Session of 2000
HOUSE BILL No. 2658
By Committee on Environment
1-19
9 AN ACT
concerning public water supply systems; concerning regulation
10 and related fees;
providing exemptions from certain fees and taxes;
11 amending K.S.A. 65-156
and K.S.A. 1999 Supp. 65-163 and 79-3606
12 and repealing the
existing sections.
13
14 Be it enacted by the Legislature of the
State of Kansas:
15 Section
1. K.S.A. 1999 Supp. 65-163 is hereby amended to read as
16 follows: 65-163. (a) (1) No person shall
operate a public water supply
17 system within the state without a public
water supply system permit from
18 the secretary. An application for a public
water supply system permit shall
19 be submitted for review and approval prior
to construction and shall in-
20 clude: (A) A copy of the plans and
specifications for the construction of
21 the public water supply system or the
extension thereof; (B) a description
22 of the source from which the water supply
is to be derived; (C) the pro-
23 posed manner of storage, purification or
treatment for the supply; and
24 (D) such other data and information as
required by the secretary of health
25 and environment. No source of water supply
in substitution for or in
26 addition to the source described in the
application or in any subsequent
27 application for which a public water supply
system permit is issued shall
28 be used by a public water supply system,
nor shall any change be made
29 in the manner of storage, purification or
treatment of the water supply
30 without an additional public water supply
system permit obtained in a
31 manner similar to that prescribed by this
section from the secretary.
32 (2) Whenever
application is made to the secretary for a public water
33 supply system permit under the provisions
of this section, it shall be the
34 duty of the secretary to examine the
application without delay and, as
35 soon as possible thereafter, to grant or
deny the public water supply sys-
36 tem permit subject to any conditions which
may be imposed by the sec-
37 retary to protect the public health and
welfare.
38 (3) The secretary
may adopt rules and regulations establishing a pro-
39 gram of annual certification by public
water supply systems that have staff
40 qualified to approve the extension of
distribution systems without the
41 necessity of securing an additional permit
for the extension provided the
42 plans for the extension are prepared by a
professional engineer as defined
43 by K.S.A. 74-7003, and amendments
thereto.
2
1 (b)
(1) Whenever a complaint is made to the secretary by any city
of
2 the state, by a local health officer,
or by a county or joint board of health
3 concerning the sanitary quality of
any water supplied to the public within
4 the county in which the city, local
health officer or county or joint board
5 of health is located, the secretary
shall investigate the public water supply
6 system about which the complaint is
made. Whenever the secretary has
7 reason to believe that a public water
supply system within the state is
8 being operated in violation of an
applicable state law or an applicable rule
9 and regulation of the secretary, the
secretary may investigate the public
10 water supply system.
11 (2) Whenever an
investigation of any public water supply system is
12 undertaken by the secretary, it shall be
the duty of the supplier of water
13 under investigation to furnish to the
secretary information to determine
14 the sanitary quality of the water supplied
to the public and to determine
15 compliance with applicable state laws and
rules and regulations. The sec-
16 retary may issue an order requiring changes
in the source or sources of
17 the public water supply system or in the
manner of storage, purification
18 or treatment utilized by the public water
supply system before delivery
19 to consumers, or distribution facilities,
collectively or individually, as may
20 in the secretary's judgment be necessary to
safeguard the sanitary quality
21 of the water and bring about compliance
with applicable state law and
22 rules and regulations. The supplier of
water shall comply with the order
23 of the secretary.
24 (c) (1) As
used in this subsection (c), "municipal water treatment
25 residues" means any solid, semisolid or
liquid residue generated during
26 the treatment of water in a public water
supply system treatment works.
27 (2) A public
water supply system may place or store municipal water
28 treatment residues resulting from
sedimentation, coagulation or softening
29 treatment processes in basins on land under
the ownership and control
30 of the public water supply system operator
provided that such storage or
31 placement is approved and permitted by the
secretary under this section
32 as part of the public water supply
system.
33 (3) The secretary
shall adopt uniform and comprehensive rules and
34 regulations for the location, design and
operation of such basins. Such
35 rules and regulations shall require permit
applications by the public water
36 suppliers for such basins to include a copy
of the plans and specifications
37 for the location and construction of each
basin, the means of conveyance
38 of the treatment residues to such basins,
the content of treatment resi-
39 dues, the proposed method of basin
operation and closure, the method
40 of any anticipated expansion and any other
data and information required
41 by the secretary.
42 (4) Whenever
complaint is made to the secretary by the mayor of any
43 city of the state, by a local health
officer or by a county or joint board of
3
1 health, or whenever an investigation
is undertaken at the initiative of the
2 secretary, relating to any alleged
violation of the provisions of the permit
3 for placement or storage of municipal
water treatment residues in such
4 basins, the public water supply
system operator shall furnish all infor-
5 mation the secretary requires. If the
secretary finds that there is any
6 violation of the terms of the permit,
that the means of placement and
7 storage exceed the terms of the
permit or that any other condition exists
8 by reason of the means of placement
and storage that may be detrimental
9 to the health of any inhabitants of
the state or to the environment, the
10 secretary shall have the authority to issue
an order amending the permit
11 or otherwise requiring the operator to
perform remedial measures to
12 curtail or prevent such detrimental
conditions.
13 (d) Any action of
the secretary pursuant to this section is subject to
14 review in accordance with the act for
judicial review and civil enforcement
15 of agency actions. The court on review
shall hear the case without delay.
16 (e) The secretary
shall establish by rule and regulation a system of
17 fees for the inspection
and of, regulation of and provision of
technical
18 assistance to public water supplies.
Before July 1, 2003, no such fee shall
19 exceed $.002 $.03 per
1,000 gallons of water sold at retail by a public
20 water supply system. On and after July
1, 2003, no such fee shall exceed
21 $.04 per 1,000 gallons of water sold
at retail by a public water supply
22 system. All such fees shall be paid
quarterly in the manner provided for
23 fees imposed on retail sales by public
water supply systems pursuant to
24 K.S.A. 82a-954 and amendments thereto. The
secretary shall remit to the
25 state treasurer all moneys collected for
such fees. Upon receipt thereof,
26 the state treasurer shall deposit the
entire amount in the state treasury
27 and credit it to the public water supply
fee fund created by K.S.A. 65-
28 163c and amendments thereto.
29 (f) There is
hereby created an advisory committee to make
recom-
30 mendations assist
public water supply systems and the department of
31 health and environment in meeting
federal safe drinking water standards
32 and requirements by advising and making
recommendations to the sec-
33 retary regarding: (1) Fees to be
adopted by the secretary under subsec-
34 tion (e); (2) means of
strengthening prioritization of on-site
technical
35 assistance to for
public water supply systems; (3) standards for on-site and
36 classroom water treatment operator
certification programs; (4) means of
37 providing assistance to governing bodies
of public water supply systems,
38 through the department and through
contractual arrangements with
39 uniquely qualified organizations with
demonstrated capabilities, to
40 strengthen the management, planning and
financial operations of such
41 systems; (5) oversight of management of,
expenditures from and credits
42 to the public water supply loan fund
established by K.S.A. 1999 Supp.
43 65-163e and amendments thereto; (6)
oversight of services provided to
4
1 public water supply systems by the
office of laboratory services of the
2 department; (7) other matters
concerning public water supplies; and (5)
3 to advise the secretary
regarding (8) expenditure of moneys in the
public
4 water supply fee fund created by
K.S.A. 65-163c and amendments
5 thereto. Such advisory committee
shall consist of one member appointed
6 by the secretary to represent the
department of health and environment,
7 one member appointed by the director
of the Kansas water office to
8 represent such office and
two three members appointed by the
secretary
9 as follows: One from three
nominations submitted by the Kansas section
10 of the American waterworks association,
and one from three nominations
11 submitted by the Kansas rural water
association and one from three nom-
12 inations submitted by the league of
Kansas municipalities. Members of
13 the advisory committee shall serve without
compensation or reimburse-
14 ment of expenses. The advisory committee
shall meet at least four times
15 each year on call of the secretary or a
majority of the members of the
16 committee. Any agenda item submitted by
a member shall be considered
17 by the advisory committee.
18 Sec.
2. K.S.A. 65-156 is hereby amended to read as follows:
65-156.
19 Subject to the provisions of subsection
(b), the secretary of health and
20 environment shall make
adopt rules and regulations for the collection of
21 samples and analysis of water, either
natural or treated, furnished by
22 municipalities, corporations, companies or
individuals to the public, and
23 shall fix the fees for any services
rendered under said such rules and
24 regulations to cover the cost of the
services.
25 (b) The fees
provided for by this section shall not apply to services
26 performed for a public water supply
system, as defined by K.S.A. 65-162a
27 and amendments thereto, if such public
water supply system pays moneys
28 into the public water supply fund
created by K.S.A. 65-163c, and amend-
29 ments thereto.
30 Sec.
3. K.S.A. 1999 Supp. 79-3606 is hereby amended to read as
31 follows: 79-3606. The following shall be
exempt from the tax imposed by
32 this act:
33 (a) All sales of
motor-vehicle fuel or other articles upon which a sales
34 or excise tax has been paid, not subject to
refund, under the laws of this
35 state except cigarettes as defined by
K.S.A. 79-3301 and amendments
36 thereto, cereal malt beverages and malt
products as defined by K.S.A. 79-
37 3817 and amendments thereto, including
wort, liquid malt, malt syrup
38 and malt extract, which is not subject to
taxation under the provisions of
39 K.S.A. 79-41a02 and amendments thereto,
motor vehicles taxed pursuant
40 to K.S.A. 79-5117, and amendments thereto,
tires taxed pursuant to
41 K.S.A. 1999 Supp. 65-3424d, and amendments
thereto, and drycleaning
42 and laundry services taxed pursuant to
K.S.A. 1999 Supp. 65-34,150, and
43 amendments thereto;
5
1 (b) all
sales of tangible personal property or service, including the
2 renting and leasing of tangible
personal property, purchased directly by
3 the state of Kansas, a political
subdivision thereof, other than a school or
4 educational institution, or purchased
by a public or private nonprofit hos-
5 pital or public hospital authority or
nonprofit blood, tissue or organ bank
6 and used exclusively for state,
political subdivision, hospital or public hos-
7 pital authority or nonprofit blood,
tissue or organ bank purposes, except
8 when: (1) Such state, hospital or
public hospital authority is engaged or
9 proposes to engage in any business
specifically taxable under the provi-
10 sions of this act and such items of
tangible personal property or service
11 are used or proposed to be used in such
business, or (2) such political
12 subdivision is engaged or proposes to
engage in the business of furnishing
13 gas, water, electricity or heat to others
and such items of personal prop-
14 erty or service are used or proposed to be
used in such business;
15 (c) all sales of
tangible personal property or services, including the
16 renting and leasing of tangible personal
property, purchased directly by
17 a public or private elementary or secondary
school or public or private
18 nonprofit educational institution and used
primarily by such school or
19 institution for nonsectarian programs and
activities provided or sponsored
20 by such school or institution or in the
erection, repair or enlargement of
21 buildings to be used for such purposes. The
exemption herein provided
22 shall not apply to erection, construction,
repair, enlargement or equip-
23 ment of buildings used primarily for human
habitation;
24 (d) all sales of
tangible personal property or services purchased by a
25 contractor for the purpose of constructing,
equipping, reconstructing,
26 maintaining, repairing, enlarging,
furnishing or remodeling facilities for
27 any public or private nonprofit hospital or
public hospital authority, public
28 or private elementary or secondary school
or a public or private nonprofit
29 educational institution, which would be
exempt from taxation under the
30 provisions of this act if purchased
directly by such hospital or public hos-
31 pital authority, school or educational
institution; and all sales of tangible
32 personal property or services purchased by
a contractor for the purpose
33 of constructing, equipping, reconstructing,
maintaining, repairing, en-
34 larging, furnishing or remodeling
facilities for any political subdivision of
35 the state, the total cost of which is paid
from funds of such political
36 subdivision and which would be exempt from
taxation under the provi-
37 sions of this act if purchased directly by
such political subdivision. Nothing
38 in this subsection or in the provisions of
K.S.A. 12-3418 and amendments
39 thereto, shall be deemed to exempt the
purchase of any construction
40 machinery, equipment or tools used in the
constructing, equipping, re-
41 constructing, maintaining, repairing,
enlarging, furnishing or remodeling
42 facilities for any political subdivision of
the state. As used in this subsec-
43 tion, K.S.A. 12-3418 and 79-3640, and
amendments thereto, "funds of a
6
1 political subdivision" shall mean
general tax revenues, the proceeds of
2 any bonds and gifts or grants-in-aid.
Gifts shall not mean funds used for
3 the purpose of constructing,
equipping, reconstructing, repairing, enlarg-
4 ing, furnishing or remodeling
facilities which are to be leased to the do-
5 nor. When any political subdivision
of the state, public or private non-
6 profit hospital or public hospital
authority, public or private elementary
7 or secondary school or public or
private nonprofit educational institution
8 shall contract for the purpose of
constructing, equipping, reconstructing,
9 maintaining, repairing, enlarging,
furnishing or remodeling facilities, it
10 shall obtain from the state and furnish to
the contractor an exemption
11 certificate for the project involved, and
the contractor may purchase ma-
12 terials for incorporation in such project.
The contractor shall furnish the
13 number of such certificate to all suppliers
from whom such purchases are
14 made, and such suppliers shall execute
invoices covering the same bearing
15 the number of such certificate. Upon
completion of the project the con-
16 tractor shall furnish to the political
subdivision, hospital or public hospital
17 authority, school or educational
institution concerned a sworn statement,
18 on a form to be provided by the director of
taxation, that all purchases so
19 made were entitled to exemption under this
subsection. As an alternative
20 to the foregoing procedure, any such
contracting entity may apply to the
21 secretary of revenue for agent status for
the sole purpose of issuing and
22 furnishing project exemption certificates
to contractors pursuant to rules
23 and regulations adopted by the secretary
establishing conditions and stan-
24 dards for the granting and maintaining of
such status. All invoices shall
25 be held by the contractor for a period of
five years and shall be subject
26 to audit by the director of taxation. If
any materials purchased under such
27 a certificate are found not to have been
incorporated in the building or
28 other project or not to have been returned
for credit or the sales or
29 compensating tax otherwise imposed upon
such materials which will not
30 be so incorporated in the building or other
project reported and paid by
31 such contractor to the director of taxation
not later than the 20th day of
32 the month following the close of the month
in which it shall be deter-
33 mined that such materials will not be used
for the purpose for which such
34 certificate was issued, the political
subdivision, hospital or public hospital
35 authority, school or educational
institution concerned shall be liable for
36 tax on all materials purchased for the
project, and upon payment thereof
37 it may recover the same from the contractor
together with reasonable
38 attorney fees. Any contractor or any agent,
employee or subcontractor
39 thereof, who shall use or otherwise dispose
of any materials purchased
40 under such a certificate for any purpose
other than that for which such a
41 certificate is issued without the payment
of the sales or compensating tax
42 otherwise imposed upon such materials,
shall be guilty of a misdemeanor
43 and, upon conviction therefor, shall be
subject to the penalties provided
7
1 for in subsection (g) of K.S.A.
79-3615, and amendments thereto;
2 (e) all
sales of tangible personal property or services purchased by a
3 contractor for the erection, repair
or enlargement of buildings or other
4 projects for the government of the
United States, its agencies or instru-
5 mentalities, which would be exempt
from taxation if purchased directly
6 by the government of the United
States, its agencies or instrumentalities.
7 When the government of the United
States, its agencies or instrumen-
8 talities shall contract for the
erection, repair, or enlargement of any build-
9 ing or other project, it shall obtain
from the state and furnish to the
10 contractor an exemption certificate for the
project involved, and the con-
11 tractor may purchase materials for
incorporation in such project. The
12 contractor shall furnish the number of such
certificates to all suppliers
13 from whom such purchases are made, and such
suppliers shall execute
14 invoices covering the same bearing the
number of such certificate. Upon
15 completion of the project the contractor
shall furnish to the government
16 of the United States, its agencies or
instrumentalities concerned a sworn
17 statement, on a form to be provided by the
director of taxation, that all
18 purchases so made were entitled to
exemption under this subsection. As
19 an alternative to the foregoing procedure,
any such contracting entity may
20 apply to the secretary of revenue for agent
status for the sole purpose of
21 issuing and furnishing project exemption
certificates to contractors pur-
22 suant to rules and regulations adopted by
the secretary establishing con-
23 ditions and standards for the granting and
maintaining of such status. All
24 invoices shall be held by the contractor
for a period of five years and shall
25 be subject to audit by the director of
taxation. Any contractor or any agent,
26 employee or subcontractor thereof, who
shall use or otherwise dispose of
27 any materials purchased under such a
certificate for any purpose other
28 than that for which such a certificate is
issued without the payment of
29 the sales or compensating tax otherwise
imposed upon such materials,
30 shall be guilty of a misdemeanor and, upon
conviction therefor, shall be
31 subject to the penalties provided for in
subsection (g) of K.S.A. 79-3615
32 and amendments thereto;
33 (f) tangible
personal property purchased by a railroad or public utility
34 for consumption or movement directly and
immediately in interstate
35 commerce;
36 (g) sales of
aircraft including remanufactured and modified aircraft,
37 sales of aircraft repair, modification and
replacement parts and sales of
38 services employed in the remanufacture,
modification and repair of air-
39 craft sold to persons using directly or
through an authorized agent such
40 aircraft and aircraft repair, modification
and replacement parts as certified
41 or licensed carriers of persons or property
in interstate or foreign com-
42 merce under authority of the laws of the
United States or any foreign
43 government or sold to any foreign
government or agency or instrumen-
8
1 tality of such foreign government and
all sales of aircraft, aircraft parts,
2 replacement parts and services
employed in the remanufacture, modifi-
3 cation and repair of aircraft for use
outside of the United States;
4 (h) all
rentals of nonsectarian textbooks by public or private elemen-
5 tary or secondary schools;
6 (i) the
lease or rental of all films, records, tapes, or any type of
sound
7 or picture transcriptions used by
motion picture exhibitors;
8 (j) meals
served without charge or food used in the preparation of
9 such meals to employees of any
restaurant, eating house, dining car, hotel,
10 drugstore or other place where meals or
drinks are regularly sold to the
11 public if such employees' duties are
related to the furnishing or sale of
12 such meals or drinks;
13 (k) any motor
vehicle, semitrailer or pole trailer, as such terms are
14 defined by K.S.A. 8-126 and amendments
thereto, or aircraft sold and
15 delivered in this state to a bona fide
resident of another state, which motor
16 vehicle, semitrailer, pole trailer or
aircraft is not to be registered or based
17 in this state and which vehicle,
semitrailer, pole trailer or aircraft will not
18 remain in this state more than 10 days;
19 (l) all isolated
or occasional sales of tangible personal property, serv-
20 ices, substances or things, except isolated
or occasional sale of motor
21 vehicles specifically taxed under the
provisions of subsection (o) of K.S.A.
22 79-3603 and amendments thereto;
23 (m) all sales of
tangible personal property which become an ingre-
24 dient or component part of tangible
personal property or services pro-
25 duced, manufactured or compounded for
ultimate sale at retail within or
26 without the state of Kansas; and any such
producer, manufacturer or
27 compounder may obtain from the director of
taxation and furnish to the
28 supplier an exemption certificate number
for tangible personal property
29 for use as an ingredient or component part
of the property or services
30 produced, manufactured or compounded;
31 (n) all sales of
tangible personal property which is consumed in the
32 production, manufacture, processing,
mining, drilling, refining or com-
33 pounding of tangible personal property, the
treating of by-products or
34 wastes derived from any such production
process, the providing of serv-
35 ices or the irrigation of crops for
ultimate sale at retail within or without
36 the state of Kansas; and any purchaser of
such property may obtain from
37 the director of taxation and furnish to the
supplier an exemption certifi-
38 cate number for tangible personal property
for consumption in such pro-
39 duction, manufacture, processing, mining,
drilling, refining, compound-
40 ing, treating, irrigation and in providing
such services;
41 (o) all sales of
animals, fowl and aquatic plants and animals, the pri-
42 mary purpose of which is use in agriculture
or aquaculture, as defined in
43 K.S.A. 47-1901, and amendments thereto, the
production of food for
9
1 human consumption, the production of
animal, dairy, poultry or aquatic
2 plant and animal products, fiber or
fur, or the production of offspring for
3 use for any such purpose or
purposes;
4 (p) all
sales of drugs, as defined by K.S.A. 65-1626 and amendments
5 thereto, dispensed pursuant to a
prescription order, as defined by K.S.A.
6 65-1626 and amendments thereto, by a
licensed practitioner or a mid-
7 level practitioner as defined by
K.S.A. 65-1626, and amendments thereto;
8 (q) all
sales of insulin dispensed by a person licensed by the state
9 board of pharmacy to a person for
treatment of diabetes at the direction
10 of a person licensed to practice medicine
by the board of healing arts;
11 (r) all sales of
prosthetic and orthopedic appliances prescribed in
12 writing by a person licensed to practice
the healing arts, dentistry or
13 optometry. For the purposes of this
subsection, the term prosthetic and
14 orthopedic appliances means any apparatus,
instrument, device, or equip-
15 ment used to replace or substitute for any
missing part of the body; used
16 to alleviate the malfunction of any part of
the body; or used to assist any
17 disabled person in leading a normal life by
facilitating such person's mo-
18 bility; such term shall include accessories
attached or to be attached to
19 motor vehicles, but such term shall not
include motor vehicles or personal
20 property which when installed becomes a
fixture to real property;
21 (s) all sales of
tangible personal property or services purchased di-
22 rectly by a groundwater management district
organized or operating un-
23 der the authority of K.S.A. 82a-1020 et
seq. and amendments thereto or
24 by any public water supply system, as
defined by K.S.A. 65-162a and
25 amendments thereto, which property
or services are used in the construc-
26 tion, renovation, operation or
maintenance of the district;
27 (t) all sales of
farm machinery and equipment or aquaculture ma-
28 chinery and equipment, repair and
replacement parts therefor and serv-
29 ices performed in the repair and
maintenance of such machinery and
30 equipment. For the purposes of this
subsection the term "farm machinery
31 and equipment or aquaculture machinery and
equipment" shall include
32 machinery and equipment used in the
operation of Christmas tree farm-
33 ing but shall not include any passenger
vehicle, truck, truck tractor, trailer,
34 semitrailer or pole trailer, other than a
farm trailer, as such terms are
35 defined by K.S.A. 8-126 and amendments
thereto. Each purchaser of
36 farm machinery and equipment or aquaculture
machinery and equipment
37 exempted herein must certify in writing on
the copy of the invoice or
38 sales ticket to be retained by the seller
that the farm machinery and
39 equipment or aquaculture machinery and
equipment purchased will be
40 used only in farming, ranching or
aquaculture production. Farming or
41 ranching shall include the operation of a
feedlot and farm and ranch work
42 for hire and the operation of a
nursery;
43 (u) all leases or
rentals of tangible personal property used as a dwell-
10
1 ing if such tangible personal
property is leased or rented for a period of
2 more than 28 consecutive days;
3 (v) all
sales of food products to any contractor for use in preparing
4 meals for delivery to homebound
elderly persons over 60 years of age and
5 to homebound disabled persons or to
be served at a group-sitting at a
6 location outside of the home to
otherwise homebound elderly persons
7 over 60 years of age and to otherwise
homebound disabled persons, as
8 all or part of any food service
project funded in whole or in part by
9 government or as part of a private
nonprofit food service project available
10 to all such elderly or disabled persons
residing within an area of service
11 designated by the private nonprofit
organization, and all sales of food
12 products for use in preparing meals for
consumption by indigent or home-
13 less individuals whether or not such meals
are consumed at a place des-
14 ignated for such purpose;
15 (w) all sales of
natural gas, electricity, heat and water delivered
16 through mains, lines or pipes: (1) To
residential premises for noncom-
17 mercial use by the occupant of such
premises; (2) for agricultural use and
18 also, for such use, all sales of propane
gas; (3) for use in the severing of
19 oil; and (4) to any property which is
exempt from property taxation pur-
20 suant to K.S.A. 79-201b Second
through Sixth. As used in this paragraph,
21 "severing" shall have the meaning ascribed
thereto by subsection (k) of
22 K.S.A. 79-4216, and amendments thereto;
23 (x) all sales of
propane gas, LP-gas, coal, wood and other fuel sources
24 for the production of heat or lighting for
noncommercial use of an oc-
25 cupant of residential premises;
26 (y) all sales of
materials and services used in the repairing, servicing,
27 altering, maintaining, manufacturing,
remanufacturing, or modification of
28 railroad rolling stock for use in
interstate or foreign commerce under
29 authority of the laws of the United
States;
30 (z) all sales of
tangible personal property and services purchased di-
31 rectly by a port authority or by a
contractor therefor as provided by the
32 provisions of K.S.A. 12-3418 and amendments
thereto;
33 (aa) all sales of
materials and services applied to equipment which is
34 transported into the state from without the
state for repair, service, al-
35 teration, maintenance, remanufacture or
modification and which is sub-
36 sequently transported outside the state for
use in the transmission of
37 liquids or natural gas by means of pipeline
in interstate or foreign com-
38 merce under authority of the laws of the
United States;
39 (bb) all sales of
used mobile homes or manufactured homes. As used
40 in this subsection: (1) "Mobile homes" and
"manufactured homes" shall
41 have the meanings ascribed thereto by
K.S.A. 58-4202 and amendments
42 thereto; and (2) "sales of used mobile
homes or manufactured homes"
43 means sales other than the original retail
sale thereof;
11
1 (cc) all
sales of tangible personal property or services purchased for
2 the purpose of and in conjunction
with constructing, reconstructing, en-
3 larging or remodeling a business or
retail business which meets the
4 requirements established in K.S.A.
74-50,115 and amendments thereto,
5 and the sale and installation of
machinery and equipment purchased for
6 installation at any such business or
retail business. When a person shall
7 contract for the construction,
reconstruction, enlargement or remodeling
8 of any such business or retail
business, such person shall obtain from the
9 state and furnish to the contractor
an exemption certificate for the project
10 involved, and the contractor may purchase
materials, machinery and
11 equipment for incorporation in such
project. The contractor shall furnish
12 the number of such certificates to all
suppliers from whom such purchases
13 are made, and such suppliers shall execute
invoices covering the same
14 bearing the number of such certificate.
Upon completion of the project
15 the contractor shall furnish to the owner
of the business or retail business
16 a sworn statement, on a form to be provided
by the director of taxation,
17 that all purchases so made were entitled to
exemption under this subsec-
18 tion. All invoices shall be held by the
contractor for a period of five years
19 and shall be subject to audit by the
director of taxation. Any contractor
20 or any agent, employee or subcontractor
thereof, who shall use or oth-
21 erwise dispose of any materials, machinery
or equipment purchased un-
22 der such a certificate for any purpose
other than that for which such a
23 certificate is issued without the payment
of the sales or compensating tax
24 otherwise imposed thereon, shall be guilty
of a misdemeanor and, upon
25 conviction therefor, shall be subject to
the penalties provided for in sub-
26 section (g) of K.S.A. 79-3615 and
amendments thereto. As used in this
27 subsection, "business" and "retail
business" have the meanings respec-
28 tively ascribed thereto by K.S.A. 74-50,114
and amendments thereto;
29 (dd) all sales of
tangible personal property purchased with food
30 stamps issued by the United States
department of agriculture;
31 (ee) all sales of
lottery tickets and shares made as part of a lottery
32 operated by the state of Kansas;
33 (ff) on and after
July 1, 1988, all sales of new mobile homes or man-
34 ufactured homes to the extent of 40% of the
gross receipts, determined
35 without regard to any trade-in allowance,
received from such sale. As used
36 in this subsection, "mobile homes" and
"manufactured homes" shall have
37 the meanings ascribed thereto by K.S.A.
58-4202 and amendments
38 thereto;
39 (gg) all sales of
tangible personal property purchased in accordance
40 with vouchers issued pursuant to the
federal special supplemental food
41 program for women, infants and
children;
42 (hh) all sales of
medical supplies and equipment purchased directly
43 by a nonprofit skilled nursing home or
nonprofit intermediate nursing
12
1 care home, as defined by K.S.A.
39-923, and amendments thereto, for
2 the purpose of providing medical
services to residents thereof. This ex-
3 emption shall not apply to tangible
personal property customarily used
4 for human habitation purposes;
5 (ii) all
sales of tangible personal property purchased directly by a
non-
6 profit organization for nonsectarian
comprehensive multidiscipline youth
7 development programs and activities
provided or sponsored by such or-
8 ganization, and all sales of tangible
personal property by or on behalf of
9 any such organization. This exemption
shall not apply to tangible personal
10 property customarily used for human
habitation purposes;
11 (jj) all sales of
tangible personal property or services, including the
12 renting and leasing of tangible personal
property, purchased directly on
13 behalf of a community-based mental
retardation facility or mental health
14 center organized pursuant to K.S.A. 19-4001
et seq., and amendments
15 thereto, and licensed in accordance with
the provisions of K.S.A. 75-
16 3307b and amendments thereto. This
exemption shall not apply to tan-
17 gible personal property customarily used
for human habitation purposes;
18 (kk) on and after
January 1, 1989, all sales of machinery and equip-
19 ment used directly and primarily for the
purposes of manufacturing, as-
20 sembling, processing, finishing, storing,
warehousing or distributing ar-
21 ticles of tangible personal property in
this state intended for resale by a
22 manufacturing or processing plant or
facility or a storage, warehousing or
23 distribution facility, and all sales of
repair and replacement parts and
24 accessories purchased for such machinery
and equipment:
25 (1) For purposes
of this subsection, machinery and equipment shall
26 be deemed to be used directly and primarily
in the manufacture, assem-
27 blage, processing, finishing, storing,
warehousing or distributing of tan-
28 gible personal property where such
machinery and equipment is used
29 during a manufacturing, assembling,
processing or finishing, storing,
30 warehousing or distributing operation:
31 (A) To effect a
direct and immediate physical change upon the tan-
32 gible personal property;
33 (B) to guide or
measure a direct and immediate physical change upon
34 such property where such function is an
integral and essential part of
35 tuning, verifying or aligning the component
parts of such property;
36 (C) to test or
measure such property where such function is an in-
37 tegral part of the production flow or
function;
38 (D) to transport,
convey or handle such property during the manu-
39 facturing, processing, storing, warehousing
or distribution operation at
40 the plant or facility; or
41 (E) to place such
property in the container, package or wrapping in
42 which such property is normally sold or
transported.
43 (2) For purposes
of this subsection "machinery and equipment used
13
1 directly and primarily" shall
include, but not be limited to:
2
(A) Mechanical machines or components thereof contributing to
a
3 manufacturing, assembling or
finishing process;
4 (B) molds
and dies that determine the physical characteristics of the
5 finished product or its packaging
material;
6 (C) testing
equipment to determine the quality of the finished
7 product;
8
(D) computers and related peripheral equipment that directly
control
9 or measure the manufacturing process
or which are utilized for engi-
10 neering of the finished product; and
11 (E) computers and
related peripheral equipment utilized for research
12 and development and product design.
13 (3) "Machinery
and equipment used directly and primarily" shall not
14 include:
15 (A) Hand
tools;
16 (B) machinery,
equipment and tools used in maintaining and repair-
17 ing any type of machinery and
equipment;
18
(C) transportation equipment not used in the manufacturing,
assem-
19 bling, processing, furnishing, storing,
warehousing or distributing process
20 at the plant or facility;
21 (D) office
machines and equipment including computers and related
22 peripheral equipment not directly and
primarily used in controlling or
23 measuring the manufacturing process;
24 (E) furniture and
buildings; and
25 (F) machinery and
equipment used in administrative, accounting,
26 sales or other such activities of the
business;
27 (4) for purposes
of this subsection, "repair and replacement parts and
28 accessories" means all parts and
accessories for exempt machinery and
29 equipment, including but not limited to
dies, jigs, molds, and patterns
30 which are attached to exempt machinery or
which are otherwise used in
31 production, short-lived replaceable parts
that can be readily detached
32 from exempt machinery or equipment, such as
belts, drill bits, grinding
33 wheels, cutting bars and saws, and other
replacement parts for production
34 equipment, including refractory brick and
other refractory items for kiln
35 equipment used in production
operations;
36 (ll) all sales of
educational materials purchased for distribution to the
37 public at no charge by a nonprofit
corporation organized for the purpose
38 of encouraging, fostering and conducting
programs for the improvement
39 of public health;
40 (mm) all sales of
seeds and tree seedlings; fertilizers, insecticides,
41 herbicides, germicides, pesticides and
fungicides; and services, purchased
42 and used for the purpose of producing
plants in order to prevent soil
43 erosion on land devoted to agricultural
use;
14
1 (nn) except
as otherwise provided in this act, all sales of services ren-
2 dered by an advertising agency or
licensed broadcast station or any mem-
3 ber, agent or employee thereof;
4 (oo) all
sales of tangible personal property purchased by a community
5 action group or agency for the
exclusive purpose of repairing or weath-
6 erizing housing occupied by low
income individuals;
7 (pp) all
sales of drill bits and explosives actually utilized in the
explo-
8 ration and production of oil or
gas;
9 (qq) all
sales of tangible personal property and services purchased by
10 a nonprofit museum or historical society or
any combination thereof, in-
11 cluding a nonprofit organization which is
organized for the purpose of
12 stimulating public interest in the
exploration of space by providing edu-
13 cational information, exhibits and
experiences, which is exempt from fed-
14 eral income taxation pursuant to section
501(c)(3) of the federal internal
15 revenue code of 1986;
16 (rr) all sales of
tangible personal property which will admit the pur-
17 chaser thereof to any annual event
sponsored by a nonprofit organization
18 which is exempt from federal income
taxation pursuant to section
19 501(c)(3) of the federal internal revenue
code of 1986;
20 (ss) all sales of
tangible personal property and services purchased by
21 a public broadcasting station licensed by
the federal communications
22 commission as a noncommercial educational
television or radio station;
23 (tt) all sales of
tangible personal property and services purchased by
24 or on behalf of a not-for-profit
corporation which is exempt from federal
25 income taxation pursuant to section
501(c)(3) of the federal internal rev-
26 enue code of 1986, for the sole purpose of
constructing a Kansas Korean
27 War memorial;
28 (uu) all sales of
tangible personal property and services purchased by
29 or on behalf of any rural volunteer
fire-fighting organization for use ex-
30 clusively in the performance of its duties
and functions;
31 (vv) all sales of
tangible personal property purchased by any of the
32 following organizations which are exempt
from federal income taxation
33 pursuant to section 501 (c)(3) of the
federal internal revenue code of
34 1986, for the following purposes, and all
sales of any such property by or
35 on behalf of any such organization for any
such purpose:
36 (1) The American
Heart Association, Kansas Affiliate, Inc. for the
37 purposes of providing education, training,
certification in emergency car-
38 diac care, research and other related
services to reduce disability and
39 death from cardiovascular diseases and
stroke;
40 (2) the Kansas
Alliance for the Mentally Ill, Inc. for the purpose of
41 advocacy for persons with mental illness
and to education, research and
42 support for their families;
43 (3) the Kansas
Mental Illness Awareness Council for the purposes of
15
1 advocacy for persons who are mentally
ill and to education, research and
2 support for them and their
families;
3 (4) the
American Diabetes Association Kansas Affiliate, Inc. for the
4 purpose of eliminating diabetes
through medical research, public edu-
5 cation focusing on disease prevention
and education, patient education
6 including information on coping with
diabetes, and professional education
7 and training;
8 (5) the
American Lung Association of Kansas, Inc. for the purpose of
9 eliminating all lung diseases through
medical research, public education
10 including information on coping with lung
diseases, professional educa-
11 tion and training related to lung disease
and other related services to
12 reduce the incidence of disability and
death due to lung disease;
13 (6) the Kansas
chapters of the Alzheimer's Disease and Related Dis-
14 orders Association, Inc. for the purpose of
providing assistance and sup-
15 port to persons in Kansas with Alzheimer's
disease, and their families and
16 caregivers; and
17 (ww) all sales of
tangible personal property purchased by the Habitat
18 for Humanity for the exclusive use of being
incorporated within a housing
19 project constructed by such
organization.
20 (xx) all sales of
tangible personal property and services purchased by
21 a nonprofit zoo which is exempt from
federal income taxation pursuant
22 to section 501(c)(3) of the federal
internal revenue code of 1986, or on
23 behalf of such zoo by an entity itself
exempt from federal income taxation
24 pursuant to section 501(c)(3) of the
federal internal revenue code of 1986
25 contracted with to operate such zoo and all
sales of tangible personal
26 property or services purchased by a
contractor for the purpose of con-
27 structing, equipping, reconstructing,
maintaining, repairing, enlarging,
28 furnishing or remodeling facilities for any
nonprofit zoo which would be
29 exempt from taxation under the provisions
of this section if purchased
30 directly by such nonprofit zoo or the
entity operating such zoo. Nothing
31 in this subsection shall be deemed to
exempt the purchase of any con-
32 struction machinery, equipment or tools
used in the constructing, equip-
33 ping, reconstructing, maintaining,
repairing, enlarging, furnishing or re-
34 modeling facilities for any nonprofit zoo.
When any nonprofit zoo shall
35 contract for the purpose of constructing,
equipping, reconstructing, main-
36 taining, repairing, enlarging, furnishing
or remodeling facilities, it shall
37 obtain from the state and furnish to the
contractor an exemption certifi-
38 cate for the project involved, and the
contractor may purchase materials
39 for incorporation in such project. The
contractor shall furnish the number
40 of such certificate to all suppliers from
whom such purchases are made,
41 and such suppliers shall execute invoices
covering the same bearing the
42 number of such certificate. Upon completion
of the project the contractor
43 shall furnish to the nonprofit zoo
concerned a sworn statement, on a form
16
1 to be provided by the director of
taxation, that all purchases so made were
2 entitled to exemption under this
subsection. All invoices shall be held by
3 the contractor for a period of five
years and shall be subject to audit by
4 the director of taxation. If any
materials purchased under such a certifi-
5 cate are found not to have been
incorporated in the building or other
6 project or not to have been returned
for credit or the sales or compen-
7 sating tax otherwise imposed upon
such materials which will not be so
8 incorporated in the building or other
project reported and paid by such
9 contractor to the director of
taxation not later than the 20th day of the
10 month following the close of the month in
which it shall be determined
11 that such materials will not be used for
the purpose for which such cer-
12 tificate was issued, the nonprofit zoo
concerned shall be liable for tax on
13 all materials purchased for the project,
and upon payment thereof it may
14 recover the same from the contractor
together with reasonable attorney
15 fees. Any contractor or any agent, employee
or subcontractor thereof,
16 who shall use or otherwise dispose of any
materials purchased under such
17 a certificate for any purpose other than
that for which such a certificate
18 is issued without the payment of the sales
or compensating tax otherwise
19 imposed upon such materials, shall be
guilty of a misdemeanor and, upon
20 conviction therefor, shall be subject to
the penalties provided for in sub-
21 section (g) of K.S.A. 79-3615, and
amendments thereto;
22 (yy) all sales of
tangible personal property and services purchased by
23 a parent-teacher association or
organization, and all sales of tangible per-
24 sonal property by or on behalf of such
association or organization;
25 (zz) all sales of
machinery and equipment purchased by over-the-air,
26 free access radio or television station
which is used directly and primarily
27 for the purpose of producing a broadcast
signal or is such that the failure
28 of the machinery or equipment to operate
would cause broadcasting to
29 cease. For purposes of this subsection,
machinery and equipment shall
30 include, but not be limited to, that
required by rules and regulations of
31 the federal communications commission, and
all sales of electricity which
32 are essential or necessary for the purpose
of producing a broadcast signal
33 or is such that the failure of the
electricity would cause broadcasting to
34 cease;
35 (aaa) all sales
of tangible personal property and services purchased
36 by a religious organization which is exempt
from federal income taxation
37 pursuant to section 501(c)(3) of the
federal internal revenue code, and
38 used exclusively for religious purposes,
and all sales of tangible personal
39 property or services purchased by a
contractor for the purpose of con-
40 structing, equipping, reconstructing,
maintaining, repairing, enlarging,
41 furnishing or remodeling facilities for any
such organization which would
42 be exempt from taxation under the
provisions of this section if purchased
43 directly by such organization. Nothing in
this subsection shall be deemed
17
1 to exempt the purchase of any
construction machinery, equipment or
2 tools used in the constructing,
equipping, reconstructing, maintaining,
3 repairing, enlarging, furnishing or
remodeling facilities for any such or-
4 ganization. When any such
organization shall contract for the purpose of
5 constructing, equipping,
reconstructing, maintaining, repairing, enlarg-
6 ing, furnishing or remodeling
facilities, it shall obtain from the state and
7 furnish to the contractor an
exemption certificate for the project involved,
8 and the contractor may purchase
materials for incorporation in such pro-
9 ject. The contractor shall furnish
the number of such certificate to all
10 suppliers from whom such purchases are
made, and such suppliers shall
11 execute invoices covering the same bearing
the number of such certifi-
12 cate. Upon completion of the project the
contractor shall furnish to such
13 organization concerned a sworn statement,
on a form to be provided by
14 the director of taxation, that all
purchases so made were entitled to ex-
15 emption under this subsection. All invoices
shall be held by the contractor
16 for a period of five years and shall be
subject to audit by the director of
17 taxation. If any materials purchased under
such a certificate are found
18 not to have been incorporated in the
building or other project or not to
19 have been returned for credit or the sales
or compensating tax otherwise
20 imposed upon such materials which will not
be so incorporated in the
21 building or other project reported and paid
by such contractor to the
22 director of taxation not later than the
20th day of the month following
23 the close of the month in which it shall be
determined that such materials
24 will not be used for the purpose for which
such certificate was issued,
25 such organization concerned shall be liable
for tax on all materials pur-
26 chased for the project, and upon payment
thereof it may recover the same
27 from the contractor together with
reasonable attorney fees. Any contrac-
28 tor or any agent, employee or subcontractor
thereof, who shall use or
29 otherwise dispose of any materials
purchased under such a certificate for
30 any purpose other than that for which such
a certificate is issued without
31 the payment of the sales or compensating
tax otherwise imposed upon
32 such materials, shall be guilty of a
misdemeanor and, upon conviction
33 therefor, shall be subject to the penalties
provided for in subsection (g)
34 of K.S.A. 79-3615, and amendments thereto.
Sales tax paid on and after
35 July 1, 1998, but prior to the effective
date of this act upon the gross
36 receipts received from any sale exempted by
the amendatory provisions
37 of this subsection shall be refunded. Each
claim for a sales tax refund
38 shall be verified and submitted to the
director of taxation upon forms
39 furnished by the director and shall be
accompanied by any additional
40 documentation required by the director. The
director shall review each
41 claim and shall refund that amount of sales
tax paid as determined under
42 the provisions of this subsection. All
refunds shall be paid from the sales
43 tax refund fund upon warrants of the
director of accounts and reports
18
1 pursuant to vouchers approved by the
director or the director's designee;
2 (bbb) all
sales of food for human consumption by an organization
3 which is exempt from federal income
taxation pursuant to section 501
4 (c)(3) of the federal internal
revenue code of 1986, pursuant to a food
5 distribution program which offers
such food at a price below cost in
6 exchange for the performance of
community service by the purchaser
7 thereof;
8 (ccc) on
and after July 1, 1999, all sales of tangible personal property
9 and services purchased by a primary
care clinic or health center the pri-
10 mary purpose of which is to provide
services to medically underserved
11 individuals and families, and which is
exempt from federal income taxa-
12 tion pursuant to section 501 (c)(3) of the
federal internal revenue code,
13 and all sales of tangible personal property
or services purchased by a
14 contractor for the purpose of constructing,
equipping, reconstructing,
15 maintaining, repairing, enlarging,
furnishing or remodeling facilities for
16 any such clinic or center which would be
exempt from taxation under the
17 provisions of this section if purchased
directly by such clinic or center.
18 Nothing in this subsection shall be deemed
to exempt the purchase of
19 any construction machinery, equipment or
tools used in the constructing,
20 equipping, reconstructing, maintaining,
repairing, enlarging, furnishing
21 or remodeling facilities for any such
clinic or center. When any such clinic
22 or center shall contract for the purpose of
constructing, equipping, re-
23 constructing, maintaining, repairing,
enlarging, furnishing or remodeling
24 facilities, it shall obtain from the state
and furnish to the contractor an
25 exemption certificate for the project
involved, and the contractor may
26 purchase materials for incorporation in
such project. The contractor shall
27 furnish the number of such certificate to
all suppliers from whom such
28 purchases are made, and such suppliers
shall execute invoices covering
29 the same bearing the number of such
certificate. Upon completion of the
30 project the contractor shall furnish to
such clinic or center concerned a
31 sworn statement, on a form to be provided
by the director of taxation,
32 that all purchases so made were entitled to
exemption under this subsec-
33 tion. All invoices shall be held by the
contractor for a period of five years
34 and shall be subject to audit by the
director of taxation. If any materials
35 purchased under such a certificate are
found not to have been incorpo-
36 rated in the building or other project or
not to have been returned for
37 credit or the sales or compensating tax
otherwise imposed upon such
38 materials which will not be so incorporated
in the building or other pro-
39 ject reported and paid by such contractor
to the director of taxation not
40 later than the 20th day of the month
following the close of the month in
41 which it shall be determined that such
materials will not be used for the
42 purpose for which such certificate was
issued, such clinic or center con-
43 cerned shall be liable for tax on all
materials purchased for the project,
19
1 and upon payment thereof it may
recover the same from the contractor
2 together with reasonable attorney
fees. Any contractor or any agent, em-
3 ployee or subcontractor thereof, who
shall use or otherwise dispose of
4 any materials purchased under such a
certificate for any purpose other
5 than that for which such a
certificate is issued without the payment of
6 the sales or compensating tax
otherwise imposed upon such materials,
7 shall be guilty of a misdemeanor and,
upon conviction therefor, shall be
8 subject to the penalties provided for
in subsection (g) of K.S.A. 79-3615,
9 and amendments thereto;
10 (ddd) on and
after January 1, 1999, and before January 1, 2000, all
11 sales of materials and services purchased
by any class II or III railroad as
12 classified by the federal surface
transportation board for the construction,
13 renovation, repair or replacement of class
II or III railroad track and
14 facilities used directly in interstate
commerce. In the event any such track
15 or facility for which materials and
services were purchased sales tax ex-
16 empt is not operational for five years
succeeding the allowance of such
17 exemption, the total amount of sales tax
which would have been payable
18 except for the operation of this subsection
shall be recouped in accord-
19 ance with rules and regulations adopted for
such purpose by the secretary
20 of revenue; and
21 (eee) on and
after January 1, 1999, and before January 1, 2000, all
22 sales of materials and services purchased
for the original construction,
23 reconstruction, repair or replacement of
grain storage facilities, including
24 railroad sidings providing access
thereto.
25 Sec. 4. K.S.A. 65-162a and
K.S.A. 1999 Supp. 65-163 and 79-3606
26 are hereby repealed.
27 Sec. 5. This act shall
take effect and be in force from and after its
28 publication in the statute book.