Session of 1999
         
HOUSE BILL No. 2098
         
By Representatives Franklin, Burroughs, Horst and Aday, Alldritt, Bal-
                 lard, Barnes, Bethell, Compton, Cox, Crow, Dahl, Dean, Farmer,
                Feuerborn, Findley, Flaharty, Flora, Garner, Geringer, Gilbert, Grant,
                Haley, Henderson, Howell, Huff, Hutchins, Kirk, Klein, Phill Kline,
                Kuether, Landwehr, Light, Lightner, M. Long, P. Long, Mayans,
                Mays, McClure, McKechnie, Mollenkamp, Myers, Nichols, O'Connor,
                Osborne, Palmer, Pauls, E. Peterson, Phelps, Powell, Rehorn, Ruff,
                Sharp, Showalter, Spangler, Storm, Swenson, Tanner, Tedder, Thi-
                mesch, Toelkes, Toplikar, Vickrey, Vining, Wagle, Weber, Wells and
                Welshimer
               
1-25
               

18             AN  ACT relating to sales taxation; concerning the rate imposed upon
19             sales of food for human consumption; amending K.S.A. 1998 Supp.
20             79-3603 and repealing the existing section.
21      
22       Be it enacted by the Legislature of the State of Kansas:
23             Section  1. K.S.A. 1998 Supp. 79-3603 is hereby amended to read as
24       follows: 79-3603. For the privilege of engaging in the business of selling
25       tangible personal property at retail in this state or rendering or furnishing
26       any of the services taxable under this act, there is hereby levied and there
27       shall be collected and paid a tax at the rate of 4.9%, unless otherwise
28       specifically provided, upon:
29             (a) The gross receipts received from the sale of tangible personal
30       property at retail within this state;
31             (b)  (1) the gross receipts from intrastate telephone or telegraph serv-
32       ices and (2) the gross receipts received from the sale of interstate tele-
33       phone or telegraph services, which (A) originate within this state and
34       terminate outside the state and are billed to a customer's telephone num-
35       ber or account in this state; or (B) originate outside this state and ter-
36       minate within this state and are billed to a customer's telephone number
37       or account in this state except that the sale of interstate telephone or
38       telegraph service does not include: (A) Any interstate incoming or out-
39       going wide area telephone service or wide area transmission type service
40       which entitles the subscriber to make or receive an unlimited number of
41       communications to or from persons having telephone service in a speci-
42       fied area which is outside the state in which the station provided this
43       service is located; (B) any interstate private communications service to

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  1       the persons contracting for the receipt of that service that entitles the
  2       purchaser to exclusive or priority use of a communications channel or
  3       group of channels between exchanges; (C) any value-added nonvoice
  4       service in which computer processing applications are used to act on the
  5       form, content, code or protocol of the information to be transmitted; (D)
  6       any telecommunication service to a provider of telecommunication serv-
  7       ices which will be used to render telecommunications services, including
  8       carrier access services; or (E) any service or transaction defined in this
  9       section among entities classified as members of an affiliated group as
10       provided by federal law (U.S.C. Section 1504). For the purposes of this
11       subsection the term gross receipts does not include purchases of tele-
12       phone, telegraph or telecommunications using a prepaid telephone call-
13       ing card or pre-paid authorization number. As used in this subsection, a
14       pre-paid telephone calling card or pre-paid authorization number means
15       the right to exclusively make telephone calls, paid for in advance, with
16       the prepaid value measured in minutes or other time units, that enables
17       the origination of calls using an access number or authorization code or
18       both, whether manually or electronically dialed;
19             (c) the gross receipts from the sale or furnishing of gas, water, elec-
20       tricity and heat, which sale is not otherwise exempt from taxation under
21       the provisions of this act, and whether furnished by municipally or pri-
22       vately owned utilities;
23             (d) the gross receipts from the sale of meals or drinks furnished at
24       any private club, drinking establishment, catered event, restaurant, eating
25       house, dining car, hotel, drugstore or other place where meals or drinks
26       are regularly sold to the public;
27             (e) the gross receipts from the sale of admissions to any place pro-
28       viding amusement, entertainment or recreation services including admis-
29       sions to state, county, district and local fairs, but such tax shall not be
30       levied and collected upon the gross receipts received from sales of ad-
31       missions to any cultural and historical event which occurs triennially;
32             (f) the gross receipts from the operation of any coin-operated device
33       dispensing or providing tangible personal property, amusement or other
34       services except laundry services, whether automatic or manually operated;
35             (g) the gross receipts from the service of renting of rooms by hotels,
36       as defined by K.S.A. 36-501 and amendments thereto, or by accommo-
37       dation brokers, as defined by K.S.A. 12-1692, and amendments thereto;
38             (h) the gross receipts from the service of renting or leasing of tangible
39       personal property except such tax shall not apply to the renting or leasing
40       of machinery, equipment or other personal property owned by a city and
41       purchased from the proceeds of industrial revenue bonds issued prior to
42       July 1, 1973, in accordance with the provisions of K.S.A. 12-1740 through
43       12-1749, and amendments thereto, and any city or lessee renting or leas-

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  1       ing such machinery, equipment or other personal property purchased
  2       with the proceeds of such bonds who shall have paid a tax under the
  3       provisions of this section upon sales made prior to July 1, 1973, shall be
  4       entitled to a refund from the sales tax refund fund of all taxes paid
  5       thereon;
  6             (i) the gross receipts from the rendering of dry cleaning, pressing,
  7       dyeing and laundry services except laundry services rendered through a
  8       coin-operated device whether automatic or manually operated;
  9             (j) the gross receipts from the rendering of the services of washing
10       and washing and waxing of vehicles;
11             (k) the gross receipts from cable, community antennae and other sub-
12       scriber radio and television services;
13             (l) the gross receipts received from the sales of tangible personal
14       property to all contractors, subcontractors or repairmen of materials and
15       supplies for use by them in erecting structures for others, or building on,
16       or otherwise improving, altering, or repairing real or personal property
17       of others;
18             (m) the gross receipts received from fees and charges by public and
19       private clubs, drinking establishments, organizations and businesses for
20       participation in sports, games and other recreational activities, but such
21       tax shall not be levied and collected upon the gross receipts received from:
22       (1) Fees and charges by any political subdivision, by any organization
23       exempt from property taxation pursuant to paragraph Ninth of K.S.A. 79-
24       201, and amendments thereto, or by any youth recreation organization
25       exclusively providing services to persons 18 years of age or younger which
26       is exempt from federal income taxation pursuant to section 501(c)(3) of
27       the federal internal revenue code of 1986, for participation in sports,
28       games and other recreational activities; and (2) entry fees and charges for
29       participation in a special event or tournament sanctioned by a national
30       sporting association to which spectators are charged an admission which
31       is taxable pursuant to subsection (e);
32             (n) the gross receipts received from dues charged by public and pri-
33       vate clubs, drinking establishments, organizations and businesses, pay-
34       ment of which entitles a member to the use of facilities for recreation or
35       entertainment, but such tax shall not be levied and collected upon the
36       gross receipts received from: (1) Dues charged by any organization ex-
37       empt from property taxation pursuant to paragraphs Eighth and Ninth of
38       K.S.A. 79-201, and amendments thereto; and (2) sales of memberships
39       in a nonprofit organization which is exempt from federal income taxation
40       pursuant to section 501 (c)(3) of the federal internal revenue code of
41       1986, and whose purpose is to support the operation of a nonprofit zoo;
42             (o) the gross receipts received from the isolated or occasional sale of
43       motor vehicles or trailers but not including: (1) The transfer of motor

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  1       vehicles or trailers by a person to a corporation solely in exchange for
  2       stock securities in such corporation; or (2) the transfer of motor vehicles
  3       or trailers by one corporation to another when all of the assets of such
  4       corporation are transferred to such other corporation; or (3) the sale of
  5       motor vehicles or trailers which are subject to taxation pursuant to the
  6       provisions of K.S.A. 79-5101 et seq., and amendments thereto, by an
  7       immediate family member to another immediate family member. For the
  8       purposes of clause (3), immediate family member means lineal ascendants
  9       or descendants, and their spouses. In determining the base for computing
10       the tax on such isolated or occasional sale, the fair market value of any
11       motor vehicle or trailer traded in by the purchaser to the seller may be
12       deducted from the selling price;
13             (p) the gross receipts received for the service of installing or applying
14       tangible personal property which when installed or applied is not being
15       held for sale in the regular course of business, and whether or not such
16       tangible personal property when installed or applied remains tangible
17       personal property or becomes a part of real estate, except that no tax shall
18       be imposed upon the service of installing or applying tangible personal
19       property in connection with the original construction of a building or
20       facility, the original construction, reconstruction, restoration, remodeling,
21       renovation, repair or replacement of a residence or the construction, re-
22       construction, restoration, replacement or repair of a bridge or highway.
23             For the purposes of this subsection:
24             (1) "Original construction" shall mean the first or initial construction
25       of a new building or facility. The term "original construction" shall include
26       the addition of an entire room or floor to any existing building or facility,
27       the completion of any unfinished portion of any existing building or fa-
28       cility and the restoration, reconstruction or replacement of a building or
29       facility damaged or destroyed by fire, flood, tornado, lightning, explosion
30       or earthquake, but such term, except with regard to a residence, shall not
31       include replacement, remodeling, restoration, renovation or reconstruc-
32       tion under any other circumstances;
33             (2) "building" shall mean only those enclosures within which individ-
34       uals customarily are employed, or which are customarily used to house
35       machinery, equipment or other property, and including the land improve-
36       ments immediately surrounding such building;
37             (3) "facility" shall mean a mill, plant, refinery, oil or gas well, water
38       well, feedlot or any conveyance, transmission or distribution line of any
39       cooperative, nonprofit, membership corporation organized under or sub-
40       ject to the provisions of K.S.A. 17-4601 et seq., and amendments thereto,
41       or of any municipal or quasi-municipal corporation, including the land
42       improvements immediately surrounding such facility; and
43             (4) "residence" shall mean only those enclosures within which indi-

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  1       viduals customarily live;
  2             (q) the gross receipts received for the service of repairing, servicing,
  3       altering or maintaining tangible personal property, except computer soft-
  4       ware described in subsection (s), which when such services are rendered
  5       is not being held for sale in the regular course of business, and whether
  6       or not any tangible personal property is transferred in connection there-
  7       with. The tax imposed by this subsection shall be applicable to the services
  8       of repairing, servicing, altering or maintaining an item of tangible personal
  9       property which has been and is fastened to, connected with or built into
10       real property;
11             (r) the gross receipts from fees or charges made under service or
12       maintenance agreement contracts for services, charges for the providing
13       of which are taxable under the provisions of subsection (p) or (q);
14             (s) the gross receipts received from the sale of computer software,
15       and the sale of the services of modifying, altering, updating or maintaining
16       computer software. As used in this subsection, "computer software"
17       means information and directions loaded into a computer which dictate
18       different functions to be performed by the computer. Computer software
19       includes any canned or prewritten program which is held or existing for
20       general or repeated sale, even if the program was originally developed
21       for a single end user as custom computer software. The sale of computer
22       software or services does not include: (1) The initial sale of any custom
23       computer program which is originally developed for the exclusive use of
24       a single end user; or (2) those services rendered in the modification of
25       computer software when the modification is developed exclusively for a
26       single end user only to the extent of the modification and only to the
27       extent that the actual amount charged for the modification is separately
28       stated on invoices, statements and other billing documents provided to
29       the end user. The services of modification, alteration, updating and main-
30       tenance of computer software shall only include the modification, alter-
31       ation, updating and maintenance of computer software taxable under this
32       subsection whether or not the services are actually provided; and
33             (t) the gross receipts received for telephone answering services, in-
34       cluding mobile phone services, beeper services and other similar services;
35       and
36             (u) the gross receipts received from the sale of prepaid telephone
37       calling cards or pre-paid authorization numbers and the recharge of such
38       cards or numbers. A pre-paid telephone calling card or pre-paid author-
39       ization number means the right to exclusively make telephone calls, paid
40       for in advance, with the prepaid value measured in minutes or other time
41       units, that enables the origination of calls using an access number or
42       authorization code or both, whether manually or electronically dialed. If
43       the dale or recharge of such card or number does not take place at the

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  1       vendor's place of business, it shall be conclusively determined to take
  2       place at the customer's shipping address; if there is no item shipped then
  3       it shall be the customer's billing address; and
  4             (v)  (1) the gross receipts received from sales of food for human con-
  5       sumption which shall be taxed at the rate of: (A) 3.9% on January 1, 2000,
  6       and before January 1, 2001; (B) 2.9% on January 1, 2001, and before
  7       January 1, 2002; (C) 1.9% on January 1, 2002, and before January 1,
  8       2003; and (D) .9% on and after January 1, 2003. (2) As used in this
  9       subsection, "food for human consumption" means only that food which is
10       eligible for purchase with food stamps issued by the United States de-
11       partment of agriculture pursuant to regulations in effect on January 1,
12       1998, regardless of whether the retailer from which the food is purchased
13       is participating in the food stamp program. Such phrase shall not include:
14       (A) Meals prepared for immediate consumption on or off premises of the
15       retailer; or (B) food sold through vending machines.  
16       Sec.  2. K.S.A. 1998 Supp. 79-3603 is hereby repealed.
17        Sec.  3. This act shall take effect and be in force from and after its
18       publication in the statute book.