Special Session of 2024
SENATE BILL No. 6
By Senator Haley
6-18

1 AN ACT concerning sales taxation; relating to exemptions; providing an
2 exemption for sales of electricity to residential premises by municipally
3 owned or operated utilities; amending K.S.A. 12-189a and K.S.A. 2023
4 Supp. 79-3606, as amended by section 15 of 2023 Senate Bill No. 27,
5 and repealing the existing sections.
6
7 WHEREAS, electricity is a necessity for modern life.
8 Now, therefore:
9 Be it enacted by the Legislature of the State of Kansas:
10 Section 1. K.S.A. 12-189a is hereby amended to read as follows: 12-
11 189a. The following sales shall be subject to the taxes levied and collected
12 by all cities and counties under the provisions of K.S.A. 12-187 et seq.,
13 and amendments thereto:
14 (a) All sales of natural gas, electricity, heat and water delivered
15 through mains, lines or pipes to residential premises for noncommercial
16 use by the occupant of such premises and all sales of natural gas,
17 electricity, heat and water delivered through mains, lines or pipes for
18 agricultural use, except that:
19 (1) Effective January 1, 2006, the provisions of this subsection shall
20 expire for sales of water pursuant to this subsection; and
21 (2) effective October 1, 2024, the provisions of this subsection shall
22 expire for sales by municipally owned or operated utilities of electricity
23 delivered to residential premises for noncommercial use by the occupant
24 of such premises pursuant to this subsection;
25 (b) all sales of propane gas, LP-gas, coal, wood and other fuel sources
26 for the production of heat or lighting for noncommercial use of an
27 occupant of residential premises;
28 (c) all sales of intrastate telephone and telegraph services for
29 noncommercial use; and
30 (d) all sales of food and food ingredients.
31 Sec. 2. K.S.A. 2023 Supp. 79-3606, as amended by section 15 of
32 2023 Senate Bill No. 27, is hereby amended to read as follows: 79-3606.
33 The following shall be exempt from the tax imposed by this act:
34 (a) All sales of motor-vehicle fuel or other articles upon which a sales
35 or excise tax has been paid, not subject to refund, under the laws of this
36 state except cigarettes and electronic cigarettes as defined by K.S.A. 79-
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1 3301, and amendments thereto, including consumable material for such
2 electronic cigarettes, cereal malt beverages and malt products as defined
3 by K.S.A. 79-3817, and amendments thereto, including wort, liquid malt,
4 malt syrup and malt extract, that is not subject to taxation under the
5 provisions of K.S.A. 79-41a02, and amendments thereto, motor vehicles
6 taxed pursuant to K.S.A. 79-5117, and amendments thereto, tires taxed
7 pursuant to K.S.A. 65-3424d, and amendments thereto, drycleaning and
8 laundry services taxed pursuant to K.S.A. 65-34,150, and amendments
9 thereto, and gross receipts from regulated sports contests taxed pursuant to
10 the Kansas professional regulated sports act, and amendments thereto;
11 (b) all sales of tangible personal property or service, including the
12 renting and leasing of tangible personal property, purchased directly by the
13 state of Kansas, a political subdivision thereof, other than a school or
14 educational institution, or purchased by a public or private nonprofit
15 hospital, public hospital authority, nonprofit blood, tissue or organ bank or
16 nonprofit integrated community care organization and used exclusively for
17 state, political subdivision, hospital, public hospital authority, nonprofit
18 blood, tissue or organ bank or nonprofit integrated community care
19 organization purposes, except when: (1) Such state, hospital or public
20 hospital authority is engaged or proposes to engage in any business
21 specifically taxable under the provisions of this act and such items of
22 tangible personal property or service are used or proposed to be used in
23 such business; or (2) such political subdivision is engaged or proposes to
24 engage in the business of furnishing gas, electricity or heat to others and
25 such items of personal property or service are used or proposed to be used
26 in such business;
27 (c) all sales of tangible personal property or services, including the
28 renting and leasing of tangible personal property, purchased directly by a
29 public or private elementary or secondary school or public or private
30 nonprofit educational institution and used primarily by such school or
31 institution for nonsectarian programs and activities provided or sponsored
32 by such school or institution or in the erection, repair or enlargement of
33 buildings to be used for such purposes. The exemption herein provided
34 shall not apply to erection, construction, repair, enlargement or equipment
35 of buildings used primarily for human habitation, except that such
36 exemption shall apply to the erection, construction, repair, enlargement or
37 equipment of buildings used for human habitation by the cerebral palsy
38 research foundation of Kansas located in Wichita, Kansas, multi
39 community diversified services, incorporated, located in McPherson,
40 Kansas, the Kansas state school for the blind and the Kansas state school
41 for the deaf;
42 (d) all sales of tangible personal property or services purchased by a
43 contractor for the purpose of constructing, equipping, reconstructing,
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1 maintaining, repairing, enlarging, furnishing or remodeling facilities for
2 any public or private nonprofit hospital or public hospital authority, public
3 or private elementary or secondary school, a public or private nonprofit
4 educational institution, state correctional institution including a privately
5 constructed correctional institution contracted for state use and ownership,
6 that would be exempt from taxation under the provisions of this act if
7 purchased directly by such hospital or public hospital authority, school,
8 educational institution or a state correctional institution; and all sales of
9 tangible personal property or services purchased by a contractor for the
10 purpose of constructing, equipping, reconstructing, maintaining, repairing,
11 enlarging, furnishing or remodeling facilities for any political subdivision
12 of the state or district described in subsection (s), the total cost of which is
13 paid from funds of such political subdivision or district and that would be
14 exempt from taxation under the provisions of this act if purchased directly
15 by such political subdivision or district. Nothing in this subsection or in
16 the provisions of K.S.A. 12-3418, and amendments thereto, shall be
17 deemed to exempt the purchase of any construction machinery, equipment
18 or tools used in the constructing, equipping, reconstructing, maintaining,
19 repairing, enlarging, furnishing or remodeling facilities for any political
20 subdivision of the state or any such district. As used in this subsection,
21 K.S.A. 12-3418 and 79-3640, and amendments thereto, "funds of a
22 political subdivision" shall mean general tax revenues, the proceeds of any
23 bonds and gifts or grants-in-aid. Gifts shall not mean funds used for the
24 purpose of constructing, equipping, reconstructing, repairing, enlarging,
25 furnishing or remodeling facilities that are to be leased to the donor. When
26 any political subdivision of the state, district described in subsection (s),
27 public or private nonprofit hospital or public hospital authority, public or
28 private elementary or secondary school, public or private nonprofit
29 educational institution, state correctional institution including a privately
30 constructed correctional institution contracted for state use and ownership
31 shall contract for the purpose of constructing, equipping, reconstructing,
32 maintaining, repairing, enlarging, furnishing or remodeling facilities, it
33 shall obtain from the state and furnish to the contractor an exemption
34 certificate for the project involved, and the contractor may purchase
35 materials for incorporation in such project. The contractor shall furnish the
36 number of such certificate to all suppliers from whom such purchases are
37 made, and such suppliers shall execute invoices covering the same bearing
38 the number of such certificate. Upon completion of the project the
39 contractor shall furnish to the political subdivision, district described in
40 subsection (s), hospital or public hospital authority, school, educational
41 institution or department of corrections concerned a sworn statement, on a
42 form to be provided by the director of taxation, that all purchases so made
43 were entitled to exemption under this subsection. As an alternative to the
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1 foregoing procedure, any such contracting entity may apply to the
2 secretary of revenue for agent status for the sole purpose of issuing and
3 furnishing project exemption certificates to contractors pursuant to rules
4 and regulations adopted by the secretary establishing conditions and
5 standards for the granting and maintaining of such status. All invoices
6 shall be held by the contractor for a period of five years and shall be
7 subject to audit by the director of taxation. If any materials purchased
8 under such a certificate are found not to have been incorporated in the
9 building or other project or not to have been returned for credit or the sales
10 or compensating tax otherwise imposed upon such materials that will not
11 be so incorporated in the building or other project reported and paid by
12 such contractor to the director of taxation not later than the 20 th day of the
13 month following the close of the month in which it shall be determined
14 that such materials will not be used for the purpose for which such
15 certificate was issued, the political subdivision, district described in
16 subsection (s), hospital or public hospital authority, school, educational
17 institution or the contractor contracting with the department of corrections
18 for a correctional institution concerned shall be liable for tax on all
19 materials purchased for the project, and upon payment thereof it may
20 recover the same from the contractor together with reasonable attorney
21 fees. Any contractor or any agent, employee or subcontractor thereof, who
22 shall use or otherwise dispose of any materials purchased under such a
23 certificate for any purpose other than that for which such a certificate is
24 issued without the payment of the sales or compensating tax otherwise
25 imposed upon such materials, shall be guilty of a misdemeanor and, upon
26 conviction therefor, shall be subject to the penalties provided for in K.S.A.
27 79-3615(h), and amendments thereto;
28 (e) all sales of tangible personal property or services purchased by a
29 contractor for the erection, repair or enlargement of buildings or other
30 projects for the government of the United States, its agencies or
31 instrumentalities, that would be exempt from taxation if purchased directly
32 by the government of the United States, its agencies or instrumentalities.
33 When the government of the United States, its agencies or
34 instrumentalities shall contract for the erection, repair, or enlargement of
35 any building or other project, it shall obtain from the state and furnish to
36 the contractor an exemption certificate for the project involved, and the
37 contractor may purchase materials for incorporation in such project. The
38 contractor shall furnish the number of such certificates to all suppliers
39 from whom such purchases are made, and such suppliers shall execute
40 invoices covering the same bearing the number of such certificate. Upon
41 completion of the project the contractor shall furnish to the government of
42 the United States, its agencies or instrumentalities concerned a sworn
43 statement, on a form to be provided by the director of taxation, that all
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1 purchases so made were entitled to exemption under this subsection. As an
2 alternative to the foregoing procedure, any such contracting entity may
3 apply to the secretary of revenue for agent status for the sole purpose of
4 issuing and furnishing project exemption certificates to contractors
5 pursuant to rules and regulations adopted by the secretary establishing
6 conditions and standards for the granting and maintaining of such status.
7 All invoices shall be held by the contractor for a period of five years and
8 shall be subject to audit by the director of taxation. Any contractor or any
9 agent, employee or subcontractor thereof, who shall use or otherwise
10 dispose of any materials purchased under such a certificate for any purpose
11 other than that for which such a certificate is issued without the payment
12 of the sales or compensating tax otherwise imposed upon such materials,
13 shall be guilty of a misdemeanor and, upon conviction therefor, shall be
14 subject to the penalties provided for in K.S.A. 79-3615(h), and
15 amendments thereto;
16 (f) tangible personal property purchased by a railroad or public utility
17 for consumption or movement directly and immediately in interstate
18 commerce;
19 (g) sales of aircraft including remanufactured and modified aircraft
20 sold to persons using directly or through an authorized agent such aircraft
21 as certified or licensed carriers of persons or property in interstate or
22 foreign commerce under authority of the laws of the United States or any
23 foreign government or sold to any foreign government or agency or
24 instrumentality of such foreign government and all sales of aircraft for use
25 outside of the United States and sales of aircraft repair, modification and
26 replacement parts and sales of services employed in the remanufacture,
27 modification and repair of aircraft;
28 (h) all rentals of nonsectarian textbooks by public or private
29 elementary or secondary schools;
30 (i) the lease or rental of all films, records, tapes, or any type of sound
31 or picture transcriptions used by motion picture exhibitors;
32 (j) meals served without charge or food used in the preparation of
33 such meals to employees of any restaurant, eating house, dining car, hotel,
34 drugstore or other place where meals or drinks are regularly sold to the
35 public if such employees' duties are related to the furnishing or sale of
36 such meals or drinks;
37 (k) any motor vehicle, semitrailer or pole trailer, as such terms are
38 defined by K.S.A. 8-126, and amendments thereto, or aircraft sold and
39 delivered in this state to a bona fide resident of another state, which motor
40 vehicle, semitrailer, pole trailer or aircraft is not to be registered or based
41 in this state and which vehicle, semitrailer, pole trailer or aircraft will not
42 remain in this state more than 10 days;
43 (l) all isolated or occasional sales of tangible personal property,
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1 services, substances or things, except isolated or occasional sale of motor
2 vehicles specifically taxed under the provisions of K.S.A. 79-3603(o), and
3 amendments thereto;
4 (m) all sales of tangible personal property that become an ingredient
5 or component part of tangible personal property or services produced,
6 manufactured or compounded for ultimate sale at retail within or without
7 the state of Kansas; and any such producer, manufacturer or compounder
8 may obtain from the director of taxation and furnish to the supplier an
9 exemption certificate number for tangible personal property for use as an
10 ingredient or component part of the property or services produced,
11 manufactured or compounded;
12 (n) all sales of tangible personal property that is consumed in the
13 production, manufacture, processing, mining, drilling, refining or
14 compounding of tangible personal property, the treating of by-products or
15 wastes derived from any such production process, the providing of
16 services or the irrigation of crops for ultimate sale at retail within or
17 without the state of Kansas; and any purchaser of such property may
18 obtain from the director of taxation and furnish to the supplier an
19 exemption certificate number for tangible personal property for
20 consumption in such production, manufacture, processing, mining,
21 drilling, refining, compounding, treating, irrigation and in providing such
22 services;
23 (o) all sales of animals, fowl and aquatic plants and animals, the
24 primary purpose of which is use in agriculture or aquaculture, as defined in
25 K.S.A. 47-1901, and amendments thereto, the production of food for
26 human consumption, the production of animal, dairy, poultry or aquatic
27 plant and animal products, fiber or fur, or the production of offspring for
28 use for any such purpose or purposes;
29 (p) all sales of drugs dispensed pursuant to a prescription order by a
30 licensed practitioner or a mid-level practitioner as defined by K.S.A. 65-
31 1626, and amendments thereto. As used in this subsection, "drug" means a
32 compound, substance or preparation and any component of a compound,
33 substance or preparation, other than food and food ingredients, dietary
34 supplements or alcoholic beverages, recognized in the official United
35 States pharmacopeia, official homeopathic pharmacopoeia of the United
36 States or official national formulary, and supplement to any of them,
37 intended for use in the diagnosis, cure, mitigation, treatment or prevention
38 of disease or intended to affect the structure or any function