Session 2000
Effective: July 1, 2000
SENATE BILL No. 226
An Act relating to taxation; amending K.S.A. 79-1009, 79-2974,
79-3228, 79-3295, 79-3296,
79-3298, 79-3299, 79-32,100, 79-32,101,
79-32,106, 79-32,143, 79-3615, 79-3706, 79-
41a03a, 79-4502 and 79-4517 and K.S.A. 1999
Supp. 79-3234 and 79-4217 and repealing
the existing sections; also repealing K.S.A.
79-3297a, 79-4512 and 79-4514 and K.S.A.
1999 Supp. 79-32,208.
Be it enacted by the Legislature of the State of Kansas:
New Section 1. For purposes of
sections 1 through 5 of this act:
(a) "Eligible taxpayer" means any person
who is required to file any
return or to pay or remit any tax under the provisions of K.S.A.
79-3601
et seq., and amendments thereto, or 79-3701 et seq.,
and amendments
thereto, and who, in the opinion of the director has demonstrated a
will-
ingness and ability to comply with the tax laws of this state and
has main-
tained an acceptable system of business records;
(b) "Managed audit agreement" means an
agreement between the
director and an eligible taxpayer consisting of an audit plan
developed by
the director and the eligible taxpayer wherein the eligible
taxpayer agrees
to review selected sales and purchase records and to calculate and
deter-
mine its liability for sales and use taxes; and
(c) "Director" means the director of
taxation.
New Sec. 2. The director of
taxation may enter into a managed audit
agreement with an eligible taxpayer. Under a managed audit
agreement,
the director shall:
(a) Agree to accept, upon verification
and subject to the provisions
of section 4, and amendments thereto, the eligible taxpayer's
determi-
nations for purposes of making a deficiency assessment or otherwise
de-
termining the taxpayer's liability for the audit period under
review;
(b) provide written procedural guidelines
to be included as part of
the managed audit agreement, including, but not limited to: (1) The
audit
period covered by the managed audit; (2) the general scope of the
man-
aged audit; (3) what records will be examined and what types of
sampling
techniques will be used; (4) the specific procedures the taxpayer
is to
follow in determining any liability; (5) the time period for
completion of
the managed audit; and (6) the time period for payment of the tax,
penalty
and interest;
(c) review the results of the managed
audit with the eligible taxpayer
and issue a final determination of tax liability in the manner
prescribed
by K.S.A. 79-3226, and amendments thereto; and
(d) recognize the taxpayer's right to
request an informal conference
in accordance with the provisions of K.S.A. 79-3610, and
amendments
thereto.
New Sec. 3. The director shall
determine, consistent with the effi-
cient use of audit resources, which accounts are to be selected for
the
managed audit program, except that no taxpayer shall be required
to
participate in the managed audit program. If a taxpayer's account
is se-
lected for a managed audit, the taxpayer shall review and examine
its
books and records to determine any unreported liability for the
audit
period, and shall make available all computations and records
reviewed
for verification by the director.
New Sec. 4. Information provided by
the taxpayer as part of the man-
aged audit shall be the same information that is required for the
comple-
tion of any other audit the director may conduct. The director may
ter-
minate a managed audit agreement and conduct an audit of an
eligible
taxpayer under K.S.A. 79-3609, and amendments thereto, if the
eligible
taxpayer fails to fulfill any of the terms of a managed audit
agreement, or
if the director believes that a managed audit should not be
conducted for
any other reason.
New Sec. 5. Upon completion of the
managed audit and verification
by the director, interest shall be computed at 50% of the rate that
would
otherwise be imposed for liabilities covered by the audit period.
Payment
of the tax, penalty and interest shall be made within the time
period
specified by the director.
New Sec. 6. In all cases where
husband and wife file a joint Kansas
income tax return and one spouse is relieved of liability under
section
6013(e) or section 6015 of the federal internal revenue code, or
would
have otherwise been relieved of liability under either such section
had
there been a liability, such spouse shall be relieved of liability
for tax,
including interest and penalties, imposed under the Kansas income
tax
act for such taxable year.
Sec. 7. K.S.A. 79-32,101 is hereby
amended to read as follows: 79-
32,101. (a) At the time prescribed in this section: (1) Every
individual
shall pay estimated tax who can reasonably expect to owe, after
withhold-
ing and credits, tax of at least $200 and who expects their
withholding
and credits to be less than (A) 90% of the tax shown on the return
for
the current year or (B) 100% of the tax shown for the preceding tax
year;
and
(2) every corporation shall pay estimated
tax if its Kansas income tax
liability can reasonably be expected to exceed $500.
(b) In the case of a husband and wife,
single payments under this
section may be made by them jointly. If a joint payment is made,
but a
joint return is not made for the taxable year, the estimated tax
for such
year may be divided between them. Notification of the division of
such
payments shall be made at such time and in such manner as the
director
of taxation may provide, on forms issued by the director of
taxation.
(c) If on or before January 31, or March
1, in the case of an individual
referred to in subsection (b) of K.S.A.
79-32,102(b) 79-32,102, relating to
income from farming or fishing, of the succeeding year, the
taxpayer files
a return for the taxable year, and pays in full the amount of tax
computed
on the return, then, under rules and regulations of the secretary
of rev-
enue no payment otherwise required to be made under this section
on
January 15, or at any time during the preceding year, in the case
of an
individual referred to in subsection (b) of K.S.A.
79-32,102(b) 79-32,102,
relating to income from farming or fishing, is required to be
made.
(d) An individual or corporation with a
taxable year of less than 12
months shall make a declaration for less than 12 months as
prescribed by
rules and regulations of the secretary of revenue.
(e) The provisions of this section shall
not apply to an estate or trust.
Sec. 8. K.S.A. 79-3295 is hereby
amended to read as follows: 79-
3295. (a) The term "employee" means a resident of this state as
defined
by subsection (b) of K.S.A. 79-32,109, and amendments thereto,
perform-
ing services for an employer either within or without the state and
a
nonresident performing services within this state, and includes an
officer,
employee or elected official of the United States, a state,
territory, or any
political subdivision thereof or any agency or instrumentality
thereof, and
an officer of a corporation, but shall not include an
individual who per-
forms services as an extra in connection with any phase of
motion picture
or television production or television commercials for less
than 14 days
during any calendar year. As used in this subsection, the
term "extra"
means an individual who pantomimes in the background, adds
atmos-
phere to the set and performs such actions without
speaking.
(b) The term "employer" means any person,
firm, partnership, lim-
ited liability company, corporation, association, trust or
fiduciary of any
kind or other type organization transacting
qualifying as an employer for
federal income tax withholding purposes and who maintains an
office,
transacts business in or deriving
derives any income from sources within
the state of Kansas for whom an individual performs or performed
any
services, of whatever nature, as the employee of such employer, and
who
has control of the payment of wages for such services, or is the
officer,
agent or employee of the person having control of the payment of
wages.
It also includes the United States, the state and all political
subdivisions
thereof, and all agencies or instrumentalities of any of them.
(c) The term "payor" means any person
or organization, other than
an employer, who makes payments which are subject to withholding
of
income tax pursuant to this act.
(d) The term "wages" means wages as
defined by section 3401(a) of
the federal internal revenue code which are taxable under the
Kansas
income tax act.
Sec. 9. K.S.A. 79-3296 is hereby
amended to read as follows: 79-
3296. (a) Every employer who is required under federal law to
withhold
upon wages pursuant to the federal internal revenue code shall,
whenever
the wage recipient is a resident of Kansas or the wages shall be
paid on
account of personal service performed in Kansas, withhold and
deduct
from such wages paid 10% of the amount required under
federal law to
be deducted, except that withholding from employees of
interstate car-
riers shall be determined under the provisions of public
law 91-569 an
amount to be determined in accordance with section 13, and
amendments
thereto.
(b) In the event that a resident
individual of this state is employed in
another state, and such other state requires a withholding
of income tax
on wages earned by such resident in such other state, the
secretary may
enter into an agreement with such other state or the
employer of such
resident as to the manner and amount of withholding
required by this act
on the wages of such resident earned in such other
state.
(c) The secretary is hereby
authorized to enter into an agreement
pursuant to 10 U.S.C. 1045 providing for the withholding of
state income
tax from monthly retired or retainer pay of any member or
former mem-
ber of the United States armed forces.
(b) Notwithstanding the requirements
of subsection (a), an employer
shall not withhold from the wages of an individual who performs
services
as an extra in connection with any phase of motion picture or
television
production or television commercials for less than 14 days
during any
calendar year. As used in this subsection, the term "extra"
means an in-
dividual who pantomimes in the background, adds atmosphere to
the set
and performs such actions without speaking.
(c) A determination by the internal
revenue service which relieves an
employer or payor from withholding responsibility with respect
to pay-
ments to an employee or payee shall also apply for Kansas income
tax
withholding purposes. Where an employer or payor is required to
rein-
state withholding for federal income tax with regard to any
employee or
payee, such obligation shall be equally applicable for Kansas
withholding
purposes.
New Sec. 10. Every payor who
withholds federal income tax:
(a) For any supplemental unemployment
compensation, annuity or
sick pay;
(b) pursuant to a voluntary withholding
agreement;
(c) on gambling winnings;
(d) on taxable payments of Indian casino
profits;
(e) for any vehicle fringe benefit;
(f) on periodic payments of pensions,
annuities and other deferred
income;
(g) on nonperiodic distributions of
pensions, annuities and other de-
ferred income; or
(h) on eligible rollover distributions of
pensions, annuities and other
deferred income, from payments made to those persons whose
primary
residence is in Kansas shall withhold and deduct an amount to be
deter-
mined in accordance with section 11, and amendments thereto.
New Sec. 11. (a) Every employer or
payor required to deduct and
withhold tax from wages of an employee or payments other than
wages
of a payee under this act shall be liable for the payment of such
tax
whether or not it is collected from the employee or payee by the
employer
or payor. For purposes of assessment and collection, any amount
required
to be withheld and paid over to the department of revenue, and
any
additions to tax, penalties and interest with respect thereto,
shall be con-
sidered the tax of the employer.
(b) Any amount of tax withheld shall
constitute a special fund in trust
for the department of revenue.
(c) No employee or payee shall have any
right of action against their
employer or payor in respect to any moneys deducted and withheld
from
wages or payments other than wages and paid over to the department
of
revenue in compliance or in intended compliance with this act.
New Sec. 12. (a) If an employer or
payor fails to deduct and withhold
the tax as required under this act, and thereafter, the income tax
against
which the tax may be credited is paid, the tax required to be
deducted
and withheld shall not be collected from the employer or payor.
The
payment of such tax does not, however, operate to relieve the
employer
from liability for penalties, interest or additions to the tax
applicable with
respect to such failure to deduct and withhold. The employer or
payor
will not be relieved under this provision from liability for
payment of the
tax required to be withheld unless it can be shown that the income
tax
against which the tax required to be withheld under this act may be
cred-
ited has been paid.
(b) Every agent or other person having
control, receipt, custody or
disposal of, or paying the wages of an employee or group of
employees
employed by one or more employers, is for the purpose of this act
des-
ignated to be an employer. In the case of the corporation, the
officers
and board of directors are likewise considered employers. Employers
of
classes named in this section shall be subject to all the
provisions of law
including penalties as is their principal. Any employer who
willfully fails
to collect the tax imposed by the Kansas withholding tax act or
truthfully
account for any pay over such tax, or willfully attempts in any
manner to
evade or defeat any tax or the payment thereof, shall be subject to
a
penalty equal to the total amount of the tax evaded, or not
collected, or
not accounted for and paid over in addition to other penalties
provided
by law.
New Sec. 13. (a) The amount to be
withheld from wages as required
by K.S.A. 79-3296, and amendments thereto, or from payments
other
than wages as required by section 10, and amendments thereto, shall
be
an amount which will approximate the employee's or payee's annual
tax
liability on a calendar year basis, calculated on the basis of
tables to be
prepared by the secretary, and schedules or percentage rates to be
pre-
scribed by the secretary, based on the wages, payments other than
wages,
or adjusted gross income of the taxpayer.
(b) The state withholding rate shall be
in proper proportion to the
tax rates imposed under K.S.A. 79-32,110, and amendments thereto,
and
the tax base, so that the withholding rate corresponds to the
employee's
or payee's expected income tax liability. Such rate may be fixed
for all
adjusted gross income classes, or variable rates may be
established, based
upon adjusted gross income class, to insure proper withholding
consistent
with the taxpayer's expected tax liability.
(c) In the event a resident individual of
this state is employed in
another state, and such other state requires a withholding of
income tax
on wages earned by such resident in such other state, the secretary
may
enter into an agreement with such other state or the employer of
such
resident as to the manner and amount of withholding required by
this act
on the wages of such resident earned in such other state.
(d) The secretary is hereby authorized to
enter into an agreement
pursuant to 10 U.S.C. 1045 providing for the withholding of state
income
tax from monthly retired or retainer pay of any member or former
mem-
ber of the United States armed forces.
Sec. 14. K.S.A. 79-3298 is hereby
amended to read as follows: 79-
3298. (a) With respect to any taxes withheld before April
1, 1983, every
employer, other than employers who have received the prior
approval of
the director to file an annual return, shall file a
withholding return on or
before the last day of the first month following the end of
the calendar
quarter in which withholding was required. Such return
shall be on a
form prescribed by the director of taxation and shall be
accompanied by
payment in full of any amounts withheld by the employer.
Employers
who have received the approval of the director to file an
annual return
before the effective date of this act shall comply with the
applicable pro-
visions of subsection (b).
(b) With respect to any taxes
withheld after March 31, 1983, Every
employer and payor shall remit the taxes and file returns in
accordance
with the following provisions. (1) Whenever the total amount
withheld
exceeds $100,000 in any calendar year, the employer or payor
shall remit
the taxes withheld in accordance with the following schedule: Each
cal-
endar month shall be divided into four remittance periods that end
on
the 7th, 15th, 21st and the last day of such month. If at the end
of any
one or all of such remittance periods the total undeposited taxes
equal or
exceed $667, the taxes shall be remitted within three banking days.
Sat-
urdays, Sundays and legal holidays shall not be treated as banking
days.
(2) Whenever the total amount withheld exceeds $8,000 but
does not
exceed $100,000 in any calendar year, the employer or payor
shall remit
the taxes withheld for wages paid during the first 15 days of any
month
on or before the 25th day of the month. The employer or
payor shall
remit the taxes withheld for wages paid during the remainder of
that
month on or before the 10th day of the following month. (3)
Whenever
the total amount withheld exceeds $1,200 but does not exceed $8,000
in
any calendar year, the employer or payor shall remit the
taxes withheld
during any month on or before the 15th day of the following month.
(4)
Whenever the total amount withheld exceeds $200 but does not
exceed
$1,200 in any calendar year, the employer or payor shall
remit the taxes
withheld in any calendar quarter on or before the 25th day of the
first
month following the end of that calendar quarter. (5)
Whenever the total
amount withheld does not exceed $200 in any calendar year, the
employer
or payor shall remit the taxes withheld during that year on
or before
January 25 of the following year.
(c) (b) Each
remittance required under the provisions of subsection
(b) (a) shall be accompanied by a Kansas
withholding tax remittance form
prescribed and furnished by the director.
(d) (c) Every
employer or payor making remittances pursuant to sub-
section (b) (a) shall file a return on a
form prescribed and furnished by
the director for each calendar year on or before the last day of
February
of the following year.
(e) (d) The
excess of any remittance over the actual taxes withheld in
any withholding period shall be credited against the liability for
following
withholding periods until exhausted. A refund shall be allowed in
accord-
ance with K.S.A. 79-32,105, and amendments thereto, where an
over-
payment cannot be adjusted by an offset against the liability for a
sub-
sequent withholding period.
(f)
(e) Determinations of amounts withheld during a
calendar year by
employers or payors for purposes of determining filing
requirements shall
be made by the director upon the basis of amounts withheld by
those
employers or payors during the preceding calendar year or by
estimates
in cases of employers or payors having no previous
withholding histories.
The director is hereby authorized to modify the filing schedule for
any
employer or payor when it is apparent that the original
determination
was inaccurate.
(g) (f) Whenever
the director has cause to believe that money with-
held by an employer or payor pursuant to this act may be
converted,
diverted, lost, or otherwise not timely paid in accordance with
this section,
the director shall have the power to require returns and payment
from
any such employer or payor at any time at more frequent
intervals than
prescribed by this section in order to secure full payment to the
state of
all amounts withheld by such employer or payor in accordance
with this
act.
Sec. 15. K.S.A. 79-3299 is hereby
amended to read as follows: 79-
3299. (a) Every employer or payor shall, on or before
January 31 of each
year prepare a statement for each employee or payee on a
form pre-
scribed by the director stating the amount of wages or payments
other
than wages subject to Kansas income tax paid during the
preceding year,
the total amount of tax withheld, if any, from such wages or
payments
other than wages by the employer or payor pursuant to
this act and such
other information as may be prescribed by the director. One copy of
such
statement shall be filed by the employer or payor with the
division of
taxation on or before the last day of February of each year. Two
copies
of such statement shall be given to the employee or payee
concerned,
one of which will be filed by the employee or payee with the
tax return
required by this chapter.
(b) In the case of an employee whose
employment is terminated be-
fore the end of a calendar year, the statement required by
subsection (a)
may be mailed at the time provided in that subsection to the last
known
address of the employee, or issued at the time of the last payment
to the
employee, at the employer's option.
(c) Any employer or payor who
willfully fails to furnish a statement
to an employee or payee as required under the provisions of
subsections
(a) and (b) of this section shall be guilty of a misdemeanor and
upon
conviction thereof shall be punished by a fine not exceeding $100
for
each such offense.
(d) The annual statement of wages and
salaries paid and amount with-
held required by this section shall be in lieu of the annual
information
return required under K.S.A. 79-3222.
Sec. 16. K.S.A. 79-32,100 is hereby
amended to read as follows: 79-
32,100. (a) The tax deducted and withheld under this act shall not
be
allowed as a deduction either to the employer or payor or to
the employee
or payee in computing taxable income under the "Kansas
income tax act."
(b) The full amount of wages and salaries
or payments other than
wages from which an amount was withheld in accordance with
this act
shall be included in the gross income of the employee or
payee unless
such wages and salaries or payments other than wages or a
portion thereof
are otherwise excludable under the provisions of the "Kansas income
tax
act."
(c) The amount deducted and withheld
under this act during any
calendar year from the wages or payments other than wages of
an indi-
vidual taxpayer shall be allowed as a credit against the income tax
oth-
erwise imposed on such taxpayer by the "Kansas income tax act,"
whether
or not such amount was remitted to the division of taxation by the
em-
ployer or payor in accordance with the terms of this
act.
(d) If the amount withheld under this act
during any calendar year
exceeds the individual income tax liability of the
employee-payee-taxpayer
any excess shall be applied to any other income tax owed the state
of
Kansas by such individual (including fines, penalties and interest,
if any)
and the balance of such excess, if any, refunded to the taxpayer as
pro-
vided in subsection (c) of K.S.A.
79-32,105(c) 79-32,105, and amendments
thereto.
Sec. 17. K.S.A. 79-32,106 is hereby
amended to read as follows: 79-
32,106. (a) The employer shall be liable to the state for the
payment of
the amount required to be deducted and withheld under this act but
shall
not be otherwise liable for the amount of any such payments.
(b) If the employer is the United States
or any agency or instrumen-
tality thereof, the return of the amount deducted and withheld upon
any
wages or payments other than wages may be made by any
officer or
employee of the United States or of such agency or instrumentality,
as
the case may be, having control of the payment of such wages or
payments
other than wages, or appropriately designated for that
purpose. Such
withholding shall, in accordance with 5 U.S.C. 84c, be exempt from
pen-
alties otherwise provided by law for noncompliance with this
act.
(c) In case a fiduciary, agent, or other
person has the control, receipt,
custody or disposal of, or pays the wages of an employee or group
of
employees, employed by one or more employers, the director, under
rules
and regulations of the secretary of revenue, is authorized to
designate
such fiduciary, agent, or other person to perform such acts as are
required
of employers under this act and as the director may specify. Except
as
may be otherwise prescribed by the director, all provisions of law
(in-
cluding penalties) applicable in respect of any employer shall be
appli-
cable to a fiduciary, agent, or other person so designated, but,
except as
so provided, the employer for whom such fiduciary, agent, or other
per-
sons acts shall remain subject to the provisions of law (including
penalties)
applicable in respect of employers.
Sec. 18. K.S.A. 79-3228 is hereby
amended to read as follows: 79-
3228. (a) For all taxable years ending prior to January 1,
2002, if any
taxpayer, without intent to evade the tax imposed by this act,
shall fail to
file a return or pay the tax, if one is due, at the time required
by or under
the provisions of this act, but shall voluntarily file a correct
return of
income or pay the tax due within six months thereafter, there shall
be
added to the tax an additional amount equal to 10% of the unpaid
balance
of tax due plus interest at the rate prescribed by subsection (a)
of K.S.A.
79-2968, and amendments thereto, from the date the tax was due
until
paid.
(b) For all taxable years ending prior
to January 1, 2002, if any tax-
payer fails voluntarily to file a return or pay the tax, if one is
due, within
six months after the time required by or under the provisions of
this act,
there shall be added to the tax an additional amount equal to 25%
of the
unpaid balance of tax due plus interest at the rate prescribed by
subsec-
tion (a) of K.S.A. 79-2968, and amendments thereto, from the date
the
tax was due until paid. Notwithstanding the foregoing, in the event
an
assessment is issued following a field audit for any period for
which a
return was filed by the taxpayer and all of the tax was paid
pursuant to
such return, a penalty shall be imposed for the period included in
the
assessment in the amount of 10% of the unpaid balance of tax due
shown
in the notice of assessment. If after review of a return for any
period
included in the assessment, the secretary or secretary's designee
deter-
mines that the underpayment of tax was due to the failure of the
taxpayer
to make a reasonable attempt to comply with the provisions of this
act,
such penalty shall be imposed for the period included in the
assessment
in the amount of 25% of the unpaid balance of tax due.
(c) For all taxable years ending after
December 31, 2001, if any tax-
payer fails to file a return or pay the tax if one is due, at
the time required
by or under the provisions of this act, there shall be added to
the tax an
additional amount equal to 1% of the unpaid balance of the tax
due for
each month or fraction thereof during which such failure
continues, not
exceeding 24% in the aggregate, plus interest at the rate
prescribed by
subsection (a) of K.S.A. 79-2968, and amendments thereto, from
the date
the tax was due until paid. Notwithstanding the foregoing, in
the event
an assessment is issued following a field audit for any period
for which a
return was filed by the taxpayer and all of the tax was paid
pursuant to
such return, a penalty shall be imposed for the period included
in the
assessment in an amount of 1% per month not exceeding 10% of
the
unpaid balance of tax due shown in the notice of assessment. If
after
review of a return for any period included in the assessment,
the secretary
or secretary's designee determines that the underpayment of tax
was due
to the failure of the taxpayer to make a reasonable attempt to
comply with
the provisions of this act, such penalty shall be imposed for
the period
included in the assessment in the amount of 25% of the unpaid
balance
of tax due.
(c) (d) If any
taxpayer who has failed to file a return or has filed an
incorrect or insufficient return, and after notice from the
director refuses
or neglects within 20 days to file a proper return, the director
shall de-
termine the income of such taxpayer according to the best available
in-
formation and assess the tax together with a penalty of 50% of the
unpaid
balance of tax due plus interest at the rate prescribed by
subsection (a)
of K.S.A. 79-2968, and amendments thereto, from the date the tax
was
originally due to the date of payment.
(d) (e) Any
person, who with fraudulent intent, fails to pay any tax or
to make, render or sign any return, or to supply any information,
within
the time required by or under the provisions of this act, shall be
assessed
a penalty equal to the amount of the unpaid balance of tax due
plus
interest at the rate prescribed by subsection (a) of K.S.A.
79-2968, and
amendments thereto, from the date the tax was originally due to the
date
of payment. Such person shall also be guilty of a misdemeanor and
shall,
upon conviction, be fined not more than $1,000 or be imprisoned in
the
county jail not less than 30 days nor more than one year, or both
such
fine and imprisonment.
(e) (f) Any
person who willfully signs a fraudulent return shall be
guilty of a felony, and upon conviction thereof shall be punished
by im-
prisonment for a term not exceeding five years. The term "person"
as
used in this section includes any agent of the taxpayer, and
officer or
employee of a corporation or a member or employee of a
partnership,
who as such officer, employee or member is under a duty to perform
the
act in respect of which the violation occurs.
(f) (g)
(1) Whenever the secretary or the secretary's designee
deter-
mines that the failure of the taxpayer to comply with the
provisions of
subsections (a), (b) and, (c) and
(d) of this section was due to reasonable
causes, the secretary or the secretary's designee may waive or
reduce any
of the penalties and may reduce the interest rate to the
underpayment
rate prescribed and determined for the applicable period under
section
6621 of the federal internal revenue code as in effect on January
1, 1994,
upon making a record of the reasons therefor.
(2) No penalty shall be assessed
hereunder with respect to any un-
derpayment of income tax liability reported on any amended return
filed
by any taxpayer who at the time of filing pays such underpayment
and
whose return is not being examined at the time of filing.
(3) No penalty assessed hereunder
shall be collected if the taxpayer
has had the tax abated on appeal, and any penalty collected upon
such
tax shall be refunded.
(g) (h) In case
of a nonresident or any officer or employee of a cor-
poration, the failure to do any act required by or under the
provisions of
this act shall be deemed an act committed in part at the office of
the
director.
(h) (i) In the
case of a nonresident individual, partnership or corpo-
ration, the failure to do any act required by or under the
provision of this
act shall prohibit such nonresident from being awarded any contract
for
construction, reconstruction or maintenance or for the sale of
materials
and supplies to the state of Kansas or any political subdivision
thereof
until such time as such nonresident has fully complied with this
act.
Sec. 19. K.S.A. 79-3615 is hereby
amended to read as follows: 79-
3615. (a) If any taxpayer shall fail to pay the tax required under
this act
at the time required by or under the provisions of this act, there
shall be
added to the unpaid balance of the tax, interest at the rate per
month
prescribed by subsection (a) of K.S.A. 79-2968 and amendments
thereto
from the date the tax was due until paid.
(b) For all taxable years ending prior
to January 1, 2002, if any tax-
payer due to negligence or intentional disregard fails to file a
return or
pay the tax due at the time required by or under the provisions of
this
act, there shall be added to the tax a penalty in an amount equal
to 10%
of the unpaid balance of tax due.
(c) For all taxable years ending prior
to January 1, 2002, if any person
fails to make a return, or to pay any tax, within six months from
the date
the return or tax was due, except in the case of an extension of
time
granted by the secretary of revenue or the secretary's designee,
there
shall be added to the tax due a penalty equal to 25% of the unpaid
balance
of such tax due. Notwithstanding the foregoing, in the event an
assess-
ment is issued following a field audit for any period for which a
return
was filed by the taxpayer and all of the tax was paid pursuant to
such
return, a penalty shall be imposed for the period included in the
assess-
ment in the amount of 10% of the unpaid balance of tax due shown
in
the notice of assessment. If after review of a return for any
period in-
cluded in the assessment, the secretary or secretary's designee
determines
that the underpayment of tax was due to the failure of the taxpayer
to
make a reasonable attempt to comply with the provisions of this
act, such
penalty shall be imposed for the period included in the assessment
in the
amount of 25% of the unpaid balance of tax due.
(d) For all taxable years ending after
December 31, 2001, if any tax-
payer fails to file a return or pay the tax if one is due, at
the time required
by or under the provisions of this act, there shall be added to
the tax an
additional amount equal to 1% of the unpaid balance of the tax
due for
each month or fraction thereof during which such failure
continues, not
exceeding 24% in the aggregate, plus interest at the rate
prescribed by
subsection (a) of K.S.A. 79-2968, and amendments thereto, from
the date
the tax was due until paid. Notwithstanding the foregoing, in
the event
an assessment is issued following a field audit for any period
for which a
return was filed by the taxpayer and all of the tax was paid
pursuant to
such return, a penalty shall be imposed for the period included
in the
assessment in an amount of 1% per month not exceeding 10% of
the
unpaid balance of tax due shown in the notice of assessment. If
after
review of a return for any period included in the assessment,
the secretary
or secretary's designee determines that the underpayment of tax
was due
to the failure of the taxpayer to make a reasonable attempt to
comply with
the provisions of this act, such penalty shall be imposed for
the period
included in the assessment in the amount of 25% of the unpaid
balance
of tax due.
(d) (e) If any
taxpayer, with fraudulent intent, fails to pay any tax or
make, render or sign any return, or to supply any information,
within the
time required by or under the provisions of this act, there shall
be added
to the tax a penalty in an amount equal to 50% of the unpaid
balance of
tax due.
(e) (f) Penalty
or interest applied under the provisions of subsections
(a) and (d) shall be in addition to the penalty added under any
other
provisions of this section, but the provisions of subsections (b)
and (c)
shall be mutually exclusive of each other.
(f) (g) Whenever
the secretary or the secretary's designee determines
that the failure of the taxpayer to comply with the provisions of
subsec-
tions (b) and (c) (a), (b), (c) and (d) of
this section was due to reasonable
causes, the secretary or the secretary's designee may waive or
reduce any
of the penalties and may reduce the interest rate to the
underpayment
rate prescribed and determined for the applicable period under
section
6621 of the federal internal revenue code as in effect on January
1, 1994,
upon making a record of the reasons therefor.
(g) (h) In
addition to all other penalties provided by this section, any
person who willfully fails to make a return or to pay any tax
imposed
under the Kansas retailers' sales tax act, or who makes a false or
fraudulent
return, or fails to keep any books or records prescribed by this
act, or
who willfully violates any regulations of the secretary of revenue,
for the
enforcement and administration of this act, or who aids and abets
another
in attempting to evade the payment of any tax imposed by this act,
or
who violates any other provision of this act, shall, upon
conviction thereof,
be fined not less than $500, nor more than $10,000, or be
imprisoned in
the county jail not less than one month, nor more than six months,
or be
both so fined and imprisoned, in the discretion of the court.
(i) No penalty assessed hereunder
shall be collected if the taxpayer
has had the tax abated on appeal, and any penalty collected upon
such
tax shall be refunded.
Sec. 20. K.S.A. 79-3706 is hereby
amended to read as follows: 79-
3706. (a) Each retailer or person subject to the provisions of this
act shall
make remittances of the tax imposed by K.S.A. 79-3703, and
amendments
thereto, and file returns in accordance with the provisions of
K.S.A. 79-
3607 and amendments thereto, except that the time schedule for
remit-
ting tax and filing returns shall be determined on the basis of
calendar
year compensating tax liability in lieu of calendar year sales tax
liability.
Returns shall show in detail the total quantity of tangible
personal prop-
erty sold by any retailer or used, stored or consumed by any person
within
the state during the period for which the return is filed subject
to the tax
herein imposed, and such other information as the director may
deem
pertinent. The director may, upon request and a proper showing of
the
necessity therefor, grant an extension of time not to exceed 60
days for
making any return and payment. Returns shall be signed by the
retailer
or such retailer's duly authorized agent, and must be certified by
such
retailer to be correct.
(b) If any taxpayer fails to pay the tax
required under the act of which
this section is amendatory at the time required by or under the
provisions
of the act of which this section is amendatory, there shall be
added to the
unpaid balance of the tax, interest at the rate per month
prescribed by
subsection (a) of K.S.A. 79-2968, and amendments thereto, from the
date
the tax was due until paid.
(c) For all taxable years ending prior
to January 1, 2002, if any tax-
payer due to negligence or intentional disregard fails to file a
return or
pay the tax due at the time required by or under the provisions of
this
section, there shall be added to the tax a penalty in an amount
equal to
10% of the unpaid balance of tax due.
(d) For all taxable years ending prior
to January 1, 2002, if any person
fails to make a return, or to pay any tax, within six months from
the date
the return or tax was due, except in the case of an extension of
time
granted by the secretary of revenue or the secretary's designee,
there shall
be added to the tax due a penalty equal to 25% of the unpaid
balance of
such tax due.
(e) For all taxable years ending after
December 31, 2001, if any tax-
payer fails to file a return or pay the tax if one is due, at
the time required
by or under the provisions of this act, there shall be added to
the tax an
additional amount equal to 1% of the unpaid balance of the tax
due for
each month or fraction thereof during which such failure
continues, not
exceeding 24% in the aggregate, plus interest at the rate
prescribed by
subsection (a) of K.S.A. 79-2968, and amendments thereto, from
the date
the tax was due until paid. Notwithstanding the foregoing, in
the event
an assessment is issued following a field audit for any period
for which a
return was filed by the taxpayer and all of the tax was paid
pursuant to
such return, a penalty shall be imposed for the period included
in the
assessment in an amount of 1% per month not exceeding 10% of
the
unpaid balance of tax due shown in the notice of assessment. If
after
review of a return for any period included in the assessment,
the secretary
or secretary's designee determines that the underpayment of tax
was due
to the failure of the taxpayer to make a reasonable attempt to
comply with
the provisions of this act, such penalty shall be imposed for
the period
included in the assessment in the amount of 25% of the unpaid
balance
of tax due.
(e) (f) If any
taxpayer, with fraudulent intent, fails to pay any tax or
make, render or sign any return, or to supply any information,
within the
time required by or under the provisions of this section, there
shall be
added to the tax a penalty in an amount equal to 50% of the
unpaid
balance of tax due.
(f) (g) Penalty
or interest applied under the provisions of subsections
(b) and (e) shall be in addition to the penalty added under any
other
provisions of this section, but the provisions of subsections (c)
and (d)
shall be mutually exclusive of each other.
(g) (h) Whenever
the secretary of revenue or the secretary's designee
determines that the failure of the taxpayer to comply with the
provisions
of subsections (c) and (d) (b), (c), (d) and
(e) was due to reasonable causes,
the secretary or the secretary's designee may waive or reduce any
of the
penalties and may reduce the interest rate to the underpayment
rate
prescribed and determined for the applicable period under section
6621
of the federal internal revenue code as in effect on January 1,
1994 upon
making a record of the reasons therefor.
(h) (i) In
addition to all other penalties provided by this section, any
person who willfully fails to make a return or to pay any tax
imposed
under the Kansas compensating tax act, or who makes a false or
fraudu-
lent return, or fails to keep any books or records prescribed by
the Kansas
compensating tax act, or who willfully violates any regulations of
the sec-
retary of revenue, for the enforcement and administration of the
Kansas
compensating tax act, or who aids and abets another in attempting
to
evade the payment of any tax imposed by the Kansas compensating
tax
act, or who violates any other provision of the Kansas compensating
tax
act, shall, upon conviction thereof, be fined not less than $100
nor more
than $1,000, or be imprisoned in the county jail not less than one
month
nor more than six months, or be both so fined and imprisoned, in
the
discretion of the court.
(j) No penalty assessed hereunder
shall be collected if the taxpayer
has had the tax abated on appeal, and any penalty collected upon
such
tax shall be refunded.
Sec. 21. K.S.A. 79-41a03a is hereby
amended to read as follows: 79-
41a03a. (a) If any taxpayer fails to pay the tax levied pursuant to
K.S.A.
79-41a02, and amendments thereto, at the time required by or under
the
provisions of K.S.A. 79-41a03, and amendments thereto, there shall
be
added to the unpaid balance of the tax, interest at the rate per
month
prescribed by subsection (a) of K.S.A. 79-2968, and amendments
thereto,
from the date the tax was due until paid.
(b) For all taxable years ending prior
to January 1, 2002, if any tax-
payer due to negligence or intentional disregard fails to file a
return or
pay the tax due at the time required by or under the provisions of
K.S.A.
79-41a03, and amendments thereto, there shall be added to the tax
a
penalty in an amount equal to 10% of the unpaid balance of tax
due.
(c) For all taxable years ending prior
to January 1, 2002, if any person
fails to make a return, or to pay any tax, within six months from
the date
the return or tax was due, except in the case of an extension of
time
granted by the secretary of revenue or the secretary's designee,
there
shall be added to the tax due a penalty equal to 25% of the unpaid
balance
of such tax due.
(d) For all taxable years ending after
December 31, 2001, if any tax-
payer fails to file a return or pay the tax if one is due, at
the time required
by or under the provisions of this act, there shall be added to
the tax an
additional amount equal to 1% of the unpaid balance of the tax
due for
each month or fraction thereof during which such failure
continues, not
exceeding 24% in the aggregate, plus interest at the rate
prescribed by
subsection (a) of K.S.A. 79-2968, and amendments thereto, from
the date
the tax was due until paid. Notwithstanding the foregoing, in
the event
an assessment is issued following a field audit for any period
for which a
return was filed by the taxpayer and all of the tax was paid
pursuant to
such return, a penalty shall be imposed for the period included
in the
assessment in an amount of 1% per month not exceeding 10% of
the
unpaid balance of tax due shown in the notice of assessment. If
after
review of a return for any period included in the assessment,
the secretary
or secretary's designee determines that the underpayment of tax
was due
to the failure of the taxpayer to make a reasonable attempt to
comply with
the provisions of this act, such penalty shall be imposed for
the period
included in the assessment in the amount of 25% of the unpaid
balance
of tax due.
(d) (e) If any
taxpayer, with fraudulent intent, fails to pay any tax or
make, render or sign any return, or to supply any information,
within the
time required by or under the provisions of K.S.A. 79-41a03, and
amend-
ments thereto, there shall be added to the tax a penalty in an
amount
equal to 50% of the unpaid balance of tax due.
(e) (f) Penalty
or interest applied under the provisions of subsections
(a) and (d) shall be in addition to the penalty added under any
other
provisions of this section, but the provisions of subsections (b)
and (c)
shall be mutually exclusive of each other.
(f) (g) Whenever
the secretary of revenue or the secretary's designee
determines that the failure of the taxpayer to comply with the
provisions
of subsections (b) and (c) was due to reasonable causes, the
secretary or
the secretary's designee may waive or reduce any of the penalties
and
may reduce the interest rate to the underpayment rate prescribed
and
determined for the applicable period under section 6621 of the
federal
internal revenue code as in effect on January 1, 1994, upon making
a
record of the reasons therefor.
(g) (h) In
addition to all other penalties provided by this section, any
person who willfully fails to make a return or to pay any tax
imposed
under K.S.A. 79-41a02, and amendments thereto, or who makes a
false
or fraudulent return, or fails to keep any books or records
necessary to
determine the accuracy of the person's reports, or who willfully
violates
any regulations of the secretary of revenue, for the enforcement
and ad-
ministration of the provisions of K.S.A. 79-41a01 to 79-41a09,
inclusive,
and amendments thereto, or who aids and abets another in attempting
to
evade the payment of any tax imposed by K.S.A. 79-41a02, and
amend-
ments thereto, or who violates any other provision of K.S.A.
79-41a01 to
79-41a09, inclusive, and amendments thereto, shall, upon
conviction
thereof, be fined not less than $100 nor more than $1,000, or be
impris-
oned in the county jail not less than one month nor more than six
months,
or be both so fined and imprisoned, in the discretion of the
court.
Sec. 22. K.S.A. 79-1009 is hereby
amended to read as follows: 79-
1009. To the end that the state of Kansas and the political
subdivisions
thereof may receive all taxes due in every instance, including
contribu-
tions due under the employment security law, contractors, who are
non-
residents of this state, desiring to engage in, prosecute, follow
or carry on
the business of contracting as defined in this act shall register
with the
secretary of revenue or the secretary's designee for each contract
where
the total contract price or compensation to be received amounts to
more
than $10,000, except that a foreign corporation authorized to do
business
in this state shall not be required to register under the
provisions of this
act. The secretary or the secretary's designee shall charge
a fee for such
registration in the amount of $10 for each such contract.
All such fees
received by the secretary or the secretary's designee shall
be deposited
on Monday of each week with the state treasurer. The state
treasurer
shall thereupon credit the amount of such fees to the state
general fund.
Sec. 23. K.S.A. 79-2974 is hereby
amended to read as follows: 79-
2974. On and after January 1, 1998, the The
secretary of revenue shall
make available in a medium readily accessible to taxpayers all
adminis-
trative rulings of the department of revenue which affect the
duties and
responsibilities of taxpayers pursuant to any law administered by
the de-
partment of revenue. Private letter rulings and written final
determina-
tions of the secretary or the designee of the secretary
shall be provided in
such a manner as to conceal the identity of the specific taxpayer
for whom
the private letter ruling was issued. The secretary shall cause to
be pub-
lished in the Kansas register a description of each such
administrative
ruling within 30 days of such ruling together with specific
instructions as
to how the complete text of the administrative ruling may be
obtained.
As used in this section, administrative rulings shall include
revenue no-
tices, revenue rulings, information guides, policy directives,
private letter
rulings, written final determinations of the secretary or the
designee of
the secretary and directives of the division of property
valuation or its
director.
Sec. 24. K.S.A. 79-4502 is hereby
amended to read as follows: 79-
4502. As used in this act, unless the context clearly indicates
otherwise:
(a) "Income" means the sum of adjusted
gross income under the
Kansas income tax act, maintenance, support money, cash public
assis-
tance and relief (not including any refund granted under this act),
the
gross amount of any pension or annuity (including all monetary
retire-
ment benefits from whatever source derived, including but not
limited
to, railroad retirement benefits, all payments received under the
federal
social security act except disability payments, and veterans
disability pen-
sions), all dividends and interest from whatever source derived not
in-
cluded in adjusted gross income, workers compensation and the
gross
amount of "loss of time" insurance. It does not include gifts from
non-
governmental sources or surplus food or other relief in kind
supplied by
a governmental agency, nor shall net operating losses and net
capital
losses be considered in the determination of income.
(b) "Household" means a claimant, a
claimant and spouse who oc-
cupy the homestead or a claimant and one or more individuals not
related
as husband and wife who together occupy a homestead.
(c) "Household income" means all income
received by all persons of
a household in a calendar year while members of such household.
(d) "Homestead" means the dwelling, or
any part thereof, whether
owned or rented, which is occupied as a residence by the household
and
so much of the land surrounding it, as defined as a home site for
ad
valorem tax purposes, and may consist of a part of a multi-dwelling
or
multi-purpose building and a part of the land upon which it is
built or a
manufactured home or mobile home and the land upon which it is
situ-
ated. "Owned" includes a vendee in possession under a land
contract, a
life tenant, a beneficiary under a trust and one or more joint
tenants or
tenants in common.
(e) "Claimant" means a person who has
filed a claim under the pro-
visions of this act and was, during the entire calendar year
preceding the
year in which such claim was filed for refund under this act,
except as
provided in K.S.A. 79-4503, and amendments thereto, both domiciled
in
this state and was: (1) A person having a disability; (2) a person
who is 55
years of age or older or (3) a person other than a person included
under
(1) or (2) having one or more dependent children under 18 years of
age
residing at the person's homestead during the calendar year
immediately
preceding the year in which a claim is filed under this act.
When a homestead is occupied by two or more
individuals and more
than one of the individuals is able to qualify as a claimant, the
individuals
may determine between them as to whom the claimant will be. If
they
are unable to agree, the matter shall be referred to the secretary
of rev-
enue whose decision shall be final.
(f) "Property taxes accrued" means
property taxes, exclusive of special
assessments, delinquent interest and charges for service, levied on
a
claimant's homestead in 1979 or any calendar year thereafter by the
state
of Kansas and the political and taxing subdivisions of the state.
When a
homestead is owned by two or more persons or entities as joint
tenants
or tenants in common and one or more of the persons or entities is
not
a member of claimant's household, "property taxes accrued" is that
part
of property taxes levied on the homestead that reflects the
ownership
percentage of the claimant's household. For purposes of this act,
property
taxes are "levied" when the tax roll is delivered to the local
treasurer with
the treasurer's warrant for collection. When a claimant and
household
own their homestead part of a calendar year, "property taxes
accrued"
means only taxes levied on the homestead when both owned and
occupied
as a homestead by the claimant's household at the time of the levy,
mul-
tiplied by the percentage of 12 months that the property was owned
and
occupied by the household as its homestead in the year. When a
house-
hold owns and occupies two or more different homesteads in the
same
calendar year, property taxes accrued shall be the sum of the taxes
allo-
cable to those several properties while occupied by the household
as its
homestead during the year. Whenever a homestead is an integral part
of
a larger unit such as a multi-purpose or multi-dwelling building,
property
taxes accrued shall be that percentage of the total property taxes
accrued
as the value of the homestead is of the total value. For the
purpose of
this act, the word "unit" refers to that parcel of property covered
by a
single tax statement of which the homestead is a part.
(g) "Disability" means:
(1) Inability to engage in any
substantial gainful activity by reason of
any medically determinable physical or mental impairment which can
be
expected to result in death or has lasted or can be expected to
last for a
continuous period of not less than 12 months, and an individual
shall be
determined to be under a disability only if the physical or mental
im-
pairment or impairments are of such severity that the individual is
not
only unable to do the individual's previous work but cannot,
considering
age, education and work experience, engage in any other kind of
sub-
stantial gainful work which exists in the national economy,
regardless of
whether such work exists in the immediate area in which the
individual
lives or whether a specific job vacancy exists for the individual,
or whether
the individual would be hired if application was made for work. For
pur-
poses of the preceding sentence (with respect to any individual),
"work
which exists in the national economy" means work which exists in
signif-
icant numbers either in the region where the individual lives or in
several
regions of the country; for purposes of this subsection, a
"physical or
mental impairment" is an impairment that results from anatomical,
phys-
iological or psychological abnormalities which are demonstrable by
med-
ically acceptable clinical and laboratory diagnostic techniques;
or
(2) blindness and inability by reason of
blindness to engage in sub-
stantial gainful activity requiring skills or abilities comparable
to those of
any gainful activity in which the individual has previously engaged
with
some regularity and over a substantial period of time.
(h) "Blindness" means central visual
acuity of 20/200 or less in the
better eye with the use of a correcting lens. An eye which is
accompanied
by a limitation in the fields of vision such that the widest
diameter of the
visual field subtends an angle no greater than 20 degrees shall be
consid-
ered for the purpose of this paragraph as having a central visual
acuity of
20/200 or less.
(i) "Rent constituting property taxes
accrued" means 20% of the gross
rent actually paid in cash or its equivalent in 1979 or any taxable
year
thereafter by a claimant and claimant's household solely for the
right of
occupancy of a Kansas homestead on which ad valorem property
taxes
were levied in full for that year. When a household occupies two or
more
different homesteads in the same calendar year, rent constituting
prop-
erty taxes accrued shall be computed by adding the rent
constituting
property taxes accrued for each property rented by the household
while
occupied by the household as its homestead during the year.
(j) "Gross rent" means the rental paid at
arm's length solely for the
right of occupancy of a homestead or space rental paid to a
landlord for
the parking of a mobile home, exclusive of charges for any
utilities, serv-
ices, furniture and furnishings or personal property appliances
furnished
by the landlord as a part of the rental agreement, whether or not
expressly
set out in the rental agreement. Whenever the director of taxation
finds
that the landlord and tenant have not dealt with each other at arms
length
and that the gross rent charge was excessive, the director may
adjust the
gross rent to a reasonable amount for the purposes of the
claim.
New Sec. 25. Insofar as the same
may be made applicable, the pro-
visions of K.S.A. 79-3226, and amendments thereto, shall apply to
claims
for refunds allowable pursuant to the homestead property tax refund
act
which may become in dispute.
Sec. 26. K.S.A. 79-4517 is hereby
amended to read as follows: 79-
4517. For claims in respect of property taxes levied in
1976 or in any year
subsequent thereto, the director of taxation
may: (a) extend the time for
filing any claim under the provisions of this act
or accept a claim filed
after the filing deadline when good cause exists
therefor; or (b) accept a
claim filed after the deadline for filing in the case of
sickness, absence or
disability of the claimant if
said the claim has been filed within four
(4)
years of said the deadline.
Sec. 27. K.S.A. 1999 Supp. 79-3234
is hereby amended to read as
follows: 79-3234. (a) All reports and returns required by this act
shall be
preserved for three years and thereafter until the director orders
them
to be destroyed.
(b) Except in accordance with proper
judicial order, or as provided
in subsection (c) or in K.S.A. 17-7511, subsection (g) of K.S.A.
46-1106,
K.S.A. 46-1114, or K.S.A. 79-32,153a, and amendments thereto, it
shall
be unlawful for the director, any deputy, agent, clerk or other
officer,
employee or former employee of the department of revenue or any
other
state officer or employee or former state officer or employee to
divulge,
or to make known in any way, the amount of income or any
particulars
set forth or disclosed in any report, return, federal return or
federal return
information required under this act; and it shall be unlawful for
the di-
rector, any deputy, agent, clerk or other officer or employee
engaged in
the administration of this act to engage in the business or
profession of
tax accounting or to accept employment, with or without
consideration,
from any person, firm or corporation for the purpose, directly or
indi-
rectly, of preparing tax returns or reports required by the laws of
the state
of Kansas, by any other state or by the United States government,
or to
accept any employment for the purpose of advising, preparing
material
or data, or the auditing of books or records to be used in an
effort to
defeat or cancel any tax or part thereof that has been assessed by
the
state of Kansas, any other state or by the United States
government.
(c) Nothing in this section shall be
construed to prohibit the publi-
cation of statistics, so classified as to prevent the
identification of partic-
ular reports or returns and the items thereof, or the inspection of
returns
by the attorney general or other legal representatives of the
state. Nothing
in this section shall prohibit the post auditor from access to all
income
tax reports or returns in accordance with and subject to the
provisions of
subsection (g) of K.S.A. 46-1106 or K.S.A. 46-1114, and
amendments
thereto. Nothing in this section shall be construed to prohibit the
disclo-
sure of taxpayer information from income tax returns to persons or
en-
tities contracting with the secretary of revenue where the
secretary has
determined disclosure of such information is essential for
completion of
the contract and has taken appropriate steps to preserve
confidentiality.
Nothing in this section shall be construed to prohibit the
disclosure of
job creation and investment information derived from tax schedules
re-
quired to be filed under the Kansas income tax act to the secretary
of
commerce. Nothing in this section shall be construed to prohibit
the dis-
closure of income tax returns to the state gaming agency to be
used solely
for the purpose of determining qualifications of licensees of
and applicants
for licensure in tribal gaming. Any information received by the
state gam-
ing agency shall be confidential and shall not be disclosed
except to the
executive director, employees of the state gaming agency and
members
and employees of the tribal gaming commission. Nothing in
this section
shall be construed to prohibit the disclosure of the taxpayer's
name, last
known address and residency status to the department of wildlife
and
parks to be used solely in its license fraud investigations.
Nothing in this
section shall prohibit the disclosure of the name, residence
address, em-
ployer or Kansas adjusted gross income of a taxpayer who may have
a
duty of support in a title IV-D case to the secretary of the Kansas
de-
partment of social and rehabilitation services for use solely in
administra-
tive or judicial proceedings to establish, modify or enforce such
support
obligation in a title IV-D case. In addition to any other limits on
use, such
use shall be allowed only where subject to a protective order which
pro-
hibits disclosure outside of the title IV-D proceeding. As used in
this
section, "title IV-D case" means a case being administered pursuant
to
part D of title IV of the federal social security act (42 U.S.C.
§ 651 et
seq.) and amendments thereto. Any person receiving any
information un-
der the provisions of this subsection shall be subject to the
confidentiality
provisions of subsection (b) and to the penalty provisions of
subsection
(d).
(d) Any violation of subsection (b) or
(c) is a class B nonperson mis-
demeanor and, if the offender is an officer or employee of the
state, such
officer or employee shall be dismissed from office.
(e) Notwithstanding the provisions of
this section, the secretary of
revenue may permit the commissioner of internal revenue of the
United
States, or the proper official of any state imposing an income tax,
or the
authorized representative of either, to inspect the income tax
returns
made under this act and the secretary of revenue may make available
or
furnish to the taxing officials of any other state or the
commissioner of
internal revenue of the United States or other taxing officials of
the fed-
eral government, or their authorized representatives, information
con-
tained in income tax reports or returns or any audit thereof or the
report
of any investigation made with respect thereto, filed pursuant to
the in-
come tax laws, as the secretary may consider proper, but such
information
shall not be used for any other purpose than that of the
administration
of tax laws of such state, the state of Kansas or of the United
States.
(f) Notwithstanding the provisions of
this section, the secretary of
revenue may:
(1) Communicate to the executive director
of the Kansas lottery in-
formation as to whether a person, partnership or corporation is
current
in the filing of all applicable tax returns and in the payment of
all taxes,
interest and penalties to the state of Kansas, excluding items
under formal
appeal, for the purpose of determining whether such person,
partnership
or corporation is eligible to be selected as a lottery
retailer;
(2) communicate to the executive director
of the Kansas racing com-
mission as to whether a person, partnership or corporation has
failed to
meet any tax obligation to the state of Kansas for the purpose of
deter-
mining whether such person, partnership or corporation is eligible
for a
facility owner license or facility manager license pursuant to the
Kansas
parimutuel racing act; and
(3) provide such information to the
president of Kansas, Inc. as re-
quired by K.S.A. 1999 Supp. 74-8017, and amendments thereto.
The
president and any employees or former employees of Kansas, Inc.
re-
ceiving any such information shall be subject to the
confidentiality pro-
visions of subsection (b) and to the penalty provisions of
subsection (d).
(g) Nothing in this section shall be
construed to allow disclosure of
the amount of income or any particulars set forth or disclosed in
any
report, return, federal return or federal return information, where
such
disclosure is prohibited by the federal internal revenue code as in
effect
on September 1, 1996, and amendments thereto, related federal
internal
revenue rules or regulations, or other federal law.
New Sec. 28. (a) For tax years
2000 and 2001, each Kansas state
individual income tax return form shall contain a designation as
follows:
Kansas World War II Memorial Fund. Check if
you wish to donate, in
addition to your tax liability, or designate from your refund,
______$1,
______$5, ______$10, or $______.
(b) The director of taxation of the
department of revenue shall de-
termine annually the total amount designated for contribution to
the Kan-
sas World War II Memorial Fund pursuant to subsection (a) and
shall
report such amount to the state treasurer who shall credit the
entire
amount thereof to the Kansas World War II Memorial Fund which
fund
is hereby established in the state treasury. In the case where
donations
are made pursuant to subsection (a), the director shall remit the
entire
amount thereof to the state treasurer who shall credit the same to
such
fund. All moneys deposited in such fund shall be used solely for
the
purpose of providing contributions to the World War II Memorial
Society
on behalf of Kansas for the benefit of the World War II memorial to
be
located in Washington, D.C. All expenditures from such fund shall
be
made in accordance with appropriation acts upon warrants of the
director
of accounts and reports payable to the World War II Memorial
Society
issued pursuant to vouchers approved by the state treasurer.
New Sec. 29. (a) For all taxable
years commencing after December
31, 1999, and subject to the provisions of this section, there
shall be
allowed as a property tax refund to the operator of an oil lease an
amount
equal to 50% of the total amount of property tax levied and
actually and
timely paid by the operator for a property tax year which is
attributable
to the working interest of an oil lease the average daily
production per
well from which is 15 barrels or less when the price per barrel of
oil is
$16 or less, as prescribed in the oil and gas appraisal guide by
the director
of property valuation for the applicable tax year. No refund shall
be al-
lowed for property tax paid upon machinery and equipment for which
a
credit is claimed pursuant to K.S.A. 1999 Supp. 79-32,206 and
amend-
ments thereto.
(b) No claim for a refund allowable
pursuant to subsection (a) shall
be paid unless filed with and in possession of the department of
revenue
on or before April 15 of the year next succeeding the year in which
such
taxes were paid, except that the director of taxation may extend
the time
for filing any claim or accept a claim filed after the deadline for
filing
when good cause exists therefor if the claim has been filed within
three
years of the deadline.
(c) The allowable amount of such claim
shall be paid to the operator
from funds appropriated for such purposes upon warrants of the
director
of accounts and reports pursuant to vouchers approved by the
director of
taxation or by any person designated by the claimant, but no
warrant
issued hereunder shall be drawn in an amount of less than $5. No
interest
shall be allowed on any payment made to an operator pursuant to
this
section.
(d) Insofar as the same may be made
applicable, the provisions of
K.S.A. 79-3226, and amendments thereto, shall apply to claims for
re-
funds allowable pursuant to this section which may become in
dispute.
(e) The department of revenue shall
devise and provide forms and
instructions necessary to administer this section, and the
secretary of rev-
enue may adopt rules and regulations for such purpose.
New Sec. 30. (a) For all taxable
years commencing after December
31, 2000, and with respect to property initially acquired and first
placed
into service in this state on and after January 1, 2001, there
shall be
allowed as a credit against the tax liability imposed by the Kansas
income
tax act of a telecommunications company, as defined in K.S.A.
79-3271
and amendments thereto, an amount equal to the difference between
the
property tax levied for property tax year 2001, and all such years
there-
after, and actually and timely paid during the appropriate income
taxable
year upon property assessed at the 33% assessment rate and the
property
tax which would be levied and paid on such property if assessed at
a 25%
assessment rate.
(b) If the amount of the tax credit
determined under subsection (a)
exceeds the tax liability for the telecommunications company for
any tax-
able year, the amount thereof which exceeds such tax liability
shall be
refunded to the telecommunications company. If the
telecommunications
company is a corporation having an election in effect under
subchapter
S of the federal internal revenue code, a partnership or a limited
liability
company, the credit provided by this section shall be claimed by
the
shareholders of such corporation, the partners of such partnership
or the
members of such limited liability company in the same manner as
such
shareholders, partners or members account for their proportionate
shares
of income or loss of the corporation, partnership or limited
liability com-
pany.
(c) As used in this section, the term
"acquired" shall not include the
transfer of property pursuant to an exchange for stock securities,
or the
transfer of assets of one business entity to another due to a
merger or
other consolidation.
Sec. 31. K.S.A. 1999 Supp. 79-4217
is hereby amended to read as
follows: 79-4217. (a) There is hereby imposed an excise tax upon
the
severance and production of coal, oil or gas from the earth or
water in
this state for sale, transport, storage, profit or commercial use,
subject to
the following provisions of this section. Such tax shall be borne
ratably by
all persons within the term "producer" as such term is defined in
K.S.A.
79-4216, and amendments thereto, in proportion to their respective
ben-
eficial interest in the coal, oil or gas severed. Such tax shall be
applied
equally to all portions of the gross value of each barrel of oil
severed and
subject to such tax and to the gross value of the gas severed and
subject
to such tax. The rate of such tax shall be 8% of the gross value of
all oil
or gas severed from the earth or water in this state and subject to
the tax
imposed under this act. The rate of such tax with respect to coal
shall be
$1 per ton. For the purposes of the tax imposed hereunder the
amount
of oil or gas produced shall be measured or determined: (1) In the
case
of oil, by tank tables compiled to show 100% of the full capacity
of tanks
without deduction for overage or losses in handling; allowance for
any
reasonable and bona fide deduction for basic sediment and water,
and
for correction of temperature to 60 degrees Fahrenheit will be
allowed;
and if the amount of oil severed has been measured or determined
by
tank tables compiled to show less than 100% of the full capacity of
tanks,
such amount shall be raised to a basis of 100% for the purpose of
the tax
imposed by this act; and (2) in the case of gas, by meter readings
showing
100% of the full volume expressed in cubic feet at a standard base
and
flowing temperature of 60 degrees Fahrenheit, and at the absolute
pres-
sure at which the gas is sold and purchased; correction to be made
for
pressure according to Boyle's law, and used for specific gravity
according
to the gravity at which the gas is sold and purchased, or if not so
specified,
according to the test made by the balance method.
(b) The following shall be exempt from
the tax imposed under this
section:
(1) The severance and production of gas
which is: (A) Injected into
the earth for the purpose of lifting oil, recycling or
repressuring; (B) used
for fuel in connection with the operation and development for, or
pro-
duction of, oil or gas in the lease or production unit where
severed; (C)
lawfully vented or flared; (D) severed from a well having an
average daily
production during a calendar month having a gross value of not
more
than $87 per day, which well has not been significantly curtailed
by reason
of mechanical failure or other disruption of production; in the
event that
the production of gas from more than one well is gauged by a
common
meter, eligibility for exemption hereunder shall be determined by
com-
puting the gross value of the average daily combined production
from all
such wells and dividing the same by the number of wells gauged by
such
meter; (E) inadvertently lost on the lease or production unit by
reason of
leaks, blowouts or other accidental losses; (F) used or consumed
for do-
mestic or agricultural purposes on the lease or production unit
from which
it is severed; or (G) placed in underground storage for recovery at
a later
date and which was either originally severed outside of the state
of Kansas,
or as to which the tax levied pursuant to this act has been
paid;
(2) the severance and production of oil
which is: (A) From a lease or
production unit whose average daily production is five barrels or
less per
producing well, which well or wells have not been significantly
curtailed
by reason of mechanical failure or other disruption of production;
(B)
from a lease or production unit, the producing well or wells upon
which
have a completion depth of 2,000 feet or more, and whose average
daily
production is six barrels or less per producing well or, if the
price of oil
as determined pursuant to subsection (d) is $16 or less, whose
average
daily production is seven barrels or less per producing well, or,
if the price
of oil as determined pursuant to subsection (d) is $15 or less,
whose
average daily production is eight barrels or less per producing
well, or, if
the price of oil as determined pursuant to subsection (d) is $14 or
less,
whose average daily production is nine barrels or less per
producing well,
or, if the price of oil as determined pursuant to subsection (d) is
$13 or
less, whose average daily production is 10 barrels or less per
producing
well, which well or wells have not been significantly curtailed by
reason
of mechanical failure or other disruption of production; (C) from a
lease
or production unit, whose production results from a tertiary
recovery
process. "Tertiary recovery process" means the process or processes
de-
scribed in subparagraphs (1) through (9) of 10 C.F.R. 212.78(c) as
in
effect on June 1, 1979; (D) from a lease or production unit, the
producing
well or wells upon which have a completion depth of less than 2,000
feet
and whose average daily production resulting from a water flood
process,
is six barrels or less per producing well, which well or wells have
not been
significantly curtailed by reason of mechanical failure or other
disruption
of production; (E) from a lease or production unit, the producing
well or
wells upon which have a completion depth of 2,000 feet or more,
and
whose average daily production resulting from a water flood
process, is
seven barrels or less per producing well or, if the price of oil as
deter-
mined pursuant to subsection (d) is $16 or less, whose average
daily pro-
duction is eight barrels or less per producing well, or, if the
price of oil
as determined pursuant to subsection (d) is $15 or less, whose
average
daily production is nine barrels or less per producing well, or, if
the price
of oil as determined pursuant to subsection (d) is $14 or less,
whose
average daily production is 10 barrels or less per producing well,
which
well or wells have not been significantly curtailed by reason of
mechanical
failure or other disruption of production; (F) test, frac or swab
oil which
is sold or exchanged for value; or (G) inadvertently lost on the
lease or
production unit by reason of leaks or other accidental means;
(3) (A) any taxpayer applying for
an exemption pursuant to subsec-
tion (b)(2)(A) and (B) shall make application annually to the
director of
taxation therefor. Exemptions granted pursuant to subsection
(b)(2)(A)
and (B) shall be valid for a period of one year following the date
of cer-
tification thereof by the director of taxation; (B) any taxpayer
applying for
an exemption pursuant to subsection (b)(2)(D) or (E) shall make
appli-
cation annually to the director of taxation therefor. Such
application shall
be accompanied by proof of the approval of an application for the
utili-
zation of a water flood process therefor by the corporation
commission
pursuant to rules and regulations adopted under the authority of
K.S.A.
55-152 and amendments thereto and proof that the oil produced
there-
from is kept in a separate tank battery and that separate books and
records
are maintained therefor. Such exemption shall be valid for a period
of
one year following the date of certification thereof by the
director of
taxation; and (C) notwithstanding the provisions of paragraph (A)
or (B),
any exemption in effect on the effective date of this act affected
by the
amendments to subsection (b)(2) by this act shall be redetermined
in
accordance with such amendments. Any such exemption, and any
new
exemption established by such amendments and applied for after
the
effective date of this shall be valid for a period commencing with
May 1,
1998, and ending on April 30, 1999.
(4) the severance and production of gas
or oil from any pool from
which oil or gas was first produced on or after April 1, 1983, as
determined
by the state corporation commission and certified to the director
of tax-
ation, and continuing for a period of 24 months from the month in
which
oil or gas was first produced from such pool as evidenced by an
affidavit
of completion of a well, filed with the state corporation
commission and
certified to the director of taxation. Exemptions granted for
production
from any well pursuant to this paragraph shall be valid for a
period of 24
months following the month in which oil or gas was first produced
from
such pool. The term "pool" means an underground accumulation of
oil
or gas in a single and separate natural reservoir characterized by
a single
pressure system so that production from one part of the pool
affects the
reservoir pressure throughout its extent;
(5) the severance and production of oil
or gas from a three-year in-
active well, as determined by the state corporation commission and
cer-
tified to the director of taxation, for a period of 10 years after
the date of
receipt of such certification. As used in this paragraph,
"three-year in-
active well" means any well that has not produced oil or gas in
more than
one month in the three years prior to the date of application to
the state
corporation commission for certification as a three-year inactive
well. An
application for certification as a three-year inactive well shall
be in such
form and contain such information as required by the state
corporation
commission, and shall be made prior to July 1, 1996. The
commission
may revoke a certification if information indicates that a
certified well was
not a three-year inactive well or if other lease production is
credited to
the certified well. Upon notice to the operator that the
certification for a
well has been revoked, the exemption shall not be applied to the
pro-
duction from that well from the date of revocation;
(6) (A) The incremental severance
and production of oil or gas which
results from a production enhancement project begun on or after
July 1,
1998, shall be exempt for a period of seven years from the startup
date
of such project. As used in this paragraph (6):
(1) "Incremental severance and
production" means the amount of oil
or natural gas which is produced as the result of a production
enhance-
ment project which is in excess of the base production of oil or
natural
gas, and is determined by subtracting the base production from the
total
monthly production after the production enhancement projects is
com-
pleted.
(2) "Base production" means the average
monthly amount of pro-
duction for the twelve-month period immediately prior to the
production
enhancement project beginning date, minus the monthly rate of
produc-
tion decline for the well or project for each month beginning 180
days
prior to the project beginning date. The monthly rate of production
de-
cline shall be equal to the average extrapolated monthly decline
rate for
the well or project for the twelve-month period immediately prior
to the
production enhancement project beginning date, except that the
monthly
rate of production decline shall be equal to zero in the case
where the well
or project has experienced no monthly decline during the
twelve-month
period immediately prior to the production enhancement project
begin-
ning date. Such monthly rate of production decline shall be
continued as
the decline that would have occurred except for the enhancement
project.
Any well or project which may have produced during the
twelve-month
period immediately prior to the production enhancement project
begin-
ning date but is not capable of production on the project
beginning date
shall have a base production equal to zero. The calculation
of the base
production amount shall be evidenced by an affidavit and supporting
doc-
umentation filed by the applying taxpayer with the state
corporation com-
mission.
(3) "Workover" means any downhole
operation in an existing oil or
gas well that is designed to sustain, restore or increase the
production
rate or ultimate recovery of oil or gas, including but not limited
to aci-
dizing, reperforation, fracture treatment, sand/paraffin/scale
removal or
other wellbore cleanouts, casing repair, squeeze cementing, initial
instal-
lation, or enhancement of artificial lifts including plunger lifts,
rods,
pumps, submersible pumps and coiled tubing velocity strings,
downsizing
existing tubing to reduce well loading, downhole commingling,
bacteria
treatments, polymer treatments, upgrading the size of pumping
unit
equipment, setting bridge plugs to isolate water production zones,
or any
combination of the aforementioned operations; "workover" shall
not
mean the routine maintenance, routine repair, or like for-like
replace-
ment of downhole equipment such as rods, pumps, tubing packers
or
other mechanical device.
(4) "Production enhancement project"
means performing or causing
to be performed the following:
(i) Workover;
(ii) recompletion to a different
producing zone in the same well bore,
except recompletions in formations and zones subject to a state
corpo-
ration commission proration order;
(iii) secondary recovery projects;
(iv) addition of mechanical devices to
dewater a gas or oil well;
(v) replacement or enhancement of surface
equipment;
(vi) installation or enhancement of
compression equipment, line
looping or other techniques or equipment which increases
production
from a well or a group of wells in a project;
(vii) new discoveries of oil or gas which
are discovered as a result of
the use of new technology, including, but not limited to, three
dimen-
sional seismic studies.
(B) The state corporation commission
shall adopt rules and regula-
tions necessary to efficiently and properly administer the
provisions of
this paragraph (6) including rules and regulations for the
qualification of
production enhancement projects, the procedures for determining
the
monthly rate of production decline, criteria for determining the
share of
incremental production attributable to each well when a production
en-
hancement project includes a group of wells, criteria for
determining the
start up date for any project for which an exemption is claimed,
and
determining new qualifying technologies for the purposes of
paragraph
(6)(A)(4)(vii).
(C) Any taxpayer applying for an
exemption pursuant to this para-
graph (6) shall make application to the director of taxation. Such
appli-
cation shall be accompanied by a state corporation commission
certifi-
cation that the production for which an exemption is sought results
from
a qualified production enhancement project and certification of the
base
production for the enhanced wells or group of wells, and the rate
of
decline to be applied to that base production. The secretary of
revenue
shall provide credit for any taxes paid between the project startup
date
and the certification of qualifications by the commission.
(D) The exemptions provided for in this
paragraph (6) shall not apply
for 12 months beginning July 1 of the year subsequent to any
calendar
year during which: (1) In the case of oil, the secretary of revenue
deter-
mines that the weighted average price of Kansas oil at the wellhead
has
exceeded $20.00 per barrel; or (2) in the case of natural gas the
secretary
of revenue determines that the weighted average price of Kansas gas
at
the wellhead has exceeded $2.50 per Mcf.
(E) The provisions of this paragraph (6)
shall not affect any other
exemption allowable pursuant to this section; and
(7) for the calendar year 1988, and any
year thereafter, the severance
or production of the first 350,000 tons of coal from any mine as
certified
by the state geological survey.
(c) No exemption shall be granted
pursuant to subsection (b)(3) or
(4) to any person who does not have a valid operator's license
issued by
the state corporation commission, and no refund of tax shall be
made to
any taxpayer attributable to any production in a period when such
tax-
payer did not hold a valid operator's license issued by the state
corporation
commission.
(d) On April 15, 1988, and on April 15 of
each year thereafter, the
secretary of revenue shall determine from statistics compiled and
pro-
vided by the United States department of energy, the average price
per
barrel paid by the first purchaser of crude oil in this state for
the six-
month period ending on December 31 of the preceding year. Such
price
shall be used for the purpose of determining exemptions allowed by
sub-
section (b)(2)(B) or (E) for the twelve-month period commencing on
May
1 of such year and ending on April 30 of the next succeeding
year.
Sec. 32. K.S.A. 79-32,143 is hereby
amended to read as follows: 79-
32,143. (a) For net operating losses incurred in taxable years
beginning
after December 31, 1987, a net operating loss deduction shall be
allowed
in the same manner that it is allowed under the federal internal
revenue
code except that such net operating loss may only be carried
forward to
each of the 10 taxable years following the taxable year of the net
operating
loss. For net operating farm losses, as defined by subsection
(i) of section
172 of the federal internal revenue code, incurred in taxable
years begin-
ning after December 31, 1999, a net operating loss deduction
shall be
allowed in the same manner that it is allowed under the federal
internal
revenue code except that such net operating loss may be carried
forward
to each of the 10 taxable years following the taxable year of
the net op-
erating loss. The amount of the net operating loss that may
be carried
back or forward for Kansas income tax purposes shall be that
portion of
the federal net operating loss allocated to Kansas under this act
in the
taxable year that the net operating loss is sustained.
(b) The amount of the loss to be carried
back or forward will be the
federal net operating loss after (1) all modifications required
under this
act applicable to the net loss in the year the loss was incurred;
and (2)
after apportionment as to source in the case of corporations,
nonresident
individuals for losses incurred in taxable years beginning prior to
January
1, 1978, and nonresident estates and trusts in the same manner that
in-
come for such corporations, nonresident individuals, estates and
trusts is
required to be apportioned.
(c) If a net operating loss was incurred
in a taxable year beginning
prior to January 1, 1988, the amount of the net operating loss that
may
be carried back and carried forward and the period for which it may
be
carried back and carried forward shall be determined under the
provisions
of the Kansas income tax laws which were in effect during the year
that
such net operating loss was incurred.
(d) If any portion of a net operating
loss described in subsections (a)
and (b) is not utilized prior to the final year of the carryforward
period
provided in subsection (a), a refund shall be allowable in such
final year
in an amount equal to the refund which would have been allowable
in
the taxable year the loss was incurred by utilizing the three year
carryback
provided under K.S.A. 79-32,143, as in effect on December 31,
1987,
multiplied by a fraction, the numerator of which is the unused
portion of
such net operating loss in the final year, and the denominator of
which
is the amount of such net operating loss which could have been
carried
back to the three years immediately preceding the year in which the
loss
was incurred. In no event may such fraction exceed 1.
(e) Notwithstanding any other provisions
of the Kansas income tax
act, the net operating loss as computed under subsections (a), (b)
and (c)
of this section shall be allowed in full in determining Kansas
taxable in-
come or at the option of the taxpayer allowed in full in
determining Kansas
adjusted gross income.
(f) No refund of income tax which
results from a net operating loss
carry back shall be allowed in an amount exceeding $1,500 in any
year.
Any excess amount may be carried back or forward to any other
year or
years as provided by this section.
Sec. 33. On and after January 1,
2000, K.S.A. 1999 Supp. 79-32,208
is hereby repealed.
Sec. 34. K.S.A. 79-1009, 79-2974,
79-3228, 79-3295, 79-32,143, 79-
3296, 79-3297a, 79-3298, 79-3299, 79-32,100, 79-32,101, 79-32,106,
79-
3615, 79-3706, 79-41a03a, 79-4502, 79-4512, 79-4514 and 79-4517
and
K.S.A. 1999 Supp. 79-3234 and 79-4217 are hereby repealed.
Sec. 35. This act shall take effect
and be in force from and after its
publication in the statute book.