Session of 1998
HOUSE BILL No. 2719
By Representative Tanner
1-26
9
AN ACT relating to income taxation; concerning
credits therefrom relat-
10 ing to equipment
utilized in the manufacture of products from po-
11 stconsumer waste;
amending K.S.A. 79-32,192 and repealing the ex-
12 isting section.
13
14 Be it enacted by the Legislature of the
State of Kansas:
15 Section 1. K.S.A.
79-32,192 is hereby amended to read as follows:
16 79-32,192. (a) There shall be allowed as a
credit against the tax liability
17 of a taxpayer imposed under the Kansas
income tax act an amount equal
18 to 20% of the costs incurred by the
taxpayer for purchases of qualified
19 equipment if the total capacity of
qualified equipment owned by the tax-
20 payer on the last day of the taxable year
in which such credit is claimed
21 exceeds the total capacity of qualified
equipment owned by the taxpayer
22 on the last day of the base year. Such
credit shall be claimed in the taxable
23 year in which at least 70% of the total
production capacity of the qualified
24 equipment is used by the taxpayer to
manufacture products. If the
25 amount of such tax credit exceeds the
taxpayer's income tax liability for
26 such taxable year, the amount thereof which
exceeds such tax liability may
27 be carried over for deduction from the
taxpayer's income tax liability in
28 the next succeeding taxable year or years
until the total amount of the tax
29 credit has been deducted from tax
liability, except that no such tax credit
30 shall be carried over for deduction after
the seventh taxable year suc-
31 ceeding the taxable year in which the tax
credit is claimed. In no event
32 shall the aggregate of any such credit for
a taxpayer exceed $100,000.
33 (b) If qualified
equipment which is purchased by any taxpayer who
34 has claimed the credit allowable pursuant
to this section is disposed of or
35 otherwise ceases to be qualified equipment
within three years of the tax-
36 able year for which such credit is allowed,
the taxpayer shall refund the
37 amount of the tax credit which was deducted
from income tax liability
38 which exceeds the following amounts: (1)
Within the first year, zero; (2)
39 within the second year, an amount equal to
33% of the amount of the
40 credit allowed; (3) within the third year,
an amount equal to 67% of the
41 amount of the credit allowed. Any taxpayer
who has refunded an amount
42 pursuant to this subsection shall no longer
be eligible to carry forward
43 any amount of the credit which had not been
used as of the date such
HB 2719
2
1 refund is made.
2 (c) (1) The
department of revenue shall prepare a report on the ef-
3 fectiveness of the tax credit allowed
pursuant to the provisions of this
4 section. Such report shall include
the following information based upon
5 the most current information
available at the time of preparation:
6 (A) The number of
taxpayers who were allowed the tax credit and
7 the aggregate dollar amount of tax
credits allowed;
8 (B) the volume of
postconsumer waste utilized by qualified equip-
9 ment for which the tax credit was
allowed which would have otherwise
10 been disposed of as waste and the
percentage that the volume of postcon-
11 sumer waste constitutes of the total volume
of materials utilized in the
12 manufacture of products;
13 (C) the number of new
employees resulting from the use of qualified
14 equipment for which the tax credit was
allowed;
15 (D) the amount of
property tax revenues attributable to qualified
16 equipment for which the tax credit was
allowed; and
17 (E) the types and
quantity of products produced from qualified
18 equipment for which the tax credit was
allowed.
19 (2) Any taxpayer who is
allowed the credit pursuant to the provisions
20 of this section shall make available, upon
request of the department of
21 revenue, such information as is necessary
for the department to prepare
22 the report required by this subsection.
23 (3) The report shall be
submitted to the legislature no later than Jan-
24 uary 1, 1994.
25 (d) As used in this
section, unless the context otherwise requires:
26 (1) ``Base year'' means
the income tax year immediately preceding
27 the income tax year for which the credit
allowed pursuant to the provi-
28 sions of this section is claimed.
29 (2) ``Capacity'' means
the volume of postconsumer waste which qual-
30 ified equipment is capable of processing or
handling.
31 (3) ``Collection''
means:
32 (A) The acquisition of
materials from businesses or the general public
33 through purchase or donation, including the
organization of systems for
34 such acquisition;
35 (B) the preparation of
materials for over-the-road transportation
36 through cleaning, densification by
shredding, baling, or any other method,
37 or coalescence, including the organization
of systems for such prepara-
38 tion; or
39 (C) the transportation
of postconsumer waste between separate ge-
40 ographical locations.
41 (4) ``Cost'' means the
amount of the purchase price or the amount of
42 the annual lease payment.
43 (5) ``Energy
conversion'' means the use of postconsumer waste for
HB 2719
3
1 the transformation of materials into
heat to be converted into steam,
2 electrical power, or other forms of
energy which results in a correspond-
3 ing decrease in the use of coal,
natural gas, or other naturally occurring
4 fuel for such purposes. Energy
conversion includes, but is not limited to,
5 methods by which gases generated by
the decomposition of organic waste
6 are captured in order to be sold in
lieu of other energy-producing gas.
7 Energy conversion does not include
any incineration of solid waste for
8 the primary purpose of reducing the
quantity of such solid waste.
9 (6) ``Postconsumer
waste'' means only those products and materials
10 generated by businesses or consumers which
have served their intended
11 end use or usefulness and either have been
or would normally be disposed
12 of as solid waste except for the fact that
they are separated from solid
13 waste for purposes of collection, recycling
or reuse. Postconsumer waste
14 shall not include hazardous waste, as
defined in K.S.A. 65-3430, and
15 amendments thereto.
16 (7) ``Product'' means
any material resulting from a manufacturing
17 process and offered for sale to the private
or public sector which is com-
18 posed of at least 25% postconsumer waste,
including energy conversion
19 occurring in such manufacturing process,
and which is used exclusively
20 for any purpose other than as virgin
material in a separate manufacturing
21 process. Product does not include any
shredded material unless such
22 shredded material is incorporated directly
into the manufacturing proc-
23 ess, is to be used for energy conversion,
or is to be used as compost.
24 (8) ``Purchase''
means:
25 (A) Any transaction
under which title to qualified equipment is trans-
26 ferred for consideration; or
27 (B) any lease contract
for qualified equipment for a period of at least
28 three years regardless of whether title to
qualified equipment is trans-
29 ferred at the end of such period.
30 (9) (A) ``Qualified
equipment'' means machinery or equipment lo-
31 cated within Kansas which has at least an
estimated three-year useful life
32 and which at least 70% of the total
production capacity thereof is used
33 by the taxpayer to manufacture products
within three years of the date
34 of purchase.
35 (B) Qualified equipment
shall not include any machinery or equip-
36 ment which is used for the collection of
postconsumer waste.
37 (e) The provisions of
this section shall be applicable to all taxable
38 years commencing after December 31,
1991, but prior to January 1, 1996
39 1997.
40 Sec. 2. K.S.A.
79-32,192 is hereby repealed.
41 Sec. 3. This act
shall take effect and be in force from and after its
42 publication in the statute book.
43