Brief ⁽¹⁾

SB 69 would amend two Kansas statutes to change the method used by the Kansas Department of Revenue to provide Kansas, Inc. with certain information. Kansas, Inc. is statutorily required to evaluate the cost effectiveness of various economic development income tax credits and sales tax exemptions. Kansas, Inc. also is required to prepare an annual report of this evaluation and submit this report to four specified legislative committees at the beginning of each legislative session. Under existing law, the Kansas Department of Revenue must develop a questionnaire to be completed by all Kansas corporate taxpayers on the use of these tax incentives. The bill would delete that requirement. The Department would be required instead, for tax years after 2000, to furnish Kansas, Inc. with the names, addresses, and telephone numbers of those individuals and firms using economic development tax credits. In addition, the bill would require the Department, for tax years after 2000, to furnish Kansas, Inc. with copies of approved applications for project exemption certificates for specified sales tax exemptions. Disclosure of information prohibited by the Federal Internal Revenue Code would not be authorized in this bill.

Background

SB 69 was requested by Kansas, Inc. to improve the reliability of responses from taxpayers concerning usage of economic development tax incentives. Mikel Miller, Kansas, Inc., testified the Department of Revenue reported receipt of 978 corporate claims on four types of tax credit from 1994 through September 30, 1998. However, only 299 usable questionnaire responses were received by Kansas, Inc. - 30.6 percent of actual claims. Ms. Miller identified two other problems with the existing information collection system:

1. The questionnaire attempted only to capture corporate taxpayers and not individual taxpayers, such as sole proprietors or partners in a company.

2. The Department of Revenue has to harvest the questionnaires from all the corporate returns before providing them to Kansas, Inc. Moreover, all corporate taxpayers, even if they do not claim a credit, are required to complete the questionnaire.

The Senate Committee amended the bill during the 1999 Session to change the effective date from July 1, 1999 (effective date of the bill) to January 1, 2000 to begin implementation of the new information collection system. This amendment responded to a point made by the other conferee on the bill, Shirley Sicilian, Kansas Department of Revenue, that the Department would have to collect this information manually until November 1999, when an automation process is scheduled to be implemented. With the Senate Committee's amendment, the Department does not have to begin to collect this information manually and then, after only a few months, make the transition to an automated process.

The House Committee amended the bill during the 2000 Session to move the new requirements for the Department of Revenue from tax year 2000 to tax year 2001 and to update statutory references.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/bill_search.html.