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14  AN ACT relating to income or privilege taxation; providing a credit
15    therefrom for a portion of property tax levied against commercial and
16    industrial machinery and equipment. relating to income taxation;
17    excluding distributions to stockholders of certain financial in-
18    stitutions; [relating to dormancy of certain tax liens;] amending
19    K.S.A. 79-1109[, 79-3235 and 79-3617] and K.S.A. 1996 Supp.
20    79-32,117 and repealing the existing sections.
21  
22  Be it enacted by the Legislature of the State of Kansas:
23    Section 1.  For all taxable years commencing after December 31,
24  1996, there shall be allowed as a credit against the tax liability of a taxpayer
25  imposed under the Kansas income tax act, the privilege tax on net in-
26  come of insurance companies imposed under article 28 of chapter
27  40 of the Kansas Statutes Annotated and the privilege tax as meas-
28  ured by net income of financial institutions imposed pursuant to
29  article 11 of chapter 79 of the Kansas Statutes Annotated, an amount
30  equal to 10% of the property tax actually paid during an income or priv-
31  ilege taxable year upon commercial and industrial machinery and equip-
32  ment classified for property taxation purposes pursuant to section 1 of
33  article 11 of the Kansas constitution in subclass (5) of or (6) of class 2
34  and machinery and equipment classified for such purposes in sub-
35  class (2) of class 2. If the amount of such tax credit exceeds the taxpayer's
36  income tax liability for the taxable year, the amount thereof which exceeds
37  such tax liability shall be refunded to the taxpayer.
38    Section 1.  K.S.A. 79-1109 is hereby amended to read as fol-
39  lows: 79-1109. As used in this act ``net income'' shall mean the
40  Kansas taxable income of corporations as defined in K.S.A. 79-
41  32,138, and amendments thereto, or the Kansas taxable income of
42  shareholders as defined in K.S.A. 79-32,139, and amendments thereto,
43  plus income received from obligations or securities of the United
SB 51--Am. by H on FA
                                     

 1  States or any authority, commission or instrumentality of the
 2  United States and its possessions to the extent not included in Kan-
 3  sas taxable income of a corporation and income received from ob-
 4  ligations of this state or a political subdivision thereof which is
 5  exempt from income tax under the laws of this state; less dividends
 6  received from stock issued by Kansas Venture Capital, Inc. to the
 7  extent such dividends are included in the Kansas taxable income
 8  of a corporation, interest paid on time deposits or borrowed money
 9  and dividends paid on withdrawable shares of savings and loan
10  associations to the extent not deducted in arriving at Kansas tax-
11  able income of a corporation.
12    Savings and loan associations shall be allowed as a deduction
13  from net income, as hereinbefore defined, a reserve established
14  for the sole purpose of meeting or absorbing losses, in the amount
15  of 5% of such net income determined without benefit of such de-
16  duction, but no further deduction shall be allowed for losses when
17  actually sustained and charged against such reserve, unless such
18  reserve shall have been fully absorbed thereby; or, in the alter-
19  native, a reasonable addition to a reserve for losses based on past
20  experience, under such rules and regulations as the secretary of
21  revenue may prescribe.
22    Sec. 2.  K.S.A. 1996 Supp. 79-32,117 is hereby amended to
23  read as follows: 79-32,117. (a) The Kansas adjusted gross income
24  of an individual means such individual's federal adjusted gross in-
25  come for the taxable year, with the modifications specified in this
26  section.
27    (b)  There shall be added to federal adjusted gross income:
28    (i)  Interest income less any related expenses directly incurred
29  in the purchase of state or political subdivision obligations, to the
30  extent that the same is not included in federal adjusted gross in-
31  come, on obligations of any state or political subdivision thereof,
32  but to the extent that interest income on obligations of this state
33  or a political subdivision thereof issued prior to January 1, 1988,
34  is specifically exempt from income tax under the laws of this state
35  authorizing the issuance of such obligations, it shall be excluded
36  from computation of Kansas adjusted gross income whether or not
37  included in federal adjusted gross income. Interest income on ob-
38  ligations of this state or a political subdivision thereof issued after
39  December 31, 1987, shall be excluded from computation of Kansas
40  adjusted gross income whether or not included in federal adjusted
41  gross income.
42    (ii)  Taxes on or measured by income or fees or payments in
43  lieu of income taxes imposed by this state or any other taxing ju-
SB 51--Am. by H on FA
                                     

 1  risdiction to the extent deductible in determining federal adjusted
 2  gross income and not credited against federal income tax. This
 3  paragraph shall not apply to taxes imposed under the provisions
 4  of K.S.A. 79-1107 or 79-1108, and amendments thereto, for privi-
 5  lege tax year 1995, and all such years thereafter.
 6    (iii)  The federal net operating loss deduction.
 7    (iv)  Federal income tax refunds received by the taxpayer if the
 8  deduction of the taxes being refunded resulted in a tax benefit for
 9  Kansas income tax purposes during a prior taxable year. Such re-
10  funds shall be included in income in the year actually received
11  regardless of the method of accounting used by the taxpayer. For
12  purposes hereof, a tax benefit shall be deemed to have resulted if
13  the amount of the tax had been deducted in determining income
14  subject to a Kansas income tax for a prior year regardless of the
15  rate of taxation applied in such prior year to the Kansas taxable
16  income, but only that portion of the refund shall be included as
17  bears the same proportion to the total refund received as the fed-
18  eral taxes deducted in the year to which such refund is attributable
19  bears to the total federal income taxes paid for such year. For
20  purposes of the foregoing sentence, federal taxes shall be consid-
21  ered to have been deducted only to the extent such deduction does
22  not reduce Kansas taxable income below zero.
23    (v)  The amount of any depreciation deduction or business ex-
24  pense deduction claimed on the taxpayer's federal income tax re-
25  turn for any capital expenditure in making any building or facility
26  accessible to the handicapped, for which expenditure the taxpayer
27  claimed the credit allowed by K.S.A. 79-32,177, and amendments
28  thereto.
29    (vi)  Any amount of designated employee contributions picked
30  up by an employer pursuant to K.S.A. 12-5005, 20-2603, 74-4919
31  and 74-4965, and amendments to such sections.
32    (vii)  The amount of any charitable contribution made to the
33  extent the same is claimed as the basis for the credit allowed pur-
34  suant to K.S.A. 1996 Supp. 79-32,196, and amendments thereto.
35    (c)  There shall be subtracted from federal adjusted gross in-
36  come:
37    (i)  Interest or dividend income on obligations or securities of
38  any authority, commission or instrumentality of the United States
39  and its possessions less any related expenses directly incurred in
40  the purchase of such obligations or securities, to the extent in-
41  cluded in federal adjusted gross income but exempt from state
42  income taxes under the laws of the United States.
43    (ii)  Any amounts received which are included in federal ad-
SB 51--Am. by H on FA
                                     

 1  justed gross income but which are specifically exempt from Kansas
 2  income taxation under the laws of the state of Kansas.
 3    (iii)  The portion of any gain or loss from the sale or other dis-
 4  position of property having a higher adjusted basis for Kansas in-
 5  come tax purposes than for federal income tax purposes on the
 6  date such property was sold or disposed of in a transaction in which
 7  gain or loss was recognized for purposes of federal income tax that
 8  does not exceed such difference in basis, but if a gain is considered
 9  a long-term capital gain for federal income tax purposes, the mod-
10  ification shall be limited to that portion of such gain which is in-
11  cluded in federal adjusted gross income.
12    (iv)  The amount necessary to prevent the taxation under this
13  act of any annuity or other amount of income or gain which was
14  properly included in income or gain and was taxed under the laws
15  of this state for a taxable year prior to the effective date of this act,
16  as amended, to the taxpayer, or to a decedent by reason of whose
17  death the taxpayer acquired the right to receive the income or
18  gain, or to a trust or estate from which the taxpayer received the
19  income or gain.
20    (v)  The amount of any refund or credit for overpayment of
21  taxes on or measured by income or fees or payments in lieu of
22  income taxes imposed by this state, or any taxing jurisdiction, to
23  the extent included in gross income for federal income tax pur-
24  poses.
25    (vi)  Accumulation distributions received by a taxpayer as a ben-
26  eficiary of a trust to the extent that the same are included in federal
27  adjusted gross income.
28    (vii)  Amounts received as annuities under the federal civil serv-
29  ice retirement system from the civil service retirement and disa-
30  bility fund and other amounts received as retirement benefits in
31  whatever form which were earned for being employed by the fed-
32  eral government or for service in the armed forces of the United
33  States.
34    (viii)  Amounts received by retired railroad employees as a sup-
35  plemental annuity under the provisions of 45 U.S.C. 228b (a) and
36  228c (a)(1) et seq.
37    (ix)  Amounts received by retired employees of a city and by
38  retired employees of any board of such city as retirement allow-
39  ances pursuant to K.S.A. 13-14,106, and amendments thereto, or
40  pursuant to any charter ordinance exempting a city from the pro-
41  visions of K.S.A. 13-14,106, and amendments thereto.
42    (x)  For taxable years beginning after December 31, 1976, the
43  amount of the federal tentative jobs tax credit disallowance under
SB 51--Am. by H on FA
                                     

 1  the provisions of 26 U.S.C. 280 C. For taxable years ending after
 2  December 31, 1978, the amount of the targeted jobs tax credit and
 3  work incentive credit disallowances under 26 U.S.C. 280 C.
 4    (xi)  For taxable years beginning after December 31, 1986, div-
 5  idend income on stock issued by Kansas Venture Capital, Inc.
 6    (xii)  For taxable years beginning after December 31, 1989,
 7  amounts received by retired employees of a board of public utili-
 8  ties as pension and retirement benefits pursuant to K.S.A. 13-1246,
 9  13-1246a and 13-1249 and amendments thereto.
10    (xiii)  For taxable years beginning after December 31, 1993, the
11  amount of income earned on contributions deposited to an indi-
12  vidual development account under K.S.A. 1996 Supp. 79-32,117h,
13  and amendments thereto.
14    (xiv)  For all taxable years commencing after December 31, 1996, that
15  portion of any income of a bank organized under the laws of this state or
16  any other state, a national banking association organized under the laws
17  of the United States, an association organized under the savings and loan
18  code of this state or any other state, or a federal savings association or-
19  ganized under the laws of the United States, for which an election as an
20  S corporation under subchapter S of the federal internal revenue code is
21  in effect, which accrues to the taxpayer who is a stockholder of such
22  corporation and which is not distributed to the stockholders as dividends
23  of the corporation.
24    (d)  There shall be added to or subtracted from federal adjusted
25  gross income the taxpayer's share, as beneficiary of an estate or
26  trust, of the Kansas fiduciary adjustment determined under K.S.A.
27  79-32,135, and amendments thereto.
28    (e)  The amount of modifications required to be made under
29  this section by a partner which relates to items of income, gain,
30  loss, deduction or credit of a partnership shall be determined un-
31  der K.S.A. 79-32,131, and amendments thereto, to the extent that
32  such items affect federal adjusted gross income of the partner.
33    [Sec. 3.  K.S.A. 79-3235 is hereby amended to read as follows:
34  79-3235. If any tax imposed by this act or any portion of such tax
35  is not paid within 60 days after it becomes due, the secretary or
36  the secretary's designee shall issue a warrant under the secretary's
37  or the secretary's designee's hand and official seal, directed to the
38  sheriff of any county of the state, commanding the sheriff to levy
39  upon and sell the real and personal property of the taxpayer found
40  within the sheriff's county for the payment of the amount thereof,
41  with the added penalties, interest and the cost of executing the
42  warrant and to return the warrant to the secretary or the secre-
43  tary's designee and pay to the secretary or the secretary's designee
SB 51--Am. by H on FA
                                     

 1  the money collected by virtue of it not more than 60 days from the
 2  date of the warrant. The sheriff, within five days after the receipt
 3  of the warrant, shall file with the clerk of the district court of the
 4  county a copy thereof, and thereupon the clerk shall either enter
 5  in the appearance docket the name of the taxpayer mentioned in
 6  the warrant, the amount of the tax or portion of it, interest and
 7  penalties for which the warrant is issued and the date such copy is
 8  filed and note the taxpayer's name in the general index. No fee
 9  shall be charged for either entry. The amount of such warrant so
10  docketed shall thereupon become a lien upon the title to and in-
11  terest in the real property of the taxpayer against whom it is issued.
12  The sheriff shall proceed in the same manner and with the same
13  effect as prescribed by law with respect to executions issued
14  against property upon judgments of a court of record and shall be
15  entitled to the same fees for services to be collected in the same
16  manner.
17    [The court in which the warrant is docketed shall have jurisdic-
18  tion over all subsequent proceedings as fully as though a judgment
19  had been rendered in the court. In the discretion of the secretary
20  or the secretary's designee a warrant of like terms, force and effect
21  may be issued and directed to any officer or employee of the sec-
22  retary, and in the execution thereof such officer or employee shall
23  have all the powers conferred by law upon sheriffs, and the sub-
24  sequent proceedings thereunder shall be the same as provided
25  where the warrant is issued directly to the sheriff. The taxpayer
26  shall have the right to redeem the real estate within a period of 18
27  months from the date of such sale. If a warrant is returned, unsat-
28  [chisfied in full, the secretary or the secretary's designee shall have
29  the same remedies to enforce the claim for taxes as if the state of
30  Kansas had recovered judgment against the taxpayer for the
31  amount of the tax. No law exempting any goods and chattels, lands
32  and tenements from forced sale under execution shall apply to a
33  levy and sale under any such warrant or upon any execution issued
34  upon any judgment rendered in any action for income taxes. Except
35  as provided further, the secretary or the secretary's designee shall
36  have the right at any time after a warrant has been returned un-
37  satisfied or satisfied only in part, to issue alias warrants until the
38  full amount of the tax is collected.
39    [If execution is not issued within 10 years from the date of the docketing
40  of any such warrant, or if 10 years shall have intervened between the date
41  of the last execution issued on such warrant, and the time of issuing an-
42  other writ of execution thereon, such warrant shall become dormant, and
43  shall cease to operate as a lien on the real estate of the delinquent taxpayer.
SB 51--Am. by H on FA
                                     

 1  Such dormant warrant may be revived in like manner as dormant judg-
 2  ment under the code of civil procedure.
 3    [Sec. 4.  K.S.A. 79-3617 is hereby amended to read as follows:
 4  79-3617. Whenever any taxpayer liable to pay any sales or com-
 5  pensating tax, refuses or neglects to pay the tax, the amount, in-
 6  cluding any interest or penalty, shall be collected in the following
 7  manner. The secretary of revenue or the secretary's designee shall
 8  issue a warrant under the hand of the secretary or the secretary's
 9  designee and official seal directed to the sheriff of any county of
10  the state commanding the sheriff to levy upon and sell the real and
11  personal property of the taxpayer found within the sheriff's county
12  to satisfy the tax, including penalty and interest, and the cost of
13  executing the warrant and to return such warrant to the secretary
14  or the secretary's designee and pay to the secretary or the secre-
15  tary's designee the money collected by virtue thereof not more
16  than 90 days from the date of the warrant. The sheriff shall, within
17  five days, after the receipt of the warrant file with the clerk of the
18  district court of the county a copy thereof, and thereupon the clerk
19  shall either enter in the appearance docket the name of the tax-
20  payer mentioned in the warrant, the amount of the tax or portion
21  of it, interest and penalties for which the warrant is issued and the
22  date such copy is filed and note the taxpayer's name in the general
23  index. No fee shall be charged for either such entry. The amount
24  of such warrant so docketed shall thereupon become a lien upon
25  the title to, and interest in, the real property of the taxpayer
26  against whom it is issued. The sheriff shall proceed in the same
27  manner and with the same effect as prescribed by law with respect
28  to executions issued against property upon judgments of a court
29  of record, and shall be entitled to the same fees for services.
30    [The court in which the warrant is docketed shall have jurisdic-
31  tion over all subsequent proceedings as fully as though a judgment
32  had been rendered in the court. A warrant of similar terms, force
33  and effect may be issued by the secretary or the secretary's des-
34  ignee and directed to any officer or employee of the secretary or
35  the secretary's designee, and in the execution thereof such officer
36  or employee shall have all the powers conferred by law upon sher-
37  iffs with respect to executions issued against property upon judg-
38  ments of a court of record and the subsequent proceedings there-
39  under shall be the same as provided where the warrant is issued
40  directly to the sheriff. The taxpayer shall have the right to redeem
41  the real estate within a period of 18 months from the date of such
42  sale. If a warrant is returned, unsatisfied in full, the secretary or
43  the secretary's designee shall have the same remedies to enforce
SB 51--Am. by H on FA
                                     

 1  the claim for taxes as if the state of Kansas had recovered judgment
 2  against the taxpayer for the amount of the tax. No law exempting
 3  any goods and chattels, land and tenements from forced sale under
 4  execution shall apply to a levy and sale under any of the warrants
 5  or upon any execution issued upon any judgment rendered in any
 6  action for sales or compensating taxes. Except as provided further,
 7  the secretary or the secretary's designee shall have the right at any
 8  time after a warrant has been returned unsatisfied, or satisfied only
 9  in part, to issue alias warrants until the full amount of the tax is
10  collected. No costs incurred by the sheriff or the clerk of the court
11  shall be charged to the secretary or the secretary's designee.
12    [If execution is not issued within 10 years from the date of the docketing
13  of any such warrant, or if 10 years shall have intervened between the date
14  of the last execution issued on such warrant, and the time of issuing an-
15  other writ of execution thereon, such warrant shall become dormant, and
16  shall cease to operate as a lien on the real estate of the delinquent taxpayer.
17  Such dormant warrant may be revived in like manner as dormant judg-
18  ments under the code of civil procedure.]
19    Sec. 3. [5.]  K.S.A. 79-1109[, 79-3235 and 79-3617] and K.S.A.
20  1996 Supp. 79-32,117 are hereby repealed.
21    Sec. 2. 4. [6.]  This act shall take effect and be in force from and after
22  its publication in the statute book.