SESSION OF 2021
SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2187
As Amended by Senate Committee of the Whole

Brief*
HB 2187, as amended, would enact the First-time Home
Buyer Savings Account Act (Act) and establish modifications
to the Kansas adjusted gross income of an individual for
contributions to a first-time home buyer savings account
(account).

Definitions
The bill would define the terms “account” or “first-time
home buyer savings account,” “designated beneficiary,”
“eligible expenses,” “financial institution,” “first-time home
buyer,” and “Secretary.”

First-time Home Buyer Savings Accounts
(New Section 3)
The bill would allow an individual, on and after July 1,
2022, to open an account with a financial institution and
designate the entirety of the account as an account that
would be used to pay or reimburse a designated beneficiary’s
eligible expenses for the purchase or construction of a
primary residence in Kansas. The bill would allow an
individual to be the account holder of multiple accounts or
jointly own an account, provided the individuals file a joint
income tax return. An account holder in compliance with the
Act would be eligible for income tax modifications of KSA 79-
32,117.
____________________
*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
 The bill would require the account holder, by April 15 of
the year after the taxable year in which the account holder
established the account, to designate a beneficiary of the
account. The bill would not prohibit an account holder from
designating the account holder as the designated beneficiary.
An account holder would be allowed to change the
designated beneficiary at any time, but no account could
have more than one designated beneficiary at one time. An
individual could be the designated beneficiary of more than
one account if the accounts are held by separate account
holders, but no account holder would be authorized to
designate the same designated beneficiary on multiple
accounts held by the same account holder.
The bill would apply the following limits to an account
established pursuant to the Act:
● Maximum contribution to an account in any tax
year:
○ $3,000 for an individual; and
○ $6,000 for a married couple filing a joint
return.
● Maximum amount of all contributions to an account
in all tax years:
○ $24,000 for an individual; and
○ $48,000 for a married couple filing a joint
return.
● The maximum total amount in an account would be
$50,000.
The bill would allow moneys to remain in an account for
an unlimited duration without the interest or income being
subject to recapture or penalty. Further, the bill would prohibit
the account holder from using moneys in an account to pay
expenses for administering the account, except for a service
fee that may be deducted by a financial institution. In addition,
the account holder would be responsible for maintaining
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documentation for the account and for eligible expenses
related to the designated beneficiary’s purchase or
construction of a primary residence.

Account Moneys (New Section 4)
Use of Account Moneys
The bill would allow the moneys in an account to be
used for the following:
● Eligible expenses related to a designated
beneficiary’s purchase or construction of a primary
residence located in Kansas;
● Eligible expenses related to a designated
beneficiary’s purchase or construction of a primary
residence located outside of Kansas if the
designated beneficiary is active-duty military and
was stationed in Kansas for any time after the
creation of the account;
● Eligible expenses that would have qualified
pursuant to this section, but the contract for
purchase or construction was not closed;
● Transfer to another newly created account; and
● Payment of service fees assessed by the financial
institution.
The bill would allow the moneys to be used for the
above purposes even if a designated beneficiary is a joint
owner of a primary residence with another person who is not
a designated beneficiary of the account.
Moneys in an account could not be used to purchase a
manufactured or mobile home that is not taxed as real
property.

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Recapture of Account Moneys and Penalties
The bill would subject moneys withdrawn from an
account to recapture by the Secretary of Revenue (Secretary)
in the tax year in which they were withdrawn if:
● At the time of withdrawal, it has been less than a
year since the first deposit in the account; or
● The moneys are used for any purpose other than
the expenses or transactions authorized pursuant
to the uses outlined in this section.
Moneys subject to recapture would be an amount equal
to the amount withdrawn from an account and would be
added to the Kansas adjusted gross income of the account
holder or of the designated beneficiary, if the account holder
is deceased. If any moneys are subject to recapture, the
account holder would be required to pay a penalty in the
following amounts:
● If the withdrawal of moneys occurred ten or fewer
years after the first deposit of the account, 5
percent of the amount subject to recapture; or
● If the withdrawal of moneys occurred more than ten
years after the first deposit in the account, 10
percent of the amount subject to recapture.
The penalties would not apply if the withdrawn moneys
are:
● Used for eligible expenses related to a designated
beneficiary’s purchase or construction of a primary
residence outside Kansas; or
● From an account in which the designated
beneficiary is deceased and the account holder did
not designate a new designated beneficiary during
the same tax year.

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 Further, if the account holder or account holders are
deceased and the account does not have a surviving transfer-
on-death beneficiary, the moneys in the account resulting
from contributions or income earned from assets in the
account would be subject to recapture in the tax year of the
death or deaths, but no penalty would be assessed.

Reports (New Section 5)
The bill would require the Secretary to establish forms
for an account holder to annually report information about any
accounts held by the account holder. An account holder
would be required to annually file all forms required by the
Secretary, the form 1099 for the account issued by the
financial institution, and any other supporting documentation
required by the Secretary with the account holder’s state
income tax return.
The bill would require the Secretary to adopt rules and
regulations necessary to administer the Act prior to July 1,
2022.

Financial Institutions (New Section 6)
The bill would state financial institutions would not be
required to:
● Designate an account as a first-time home buyer
savings account or designate the beneficiaries of
an account in the financial institution’s account
contracts or systems in any way;
● Track the use of moneys withdrawn from an
account; or
● Report any information to the Department of
Revenue (Department) or any other governmental
agency that is not otherwise required by law.

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 The bill would state financial institutions would not be
responsible or liable for:
● Determining or ensuring an account holder is
eligible for a Kansas adjusted gross income
modification;
● Determining or ensuring moneys in the account are
used for eligible expenses; or
● Reporting or remitting taxes or penalties related to
the use of account moneys.
Modifications to Kansas Adjusted Gross Income of an
Individual (Section 7)
The bill would add to the federal adjusted gross income
for all taxable years beginning after December 31, 2021:
● The amount of any contributions to, or earnings
from, an account if distributions from the account
were not used to pay for expenses or transactions
authorized by or were not held for the minimum
length of time pursuant to the bill; and
● Contributions to, or earnings from, the account,
including any amount resulting from the account
holder not designating a surviving transfer-on-
death beneficiary pursuant to the bill.
The bill would also create a subtraction modification
from the federal adjusted gross income for all taxable years
beginning after December 31, 2021:
● The amount contributed to a first-time home buyer
savings account in an amount not to exceed
$3,000 for an individual or $6,000 for a married
couple filing a joint return; or

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 ● Amounts received as income earned from assets in
an account.
Background
The bill was introduced by the House Committee on
Taxation at the request of Representative Kelly.
[Note: The provisions of HB 2187, as introduced, are the
same as those of 2020 HB 2516, as amended by the House
Committee.]

House Committee on Financial Institutions and Rural
Development
In the House Committee hearing on the bill,
Representative Woodard on behalf of the Kansas Future
Caucus and representatives of the Heartland Credit Union
Association, Kansas Association of Realtors, and Kansas
Bankers Association provided proponent testimony, stating
the bill has the potential to spur economic activity across
Kansas. They stated similar account programs have been
used successfully in other states, and the bill could help
younger and working Kansans purchase their first homes.
Representatives of Kansas Housing Association, Inc.; Kansas
Housing Resources Corporation; and Kansas Manufactured
Housing Association provided written-only proponent
testimony.
No neutral or opponent testimony was provided.

Senate Committee on Financial Institutions and
Insurance
In the Senate Committee hearing, representatives of the
Kansas Association of Realtors, Kansas Bankers Association,
and Heartland Credit Union Association provided proponent
testimony, stating the bill has the potential to encourage
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home ownership and spur economic development across the
state. The proponents stated many surrounding states have
enacted similar legislation and they would like Kansas to
encourage first-time home buyers savings accounts on par
with the programs of neighboring states.
No other testimony was provided.
The Senate Committee amended the bill to change the
effective date to upon publication in the Kansas Register.

Senate Committee of the Whole
The Senate Committee of the Whole amended the bill to
change the effective date to upon publication in the statute
book.

Fiscal Information
According to the fiscal note prepared by the Division of
the Budget on the bill, as introduced, the Department
estimates the bill would decrease State General Fund (SGF)
revenues by $3.54 million for FY 2023 and by similar
amounts in future fiscal years. In addition, the Department
indicates the bill would require $168,249 from the SGF for FY
2022 to implement its provisions and to modify the automated
tax system. The bill would require the Department to fill a 1.0
FTE position to answer taxpayer questions and manage the
new first-time home buyer savings account tax credit. The
required programming for this bill by itself would be
performed by existing staff of the Department.
In addition, if the combined effect of implementing the
bill and other enacted legislation exceeds the Department’s
programming resources, or if the time for implementing the
changes is too short, additional expenditures may be required
for outside contract programming services beyond the
Department’s current budget. Any fiscal effect associated with

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enactment of the bill is not reflected in The FY 2022
Governor’s Budget Report.
First-time Home Buyer Savings Account; savings account; financial institutions;
adjusted gross income


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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
Enrolled - Law effective July 1, 2021: 79-32