UPDATED
SESSION OF 2022
SUPPLEMENTAL NOTE ON SENATE SUBSTITUTE FOR
HOUSE BILL NO. 2316
As Recommended by Senate Committee on
Assessment and Taxation

Brief*
Senate Sub. for HB 2316 would amend law related to
sales tax, including exemptions, exclusions, state rates on
certain utilities, and sales tax remittances by retailers. The bill
would also sunset a local sales tax in Atchison County and
amend law related to the disposition of revenue of countywide
sales taxes and sales tax imposed by Washburn University.

Manufacturer’s Coupons Sales Tax Exclusion
The bill would exclude manufacturer’s coupons from the
sales price for purposes of retail sales and compensating use
tax.

Motor Vehicle Rebates Sales Tax Exclusion Sunset
Repeal
The bill would repeal the June 30, 2024, sunset for an
exclusion from sales tax of cash rebates granted by
manufacturers to purchasers or lessees of new motor
vehicles if such rebates are paid directly to retailers.


____________________
*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
Back-to-School Sales Tax Holiday
The bill would provide for a sales tax exemption for the
first Thursday in August through the following Sunday for
purchases of back-to-school-related clothing, clothing
accessories or equipment, school supplies, school
instructional materials, school art supplies, personal
computers, school computer supplies, and prewritten
computer software, as those items are defined by the bill.
The bill would direct the application of the exemption
under certain conditions for layaway sales, bundled sales,
discounts, unit sales, rain checks, exchanges, deliveries
outside the time of the exemption, and returns.

Sales Tax on Utilities
The bill would expand, beginning July 1, 2023, the state
sales and use tax rate of zero percent currently applied to
residential and agricultural sales of gas, electricity, heat,
propane gas, liquified petroleum gas, coal, wood, and other
fuel sources for the production of heat or lighting to all such
sales.
Additionally, such sales would be added to the list of
items expressly subject to sales taxes imposed by cities and
counties. However, cities and counties would be given the
authority to exempt all such sales from the sales taxes levied
by the city or county.

Sales Tax Remittances
The bill would, beginning January 1, 2023, eliminate a
provision requiring retailers with annual sales tax liability in
excess of $40,000 to remit estimated payment for the first 15
days of the current month when the tax return for the previous
month is filed.

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 The bill would also increase the remittance thresholds
for annual filers from up to $400 to up to $1,000, and for
quarterly filers from up to $4,000 to up to $5,000.

Washburn University
The bill would provide that all sales subject to sales
taxes imposed by cities and counties would be subject to
sales taxes imposed by Washburn University.

Atchison County
The bill would require the termination of the countywide
sales tax in Atchison County for joint law enforcement
communications and solid waste disposal enacted pursuant
to an election held on August 3, 1993, by June 30, 2024.

Countywide Sales Tax Disposition of Revenue
The bill would provide for all countywide sales taxes
imposed pursuant to elections held on or after July 1, 2022, to
be remitted to and retained by counties unless the board of
county commissioners adopts a resolution at least 60 days
prior to the election providing for the application of the
formula in current law apportioning the proceeds of
countywide sales taxes to the county and cities located within
the county. The bill would require ballot propositions for
countywide sales taxes to state whether the apportionment
formula would be used for the proceeds of the tax.


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Johnson County Christmas Bureau
The bill would create a sales tax exemption for
purchases by or on behalf of the Johnson County Christmas
Bureau Association for the purpose of providing food,
clothing, cleaning supplies, personal care items, and other
necessities of life to those in need and for all sales by or on
behalf of the organization.

Background
HB 2316 was introduced by the House Committee on
Taxation at the request of a representative of the Kansas
Restaurant and Hospitality Association. The Senate
Committee on Assessment and Taxation removed the original
contents of HB 2316 (those provisions related to the
surcharge prohibition on purchases made with credit or debit
cards and were inserted into Sub. for SB 462), inserted the
contents described in the above brief section, and
recommended a substitute bill be created.
The contents of Senate Sub. for HB 2316 previously
existed in several different bills. The background of those bills
is provided below.

SB 432 (Back-to-School Sales Tax Holiday)
The bill was introduced by the Senate Committee on
Assessment and Taxation at the request of Senator Peck.
Senate Committee on Assessment and Taxation
In the Senate Committee hearing on the bill, proponent
testimony was provided by Senators Peck and Doll, generally
stating that some of Kansas’ neighboring states provide
similar exemptions, and the bill would result in sales returning
to Kansas and Kansas families receiving a sales tax
reduction in making back-to-school purchases.
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 No other testimony was provided.

SB 359 (Sales Tax on Utilities and Washburn University)
The bill was introduced by the Senate Committee on
Assessment and Taxation at the request of Senator Tyson.
Senate Committee on Assessment and Taxation
In the Senate Committee hearing, proponent testimony
was provided by representatives of the Kansas Chamber of
Commerce, Kansas Industrial Consumers Group, National
Federation of Independent Business, and Wichita Chamber of
Commerce, stating the bill would afford commercial and
industrial taxpayers the same tax treatment currently provided
to residential and agricultural consumers. Written-only
proponent testimony was provided by representatives of the
Kansas Agribusiness Retailers Association, Kansas Grain
and Feed Association, Kansas Policy Institute and Renew
Kansas Biofuels Association.
Neutral testimony was provided by a representative of
the League of Kansas Municipalities. Written-only neutral
testimony was provided by a representative of Washburn
University.
No other testimony was provided.

SB 87 (Atchison County and Local Sales Tax Authority)
The bill was introduced by the Senate Committee on
Assessment and Taxation at the request of Senator Tyson.
Senate Committee on Assessment and Taxation
In the Senate Committee hearing, proponent testimony
was provided by a representative of the Atchison County
Farm Bureau Board and the Kansas Association of Wheat
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Growers, who stated the Atchison County sales tax is not
being used according to the intent of voters in the 1993
election and counties should not be required to share
proceeds of countywide sales taxes with cities.
Opponent testimony was offered by representatives of
the cities of Atchison, Derby, Junction City, and Oberlin; the
Kansas Association of Counties; and the League of Kansas
Municipalities, and by a private citizen. Opponents stated the
current apportionment formula generally works well for cities
and counties and the Atchison County experience is not
reflective of statewide experiences.
Written-only opponent testimony was provided by
representatives of the Kansas Legislative Policy Group, the
Southwest Kansas Coalition, and numerous cities.
The Senate Committee amended the bill to remove the
original provision that would have eliminated the
apportionment formula and to insert the provisions described
above.
SB 354 (Manufacturer’s Coupons)
The bill was introduced by the Senate Committee on
Assessment and Taxation at the request of Senator Tyson.
Senate Committee on Assessment and Taxation
In the Senate Committee hearing on the bill, proponent
testimony was provided by a private citizen. The proponent
stated the bill would provide tax relief to individuals who use
manufacturer’s coupons and eliminate a tax that many
consumers do not realize they are paying.
No other testimony was provided.
The Senate Committee amended the bill to limit the
exclusion to only manufacturer’s coupons and not all third-
party compensation provided to retailers.
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Sub. for SB 311 (Johnson County Christmas Bureau)
The bill was introduced by the Senate Committee on
Assessment and Taxation at the request of a representative
of the Johnson County Christmas Bureau Association.
Senate Committee on Assessment and Taxation
In the Senate Committee hearing, proponent testimony
was provided by two representatives of the Johnson County
Christmas Bureau Association, stating enactment of the bill
would enable them to more effectively serve those in need.
No other testimony was provided.
The Senate Committee amended the bill with a technical
amendment and recommended a substitute bill be created.
Fiscal Information
The Department of Revenue estimates enactment of the
bill would have the following fiscal effect.
(Dollars in Millions)
FY 2023 FY 2024 FY 2025
Manufacturer’s Coupons $ (1.7) $ (1.9) $ (1.9)
Motor Vehicle Rebates Sunset - - (3.9)
Repeal
Back-to-School Sales Tax Holiday (7.0) (7.1) (7.3)
Utility Sales Tax - (46.8) (52.1)
Sales Tax Remittance Change (160.4) - -
Subtotal State General Fund $ (169.1) $ (55.8) $ (65.2)
Manufacturer’s Coupons $ (0.3) $ (0.4) $ (0.4)
Motor Vehicle Rebates Sunset - - (0.8)
Repeal
Back-to-School Sales Tax Holiday (1.4) (1.4) (1.4)
Utility Sales Tax - (9.0) (10.0)
Sales Tax Remittance Change (30.9) - -
Subtotal State Highway Fund $ (32.6) $ (10.8) $ (12.6)
Total All Funds $ (201.7) $ (66.6) $ (77.8)

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 The sales tax exemption for the Johnson County
Christmas Bureau would have a negligible negative impact on
State General Fund and State Highway Fund receipts.
Additionally, the Department of Revenue indicates
provisions of the bill relating to manufacturer’s coupons,
Back-to-School sales tax holiday, and utility sales tax local
options could result in Kansas being determined to be out of
compliance with the Streamlined Sales and Use Tax
Agreement, which could imperil $60.4 million of annual
revenue received pursuant to that Agreement.
Any fiscal effect associated with enactment of the bill is
not reflected in The FY 2023 Governor’s Budget Report.
Taxation; sales tax; Atchison County; local sales tax distributions; manufacturer’s
coupons; motor vehicle rebates; sales tax holiday; sales tax remittance; utilities;
Washburn University; Johnson County Christmas Bureau


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Statutes affected:
As introduced: 2-403, 12-16, 19-122, 72-1176, 75-30
S Sub for: 12-187, 12-189a, 12-192, 13-13a39, 79-3602, 79-3603, 79-3606, 79-3607