualified domestic relations order'' shall have the
meaning ascribed to them in section 414(p) of the United States internal
revenue code of 1954, as amended. The provisions of this section shall
apply to any qualified domestic relations order which is in effect on or
after July 1, 1994.
  Sec. 2.  K.S.A. 1996 Supp. 12-5005 is hereby amended to read as
follows: 12-5005. (a) Every retired member of a local police or fire pen-
sion plan and every active member of the plan who is entitled to make
an election to become a member of the Kansas police and firemen's re-
tirement system pursuant to K.S.A. 12-5003 or 74-4955 and amendments
thereto and who does not so elect shall become a special member of the
Kansas police and firemen's retirement system on the entry date of the
city which is affiliating with the Kansas police and firemen's retirement
system with regard to all active members and retired members of the
local police or fire pension plan under K.S.A. 74-4954 and amendments
HB 2482
                                     

 1  thereto.
 2    (b)  Beginning with the first payroll for services as a policeman or
 3  fireman after an active member of a local police or fire pension plan
 4  becomes a special member of the Kansas police and firemen's retirement
 5  system under this section, the city shall deduct from the compensation
 6  of each special member the greater of 7% or the percentage rate of con-
 7  tribution which the active member was required to contribute to the local
 8  police or fire pension plan preceding the entry date of the city, as em-
 9  ployee contributions. The deductions shall be remitted quarterly, or as
10  the board of trustees otherwise provides, to the executive secretary of the
11  Kansas public employees retirement system for credit to the Kansas pub-
12  lic employees retirement fund. All deductions shall be credited to the
13  special members' individual accounts beginning on July 1 of the year
14  following the entry date of the city for purposes of all active and retired
15  members of the local police and fire pension plan.
16    (c)  Except as otherwise provided in this act, each active member of
17  a local police or fire pension plan who becomes a special member of the
18  Kansas police and firemen's retirement system under this section shall be
19  subject to the provisions of and entitled to pensions and other benefits,
20  rights and privileges to the extent provided under the local police and fire
21  pension plan on the day immediately preceding the entry date of the city
22  which is affiliating with the Kansas police and firemen's retirement system
23  with regard to all active members and retired members of the plan.
24    (d)  Each retired member of a local police or fire pension plan who
25  becomes a special member of the Kansas police and firemen's retirement
26  system under this section shall be entitled to receive from the Kansas
27  police and firemen's retirement system a pension or any other benefit to
28  the same extent and subject to the same conditions as existed under the
29  local police or fire pension plan on the day immediately preceding the
30  entry date of the city which is affiliating with the system with regard to
31  all active members and retired members of the plan under K.S.A. 74-
32  4954 and amendments thereto, except no retired special member shall
33  be appointed in or to a position or office for which compensation is paid
34  for service to the same state agency, or the same police or fire department
35  of a city, township, special district or county or the same sheriff's office
36  of a county. This subsection shall not apply to service rendered by a
37  retiree as a juror, as a witness in any legal proceeding or action, as an
38  election board judge or clerk or in any other office or position of a similar
39  nature. Any retiree employed by a participating employer in the Kansas
40  police and firemen's retirement system shall not make contributions or
41  receive additional credit under the system for that service. This subsec-
42  tion, except as it relates to contributions and additional credit, shall not
43  apply to the employment of any retiree by the state of Kansas, or any
HB 2482
                                     

 1  county, city, township, special district, political subdivision or instrumen-
 2  tality of any one or several of the aforementioned for a period of not
 3  exceeding 30 days in any one calendar year.
 4    (e) (1)  Except to the extent otherwise provided by K.S.A. 79-32,117,
 5  and amendments thereto, every pension or other benefit received by any
 6  special member pursuant to subsection (c) or (d) is hereby made and
 7  declared exempt from any tax of the state of Kansas or any political sub-
 8  division or taxing body of this state; shall not be subject to execution,
 9  garnishment, attachment or any other process or claim whatsoever, except
10  such pension or benefit or any accumulated contributions due and owing
11  from the system to such special member are subject to decrees for child
12  support or maintenance, or both, as provided in K.S.A. 60-1610 and
13  amendments thereto; and shall be unassignable, except that within 30
14  days after the death of a retirant the lump-sum death benefit payable to
15  a retirant pursuant to the provisions of K.S.A. 74-4989 and amendments
16  thereto may be assignable to a funeral establishment providing funeral
17  services to such retirant by the beneficiary of such retirant. The Kansas
18  public employees retirement system shall not be a party to any action
19  under article 16 of chapter 60 of the Kansas Statutes Annotated, and
20  amendments thereto, and is subject to orders from such actions issued
21  by the district court of the county where such action was filed. Such orders
22  from such actions shall specify either a specific amount or specific per-
23  centage of the amount of the pension or benefit or any accumulated
24  contributions due and owing from the system to be distributed by the
25  system pursuant to this act.
26    (2)  Every pension or other benefit received by any special member
27  pursuant to subsection (c) or (d) is hereby made and declared exempt
28  from any tax of the state of Kansas or any political subdivision or taxing
29  body of this state; shall not be subject to execution, garnishment, attach-
30  ment or any other process or claim whatsoever, except such pension or
31  benefit or any accumulated contributions due and owing from the system
32  to such special members are subject to claims of an alternate payee under
33  a qualified domestic relations order. As used in this subsection, the terms
34  ``alternate payee'' and ``qualified domestic relations order'' shall have the
35  meaning ascribed to them in section 414(p) of the United States internal
36  revenue code of 1954, as amended. The provisions of this subsection shall
37  apply to any qualified domestic relations order which is in effect on or
38  after July 1, 1994.
39    (f) (1)  Each participating employer, pursuant to the provisions of sec-
40  tion 414(h)(2) of the United States internal revenue code, shall pick up
41  and pay the contributions which would otherwise be payable by members
42  as prescribed in subsection (a) commencing with the third quarter of
43  1984. The contributions so picked up shall be treated as employer con-
HB 2482
                                     

 1  tributions for purposes of determining the amounts of federal income
 2  taxes to withhold from the member's compensation.
 3    (2)  Member contributions picked up by the employer shall be paid
 4  from the same source of funds used for the payment of compensation to
 5  a member. A deduction shall be made from each member's compensation
 6  equal to the amount of the member's contributions picked up by the
 7  employer, provided that such deduction shall not reduce the member's
 8  compensation for purposes of computing benefits under K.S.A. 12-5001
 9  to 12-5007, inclusive, and amendments thereto.
10    (3)  Member contributions picked up by the employer shall be re-
11  mitted quarterly, or as the board may otherwise provide, to the executive
12  secretary for credit to the Kansas public employees retirement fund. Such
13  contributions shall be credited to a separate account within the member's
14  individual account so that amounts contributed by the member com-
15  mencing with the third quarter of 1984 may be distinguished from the
16  member contributions picked up by the employer. Interest shall be added
17  annually to members' individual accounts.
18    Sec. 3.  K.S.A. 1996 Supp. 13-1246a is hereby amended to read as
19  follows: 13-1246a. (a) (1)  Any board of public utilities in any munici-
20  pality of the state of Kansas having a population of more than 120,000
21  shall be empowered to enter into an agreement with its employees for
22  the purpose of reorganizing and establishing a board to be known as a
23  board of pension trustees composed of six members, and for the purpose
24  of continuing, revising, maintaining and adopting an equitable and ade-
25  quate pension program for all of its employees, including retired em-
26  ployees, and their dependents. Three members of the board of pension
27  trustees shall be appointed by the board of public utilities from its regular
28  employees to serve at its discretion. Three members of the board of pen-
29  sion trustees shall be elected annually by all of the nonsupervisory em-
30  ployees of the board of public utilities from its nonsupervisory employees
31  and shall serve for fixed periods of one year, commencing on July 1, of
32  each year.
33    (2)  Present employees of such board of public utilities, in order to
34  pay the cost of implementing, continuing and operating such retirement
35  pension plan for such present employees, shall contribute in the aggregate
36  from their earnings not more than 1/2 of the costs of future-service pen-
37  sions, and such board of public utilities shall pay or contribute the re-
38  maining portion thereof to any revised, continued or adopted retirement
39  pension plan, as provided for herein.
40    (3)  Any costs of paying increased pensions or benefits to retired em-
41  ployees and their dependents of such board of public utilities, and the
42  costs of any back-service obligations under terms of such revised pension
43  plan as may be found and determined to be proper and equitable, under
HB 2482
                                     

 1  rules and provisions to be adopted by such board of pension trustees,
 2  shall be borne in their entirety by such board of public utilities; and such
 3  contributions to such continued and revised retirement pension plan for
 4  the use and benefit of retired employees and their dependents which
 5  shall be made by such board of public utilities shall be computed and
 6  based on sound actuarial standards.
 7    (4)  Such board of pension trustees shall be empowered to make and
 8  enter into an agreement with such board of public utilities, authorizing
 9  such board of pension trustees to take control and custody of all assets,
10  property and funds presently held, controlled and in the possession of the
11  now constituted retirement advisory council of such board of public util-
12  ities, and its present trustee, as the same was theretofore created and is
13  now functioning as provided by K.S.A. 13-1247 and amendments thereto.
14  The board shall provide for such additional funds as may be necessary to
15  fulfill the purposes of this act.
16    (5)  Such board of pension trustees shall be empowered to control
17  and take immediately into and under its custody and control, title to and
18  possession of all records, funds, property and assets of the such existing
19  retirement advisory council of such board of public utilities, and its pres-
20  ent trustees, as the same is now constituted by the provisions of K.S.A.
21  13-1247 and amendments thereto, which such retirement council of such
22  board of public utilities, its powers, authority and duties shall be abol-
23  ished, cease and terminate upon the effective date of this act.
24    (b) (1)  The board of pension trustees shall establish a formal, ade-
25  quate written pension plan with specific rules of eligibility for pension
26  coverage for all present employees, including retired employees, and their
27  dependents, of such board of public utilities. The plan and rules apper-
28  taining thereto may be amended at any time by the vote of four members
29  of such board of pension trustees and may be the subject of negotiations
30  between such board of public utilities and its employees, but subject to
31  the revision, adoption and ratification of the same by such board of pen-
32  sion trustees, as the same is created and governed by the provisions of
33  this act. The plan and rules shall be printed and distributed to all em-
34  ployees.
35    (2)  Pensions and retirement benefits, received and paid under the
36  such continued and revised retirement pension plan and rules promul-
37  gated by such board of pension trustees, to retired employees, their de-
38  pendents, and present employees, shall at all times bear a reasonable
39  relationship to the wages or earnings paid to any employee of such board
40  of public utilities. Such benefits shall be compatible with any changes in
41  cost of living indexes except, such plan and benefits payable shall at all
42  times be in strict conformity with current, sound actuarial standards and
43  principles.
HB 2482
                                     

 1    (3)  No employee shall be exempt from having contributions made on
 2  such employee's behalf or be precluded from receiving benefits for any
 3  reason other than lack of age, or an insufficient period or time of em-
 4  ployment.
 5    (4)  No plan shall be adopted or modified at any future time which is
 6  not properly funded and in conformity with recognized, sound actuarial
 7  principles and standards.
 8    (5)  All funds and the earnings therefrom held in trust for the use and
 9  benefit of the employees and members, including retired employees and
10  their dependents, of such board of public utilities, of any retirement pen-
11  sion plan continued, revised and adopted under the provisions of this act,
12  shall be exempt from civil process, taxation or assessment, and shall not
13  be subject to seizure or execution or liens of any kind. Except to the extent
14  otherwise provided by K.S.A. 79-32,117, and amendments thereto, all
15  benefits due to the members or to their beneficiaries of any retirement
16  pension plan continued and revised under the provisions of this act, shall
17  be exempt from any tax of the state of Kansas or any political subdivision
18  or taxing body of the state and civil liability for debts of the members and
19  employees, or their beneficiaries, receiving the same, and, except as oth-
20  erwise provided, shall not be subject to seizure, execution or process of
21  any nature. Any annuity or benefit or accumulated contributions due and
22  owing to any person under the provisions of any retirement pension plan
23  continued and revised under the provisions of this act are subject to claims
24  of an alternate payee under a qualified domestic relations order. As used
25  in this subsection, the terms ``alternate payee'' and ``qualified domestic
26  relations order'' shall have the meaning ascribed to them in section 414(p)
27  of the United States internal revenue code of 1954, as amended. The
28  provisions of this act shall apply to any qualified domestic relations order
29  which is in effect on or after July 1, 1994. Such retirement  pension plan
30  continued and revised under the provisions of this act, such board of
31  pension trustees, or such board of public utilities shall not be a party to
32  any action under article 16 of chapter 60 of the Kansas Statutes Annotated
33  but is subject to orders from such actions issued by the district court of
34  the county where such action was filed and may accept orders which it
35  deems to be qualified under this subsection if such orders are issued by
36  courts having jurisdiction of such actions outside the state of Kansas. Such
37  orders from such actions shall specify either a specific amount or specific
38  percentage of the amount of the pension or benefit or any accumulated
39  contributions due and owing from such retirement pension plan pursuant
40  to this act.
41    (6)  The members and employees of any retirement pension plan con-
42  tinued, revised and adopted under the provisions of this act, may name
43  one or more beneficiaries to receive any benefits that may be due or
HB 2482
                                     

 1  become due to such member and employee in the event of such member
 2  or employee's death.
 3    Sec. 4.  K.S.A. 1996 Supp. 13-14a10 is hereby amended to read as
 4  follows: 13-14a10. Except as hereinafter provided further and to the extent
 5  otherwise provided by K.S.A. 79-32,117, and amendments thereto, any
 6  annuity, benefits, funds, property, or rights created by or accruing to any
 7  person under the provisions of K.S.A. 13-14a01 et seq. or K.S.A. 14-10a01
 8  et seq., and amendments thereto, are hereby made and declared exempt
 9  from any tax of the state of Kansas or any political subdivision or taxing
10  body thereof, and shall not be subject to execution, garnishment, or at-
11  tachment, or any other process or claim whatsoever, and shall be unas-
12  signable, except as specifically provided by law.
13    Any pension benefits or annuities accruing under the provisions of
14  K.S.A. 13-14a01 et seq. or K.S.A. 14-10a01 et seq., and amendments
15  thereto, shall not be exempt from claims of an alternate payee under a
16  qualified domestic relations order. As used in this section, the terms ``al-
17  ternate payee'' and ``qualified domestic relations order'' shall have the
18  meaning ascribed to them in section 414(p) of the United States internal
19  revenue code of 1954, as amended. The provisions of this section shall
20  apply to any qualified domestic relations order which is in effect on or
21  after July 1, 1994.
22    Sec. 5.  K.S.A. 14-10a10 is hereby amended to read as follows: 14-
23  10a10. Except to the extent otherwise provided by K.S.A. 79-32,117, and
24  amendments thereto, any annuity, benefits, funds, property, or rights cre-
25  ated by or accruing to any person under the provisions of K.S.A. 13-14a01
26  et seq. or K.S.A. 14-10a01 et seq. and any acts amendatory thereof or
27  supplemental amendments thereto are hereby made and declared exempt
28  from any tax of the state of Kansas or any political subdivision or taxing
29  body thereof, and shall not be subject to execution, garnishment, or at-
30  tachment, or any other process or claim whatsoever, and shall be unas-
31  signable, except as specifically provided by law.
32    Sec. 6.  K.S.A. 20-2618 is hereby amended to read as follows: 20-
33  2618. Except to the extent otherwise provided by K.S.A. 79-32,117, and
34  amendments thereto, every annuity or other benefit received by any judge
35  or other person pursuant to the retirement system for judges under the
36  acts contained in article 26 of chapter 20 of the Kansas Statutes Annotated
37  and amendments thereto is exempt from any tax of the state of Kansas
38  or any political subdivision or taxing body thereof; shall not be subject to
39  execution, garnishment, attachment or except as otherwise provided, any
40  other process or claim whatsoever; and shall be unassignable, except that
41  within 30 days after the death of a retirant the lump-sum death benefit
42  payable to a retirant pursuant to the provisions of K.S.A. 74-4989 and
43  amendments thereto may be assignable to a funeral establishment pro-
HB 2482
                                     

 1  viding funeral services to such retirant by the beneficiary of such retirant.
 2  Any annuity or benefit or accumulated contributions due and owing to
 3  any judge or any person under the provisions of the retirement system
 4  for judges are subject to claims of an alternate payee under a qualified
 5  domestic relations order. As used in this subsection, the terms ``alternate
 6  payee'' and ``qualified domestic relations order'' shall have the meaning
 7  ascribed to them in section 414(p) of the United States internal revenue
 8  code of 1954, as amended. The provisions of this act shall apply to any
 9  qualified domestic relations order which was filed or amended either
10  before or after July 1, 1994. The Kansas public employees retirement
11  system shall not be a party to any action under article 16 of chapter 60
12  of the Kansas Statutes Annotated, and amendments thereto, but is subject
13  to orders from such actions issued by the district court of the county
14  where such action was filed and may also accept orders which it deems
15  to be qualified under this subsection from courts having jurisdiction of
16  such actions outside the state of Kansas. Such orders from such actions
17  shall specify either a specific amount or specific percentage of the amount
18  of the pension or benefit or any accumulated contributions due and owing
19  from the system to be distributed by the system pursuant to this act.
20    Sec. 7.  K.S.A. 1996 Supp. 74-4923 is hereby amended to read as
21  follows: 74-4923. (a) No alteration, amendment or repeal of this act shall
22  affect the then existing rights of members and beneficiaries but shall be
23  effective only as to rights which would otherwise accrue under this act as
24  a result of services rendered by an employee after the alteration, amend-
25  ment or repeal. This subsection shall not apply to any alteration or amend-
26  ment of this act which provides greater benefits to members or benefi-
27  ciaries, but any increase of benefits shall only be applicable to benefits
28  payable on the first day of the month coinciding with or following the
29  effective date of the alteration or amendment.
30    (b)  Except to the extent otherwise provided by K.S.A. 79-32,117, and
31  amendments thereto, any annuity, benefits, funds, property or rights cre-
32  ated by, or accruing to any person under the provisions of K.S.A. 74-4901
33  et seq. or 74-4951 et seq., and amendments thereto, shall be exempt from
34  any tax of the state of Kansas or any political subdivision or taxing body
35  of the state; shall not be subject to execution, garnishment or attachment,
36  or, except as otherwise provided, any other process or claim whatsoever;
37  and shall be unassignable, except that within 30 days after the death of a
38  retirant the lump-sum death benefit payable to a retirant's beneficiary
39  pursuant to the provisions of K.S.A. 74-4989 and amendments thereto
40  may be assignable to a funeral establishment providing funeral services
41  to the retirant by the beneficiary of such retirant. Any annuity or benefit
42  or accumulated contributions due and owing to any person under the
43  provisions of K.S.A. 74-4901 et seq. or 74-4951 et seq. and amendments
HB 2482
                                     

 1  thereto are subject to claims of an alternate payee under a qualified do-
 2  mestic relations order. As used in this subsection, the terms ``alternate
 3  payee'' and ``qualified domestic relations order'' shall have the meaning
 4  ascribed to them in section 414(p) of the United States internal revenue
 5  code of 1954, as amended. The provisions of this act shall apply to any
 6  qualified domestic relations order which is in effect on or after July 1,
 7  1994. The Kansas public employees retirement system shall not be a party
 8  to any action under article 16 of chapter 60 of the Kansas Statutes An-
 9  notated, and amendments thereto, but is subject to orders from such
10  actions issued by the district court of the county where such action was
11  filed and may also accept orders which it deems to be qualified under
12  this subsection from courts having jurisdiction of such actions outside the
13  state of Kansas. Such orders from such actions shall specify either a spe-
14  cific amount or specific percentage of the amount of the pension or ben-
15  efit or any accumulated contributions due and owing from the system to
16  be distributed by the system pursuant to this act.
17    (c)  In any case where a state agency is owed a debt or where a par-
18  ticipating employer under the Kansas public employees retirement sys-
19  tem or under the Kansas police and firemen's retirement system has been
20  required to pay and has paid an arrearage obligation of the amount of
21  contributions of a member which were not paid at the time required and
22  where the employment of the member by the state agency or participating
23  employer has been terminated and the member is eligible to withdraw
24  accumulated contributions in accordance with K.S.A. 74-4917 and 74-
25  4963, and amendments thereto, the state agency or participating em-
26  ployer shall be paid from the member's account in the fund an amount
27  equal to the debt or the amount of contributions of the member paid by
28  the participating employer pursuant to an arrearage obligation, upon ap-
29  plication to the board therefor accompanied by certification of the
30  amount to be paid to the state agency or participating employer. If any
31  application and certification under this subsection are not received by the
32  board prior to the withdrawal of accumulated contributions by the mem-
33  ber, the board shall not be liable to pay and shall not pay any amount
34  from the fund pursuant to any such application and certification.
35    Sec. 8.  K.S.A. 74-4978g is hereby amended to read as follows: 74-
36  4978g. Any person receiving or entitled to receive a pension or any other
37  benefit, or who will become entitled to receive a pension or any other
38  benefit, from the state highway patrol pension fund as it existed prior to
39  April 1, 1972, shall be entitled to receive from the Kansas police and
40  firemen's retirement system such pension or any other benefit to the same
41  extent and subject to the same conditions as existed on April 1, 1972. Any
42  minor child of a member of the state highway patrol pension system or
43  special member of the Kansas police and firemen's retirement system
HB 2482
                                     

 1  who died by reason of injuries received or disease contracted by such
 2  member while in the performance of such member's duties as a member
 3  of the highway patrol and whose spouse's pension was terminated because
 4  of such spouse's remarriage shall receive a monthly amount equal to the
 5  pension which was terminated due to such remarriage. Such benefits shall
 6  accrue from April 1, 1973, or the date of the spouse's remarriage, which-
 7  ever is later and shall be terminated on the first day of the month in which
 8  the child dies, marries or attains the age of 18 years or in which the child
 9  attains the age of 23 years, if such child is a full-time student as provided
10  in K.S.A. 74-49,117, and amendments thereto. Except to the extent oth-
11  erwise provided by K.S.A. 79-32,117, and amendments thereto, all pen-
12  sions and benefits received by any person under this act are hereby made
13  and declared exempt from any tax of the state of Kansas or any political
14  subdivision or taxing body thereof, and shall not be subject to execution,
15  garnishment, or attachment, or any other process or claim whatsoever.
16    Sec. 9.  K.S.A. 1996 Supp. 74-49,105 is hereby amended to read as
17  follows: 74-49,105. Except to the extent otherwise provided by K.S.A. 79-
18  32,117, and amendments thereto, every retirement benefit received by
19  any person under subsection (b) of K.S.A. 74-49,104 and amendments
20  thereto shall be exempt from any tax of the state of Kansas or any political
21  subdivision or taxing body of the state; shall not be subject to execution,
22  garnishment, attachment or except as otherwise provided, any other proc-
23  ess or claim whatsoever; and shall be unassignable. Any retirement benefit
24  due and owing to any person under subsection (b) of K.S.A. 74-49,104
25  and amendments thereto is subject to claims of an alternate payee under
26  a qualified domestic relations order. As used in this subsection, the terms
27  ``alternate payee'' and ``qualified domestic relations order'' shall have the
28  meaning ascribed to them in section 414(p) of the United States internal
29  revenue code of 1954, as amended. The provisions of this act shall apply
30  to any qualified domestic relations order which was filed or amended
31  either before or after July 1, 1994.
32    Sec. 10.  K.S.A. 74-49,106 is hereby amended to read as follows: 74-
33  49,106. (a) Each person who is a special member of the Kansas public
34  employees retirement system under subsection (c) of K.S.A. 74-4999, and
35  amendments thereto, shall be entitled to receive from the Kansas public
36  employees retirement system a retirement benefit, annuity, pension or
37  other benefit to the same extent and subject to the same conditions as
38  existed under the laws in effect on the day immediately preceding the
39  effective date of this act, except that each person who is a special member
40  of the Kansas public employees retirement system pursuant to subsection
41    (c) of K.S.A. 74-4999, and amendments thereto, shall have such person's
42  retirement benefit, annuity, pension or other benefit recalculated under
43  subsection (c) of K.S.A. 74-49,104 and amendments thereto. If such re-
HB 2482
                                     

 1  calculation results in an increase in such special member's retirement
 2  benefit, annuity, pension or other benefit, such increase shall accrue and
 3  be payable to such special member on and after July 1, 1982.
 4    (b)  Except to the extent otherwise provided by K.S.A. 79-32,117, and
 5  amendments thereto, every retirement benefit, annuity, pension or other
 6  benefit received by any person pursuant to subsection (a) shall be exempt
 7  from any tax of the state of Kansas or any political subdivision or taxing
 8  body of the state; shall not be subject to execution, garnishment, attach-
 9  ment or any other process or claim whatsoever, including decrees for
10  support or maintenance; and shall be unassignable.
11    Sec. 11.  K.S.A. 1996 Supp. 79-32,117 is hereby amended to read as
12  follows: 79-32,117. (a) The Kansas adjusted gross income of an individual
13  means such individual's federal adjusted gross income for the taxable year,
14  with the modifications specified in this section.
15    (b)  There shall be added to federal adjusted gross income:
16    (i)  Interest income less any related expenses directly incurred in the
17  purchase of state or political subdivision obligations, to the extent that
18  the same is not included in federal adjusted gross income, on obligations
19  of any state or political subdivision thereof, but to the extent that interest
20  income on obligations of this state or a political subdivision thereof issued
21  prior to January 1, 1988, is specifically exempt from income tax under the
22  laws of this state authorizing the issuance of such obligations, it shall be
23  excluded from computation of Kansas adjusted gross income whether or
24  not included in federal adjusted gross income. Interest income on obli-
25  gations of this state or a political subdivision thereof issued after Decem-
26  ber 31, 1987, shall be excluded from computation of Kansas adjusted
27  gross income whether or not included in federal adjusted gross income.
28    (ii)  Taxes on or measured by income or fees or payments in lieu of
29  income taxes imposed by this state or any other taxing jurisdiction to the
30  extent deductible in determining federal adjusted gross income and not
31  credited against federal income tax. This paragraph shall not apply to taxes
32  imposed under the provisions of K.S.A. 79-1107 or 79-1108, and amend-
33  ments thereto, for privilege tax year 1995, and all such years thereafter.
34    (iii)  The federal net operating loss deduction.
35    (iv)  Federal income tax refunds received by the taxpayer if the de-
36  duction of the taxes being refunded resulted in a tax benefit for Kansas
37  income tax purposes during a prior taxable year. Such refunds shall be
38  included in income in the year actually received regardless of the method
39  of accounting used by the taxpayer. For purposes hereof, a tax benefit
40  shall be deemed to have resulted if the amount of the tax had been de-
41  ducted in determining income subject to a Kansas income tax for a prior
42  year regardless of the rate of taxation applied in such prior year to the
43  Kansas taxable income, but only that portion of the refund shall be in-
HB 2482
                                     

 1  cluded as bears the same proportion to the total refund received as the
 2  federal taxes deducted in the year to which such refund is attributable
 3  bears to the total federal income taxes paid for such year. For purposes
 4  of the foregoing sentence, federal taxes shall be considered to have been
 5  deducted only to the extent such deduction does not reduce Kansas tax-
 6  able income below zero.
 7    (v)  The amount of any depreciation deduction or business expense
 8  deduction claimed on the taxpayer's federal income tax return for any
 9  capital expenditure in making any building or facility accessible to the
10  handicapped, for which expenditure the taxpayer claimed the credit al-
11  lowed by K.S.A. 79-32,177, and amendments thereto.
12    (vi)  Any amount of designated employee contributions picked up by
13  an employer pursuant to K.S.A. 12-5005, 20-2603, 74-4919 and 74-4965,
14  and amendments to such sections.
15    (vii)  The amount of any charitable contribution made to the extent
16  the same is claimed as the basis for the credit allowed pursuant to K.S.A.
17  1996 Supp. 79-32,196, and amendments thereto.
18    (c)  There shall be subtracted from federal adjusted gross income:
19    (i)  Interest or dividend income on obligations or securities of any
20  authority, commission or instrumentality of the United States and its pos-
21  sessions less any related expenses directly incurred in the purchase of
22  such obligations or securities, to the extent included in federal adjusted
23  gross income but exempt from state income taxes under the laws of the
24  United States.
25    (ii)  Any amounts received which are included in federal adjusted
26  gross income but which are specifically exempt from Kansas income tax-
27  ation under the laws of the state of Kansas.
28    (iii)  The portion of any gain or loss from the sale or other disposition
29  of property having a higher adjusted basis for Kansas income tax purposes
30  than for federal income tax purposes on the date such property was sold
31  or disposed of in a transaction in which gain or loss was recognized for
32  purposes of federal income tax that does not exceed such difference in
33  basis, but if a gain is considered a long-term capital gain for federal in-
34  come tax purposes, the modification shall be limited to that portion of
35  such gain which is included in federal adjusted gross income.
36    (iv)  The amount necessary to prevent the taxation under this act of
37  any annuity or other amount of income or gain which was properly in-
38  cluded in income or gain and was taxed under the laws of this state for a
39  taxable year prior to the effective date of this act, as amended, to the
40  taxpayer, or to a decedent by reason of whose death the taxpayer acquired
41  the right to receive the income or gain, or to a trust or estate from which
42  the taxpayer received the income or gain.
43    (v)  The amount of any refund or credit for overpayment of taxes on
HB 2482
                                     

 1  or measured by income or fees or payments in lieu of income taxes im-
 2  posed by this state, or any taxing jurisdiction, to the extent included in
 3  gross income for federal income tax purposes.
 4    (vi)  Accumulation distributions received by a taxpayer as a beneficiary
 5  of a trust to the extent that the same are included in federal adjusted
 6  gross income.
 7    (vii)  Amounts received as annuities under the federal civil service
 8  retirement system from the civil service retirement and disability fund
 9  and other amounts received as retirement benefits in whatever form
10  which were earned for being employed by the federal government or for
11  service in the armed forces of the United States by any taxpayer as re-
12  tirement benefits in whatever form which were earned for being selfem-
13  ployed or being employed by a public or private entity, to the extent
14  included in federal adjusted gross income, but not exceeding $15,000.
15    (viii)  Amounts received by retired railroad employees as a supple-
16  mental annuity under the provisions of 45 U.S.C. 228b (a) and 228c (a)(1)
17  et seq.
18    (ix)  Amounts received by retired employees of a city and by retired
19  employees of any board of such city as retirement allowances pursuant to
20  K.S.A. 13-14,106, and amendments thereto, or pursuant to any charter
21  ordinance exempting a city from the provisions of K.S.A. 13-14,106, and
22  amendments thereto as retirement benefits which have been previously
23  taxed pursuant to paragraph (vi) of subsection (b).
24    (x)  For taxable years beginning after December 31, 1976, the amount
25  of the federal tentative jobs tax credit disallowance under the provisions
26  of 26 U.S.C. 280 C. For taxable years ending after December 31, 1978,
27  the amount of the targeted jobs tax credit and work incentive credit dis-
28  allowances under 26 U.S.C. 280 C.
29    (xi)  For taxable years beginning after December 31, 1986, dividend
30  income on stock issued by Kansas Venture Capital, Inc.
31    (xii)  For taxable years beginning after December 31, 1989, amounts
32  received by retired employees of a board of public utilities as pension and
33  retirement benefits pursuant to K.S.A. 13-1246, 13-1246a and 13-1249
34  and amendments thereto.
35    (xiii) (xii)  For taxable years beginning after December 31, 1993, the
36  amount of income earned on contributions deposited to an individual
37  development account under K.S.A. 1996 Supp. 79-32,117h, and amend-
38  ments thereto.
39    (d)  There shall be added to or subtracted from federal adjusted gross
40  income the taxpayer's share, as beneficiary of an estate or trust, of the
41  Kansas fiduciary adjustment determined under K.S.A. 79-32,135, and
42  amendments thereto.
43    (e)  The amount of modifications required to be made under this sec-
HB 2482
                                     

 1  tion by a partner which relates to items of income, gain, loss, deduction
 2  or credit of a partnership shall be determined under K.S.A. 79-32,131,
 3  and amendments thereto, to the extent that such items affect federal
 4  adjusted gross income of the partner.
 5    New Sec. 12.  The provisions of section 1 of this act shall be appli-
 6  cable to all taxable years commencing after December 31, 1996.
 7    Sec. 13.  K.S.A. 14-10a10, 20-2618, 72-17,122, 74-4978g and 74-
 8  49,106 and K.S.A. 1996 Supp. 12-111a, 12-5005, 13-1246a, 13-14a10, 74-
 9  4923, 74-49,105 and 79-32,117 are hereby repealed.
10    Sec. 14.  This act shall take effect and be in force from and after its
11  publication in the statute book.