Bill Summary – FastDemocracy

UPDATED
                        SESSION OF 2021
     SUPPLEMENTAL NOTE ON SENATE BILL NO. 22
         As Amended by Senate Committee of the Whole

Brief*
      SB 22, as amended, would enact the Rebuilding
Employers and Livelihoods while Investing in Everyone’s
Future (RELIEF) Act, amending income tax law relative to
fraudulent unemployment benefits, standard and itemized
deductions, certain retirement income, business income
related to 2017 and 2020 federal legislation, and the business
expensing deduction.

Fraudulent Compensation
      The bill would clarify that victims of identify theft would
not owe Kansas individual income tax on unemployment
compensation or other compensation that was fraudulently
obtained by another individual and would require the
Department of Revenue to provide a method for any taxpayer
to report whether the taxpayer was victim of fraud and the
amount of fraudulent income for the taxpayer reported to the
Internal Revenue Service.

Standard Deductions
     The bill would increase the Kansas standard deduction
amounts in tax year 2021 to $3,600 for single individual filing
taxpayers, $6,600 for head of household filing taxpayers, and
$9,000 for married taxpayers filing jointly and, in tax year
2022 and all tax years thereafter, to $4,050 for single
____________________
*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.kslegislature.org
individual filing taxpayers, $7,425 for head of household filing
taxpayers, and $10,125 for married taxpayers filing jointly.

Itemized Deductions
      Beginning in tax year 2020, the bill would provide
individual income taxpayers the option to take Kansas
itemized deductions regardless of whether deductions are
itemized or the standard deduction is claimed for federal
income tax purposes.

Retirement Income
      The bill would, beginning in tax year 2021, exempt social
security benefits and amounts received by retired individuals
under employer-sponsored qualified and non-qualified
retirement plans from the Kansas income tax to the extent
such income is included in federal adjusted gross income.

Business Income
Global Intangible Low Tax Income (GILTI)
     The bill would provide, beginning in tax year 2021, a
subtraction modification exempting GILTI, as defined in
section 951A of the federal Internal Revenue Code (IRC),
before any deductions allowed under section 250(a)(1)(B) of
the IRC.
Business Interest
      The bill would provide, beginning in tax year 2021, a
subtraction modification exempting certain business interest,
to the extent such business interest is currently disallowed as
a deduction pursuant to the IRC but was deductible under the
IRC as in effect on December 31, 2017.

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Capital Contributions
      The bill would, beginning in tax year 2021, specify for
Kansas corporation income tax purposes that the exemption
from federal taxable income for capital contributions shall be
the exemption as it existed in section 118 of the IRC as in
effect on December 31, 2017.
FDIC Premiums
     The bill would provide, beginning in tax year 2021, a
subtraction modification for the amount disallowed as a
deduction by section 162(r) of the IRC, as in effect on
January 1, 2018, for Federal Deposit Insurance Corporation
(FDIC) premiums paid by the taxpayer.
Business Meal Expenses
      The bill would provide, beginning in tax year 2021, a
subtraction     modification   exempting     certain   meal
expenditures, to the extent such expenditures are currently
disallowed as a deduction pursuant to the IRC but were
deductible under the IRC as in effect on December 31, 2017.
Paycheck Protection Program Loans and Expenses
     The bill would provide, beginning in tax year 2020, a
subtraction modification exempting amounts received from
the Paycheck Protection Program and any expenses paid
with proceeds of Paycheck Protection Program loans, to the
extent such amounts and expenses are included in the
federal adjusted gross income of the taxpayer.

Expensing Deduction
     The bill would allow individual income taxpayers to begin
claiming the expensing deduction (provided by KSA 79-
32,143(a)) for the costs of placing certain tangible property
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and computer software into service in the state beginning in
tax year 2021. A second change, also effective with tax year
2021, would require all taxpayers claiming the Kansas
expensing deduction to offset the amount of federal
expensing deduction claimed pursuant to Section 179 of the
IRC.

Effective Date
    The bill would be in effect upon publication in the
Kansas Register.

Background
    The bill was introduced by the Senate Committee on
Assessment and Taxation at the request of the Kansas
Chamber of Commerce.

Senate Committee on Assessment and Taxation
      In the Senate Committee hearing on January 13 and 21,
2021, representatives of the Kansas Chamber of Commerce,
Americans for Prosperity-Kansas, the Kansas Association of
Realtors, the Kansas Policy Institute, and the National
Federation of Independent Business spoke as proponents of
the bill. Proponents stated the bill would resolve unintended
tax increases that had occurred as a result of 2017 federal
tax legislation and would allow Kansans to benefit from
itemizing deductions.
    Written-only proponent testimony was provided by the
Kansas Bankers Association.
      Representatives of the Center on Budget and Policy
Priorities and Kansas Action for Children, and a private
citizen, spoke as opponents to the bill, generally stating
more effective tax relief options were available to Kansas.

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     There was no other testimony.
     The Senate Committee amended the bill to provide for
retroactive application of the provision allowing taxpayers the
option to itemize deductions to tax year 2020, to eliminate
retroactive application of business tax items, to eliminate a
provision that would have provided conformity to federal law
for net operating loss carryforward and carryback provisions,
and to eliminate a provision that would have provided that
GILTI be taxed as foreign divided income for tax years 2018
and 2019.

Senate Committee of the Whole
     The Senate Committee of the Whole amended the bill to
extend the clarification that victims of identity theft would not
be liable for income tax on unemployment compensation
fraudulently received by another individual to any
compensation fraudulently received by another individual and
require the Department of Revenue to provide a method for
such income to be reported, to add the provisions exempting
certain retirement income, to increase the standard deduction
amounts, and to change the effective date of the bill.

Fiscal Information
      The Department of Revenue provided the following
fiscal information for the bill, as amended by the Senate
Committee of the Whole.


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                                ($ in millions)
                                           FY 2022    FY 2023   FY 2024
Expensing Deduction                             $2.30     $2.40      $2.50
Limitation on Deduction for Interest         -$30.60    -$37.50   -$38.60
Limitation on Deduction for FDIC              -$1.30     -$1.30    -$1.30
   Premiums
GILTI                                        -$24.20    -$23.50   -$23.70
Deduction for Meal Expenditure                  $0.00     $0.00    -$3.10
Allowing Itemized Deductions*               -$127.80    -$65.70   -$66.30
Social Security Benefits Exemption          -$115.10   -$118.60 -$122.10
Retirement Benefits Exemption               -$125.10   -$126.30 -$127.60
Standard Deduction Increase                  -$84.30    -$97.30   -$98.20
Capital Contributions                     Negligible Negligible Negligible
Total State General Fund Impact             -$506.10   -$467.80 -$478.50

* Allowing itemized deductions is effective for TY 2020. FY 2022 includes
   estimate for TY 2020 (-$62.8) and TY 2021 (-$65.0).
      The Department of Revenue also noted it is unable to
determine the fiscal impact of provisions relating to the
Paycheck Protection Program and of exempting GILTI before
any deductions allowed under section 250(a)(10)(B) of the
IRC. The Department of Revenue noted the interaction of the
provisions allowing taxpayers to itemize and increasing the
standard deduction would change the total impact of these
two provisions, but is unable to estimate the magnitude of
that change.

     Any fiscal effect associated with the bill is not reflected
in The FY 2022 Governor’s Budget Report

Taxation, income tax, unemployment fraud


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Statutes affected: 
As introduced: 79-32
As Amended by Senate Committee: 79-32
{As Amended by Senate Committee of the Whole}: 79-32